Poisoning The Waters
The U.S. uses the USMCA trade agreement to attack China and the rest of the world
It is easy to take sides politically or ideologically on trade issues, but the politicization of these matters is a poison pill that no one will be able to escape. This pill, as embedded in the Us-mexico-canada Agreement (USMCA), is extremely venomous, not only for China, but also for the world at large.
The trade deal, which was concluded at the end of September, contained a clause in article 32.10 which states, “Entry by any Party into a free trade agreement with a non-market country, shall allow the other Parties to terminate this Agreement on sixmonth notice and replace this Agreement with an agreement as between them (bilateral agreement).”
This clause and the whole of article 32.10, by design, ostensibly prevent Mexico and Canada from entering into any free trade arrangements with a non-market country. The unspoken message is: I (the United States) am the boss, and you (Canada and Mexico) will have to follow my preferences in your free trade decisions.
But which is the non-market country the clause is referring to?
White House National Economic Council Director Larry Kudlow explained to reporters on October 2, “It starts with a C and ends with an A.” He seemed to shy away from actually mentioning the country. But it’s definitely not Croatia, Colombia or even Cuba. It’s China that the United States is trying to target in the USMCA.
So why is China labeled as a non-market economy?
China’s non-market status was supposed to end upon the completion of its 15-year transition period in the World Trade Organization (WTO) by identifying the cost comparisons of products in trade dispute cases. By December 11, 2016, the United States was supposed to honor its commitment as it had promised and detailed in Article 15 of China’s WTO accession agreement. This would typically entail giving Chinese companies fair and marketbased treatment in assessing the value of their products. However, the United States refused to carry out its obligations and purposefully designated China a non-market economy.
There is no market economy definition within the WTO. The U.S. itself is not an internationally recognized market economy. Thus, the U.S. definition of a non-market economy is based only on its own domestic law.
The United States has chosen to ignore China’s reform and marketization achieve-