Parsing China’s role as NAFTA is recalibrated

China is expected to remain a major trading player with the countries in the North American Free Trade Agreement (NAFTA) — the United States, Canada and Mexico — as they renegotiate the pact, but it could face some changes.

In an interview with China Daily, Aurel Braun, a professor of international relations and political science at the University of Toronto, said China’s tangential role in the trade deal should be re-examined because the three North American nations have invariable links to the huge Asian market.

Braun believes the North American trade bloc would accommodate China to a certain extent, contingent on a number of factors.

The most important one is a natural matter — the size of China’s economy and the fact that it already has voluminous trade with the US and Canada.

“We will also have to see what kind of agreement Canada will make with the US,” Braun said. “It should be closely examined in China, because it follows the same trade patterns as the one between US and Mexico.

“Whatever agreement is reached, it will have a negative impact on Chinese exports, as well as involve China in a number of ways because of the current trade patterns,” he added.

Canada still can participate in the North American trade deal, but it has made a mistake by waiting, Braun said.

The US and Mexico agreed to a deal on Aug 27, but Canada and the US announced on Aug 31 that they had not.

“So, Canada now has to find a way to join them,” he added, noting that Canada might now have to diversify, redirect trade to China and be less dependent on the US.

Canada’s foreign minister said on Wednesday that ongoing trade talks with the US remain “constructive” and that both sides are expected to offer new ideas when they reconvene.

Chrystia Freeland, Canada’s lead NAFTA minister, met with US Trade Representative Robert Lighthizer in Washington after a series of back-to-back meetings last week failed to yield an agreement.

The US has said Canada still can join the preliminary pact it struck with Mexico to replace NAFTA before the agreement is signed in late November.

Officials held discussions on Wednesday over “a number of issues”, and now the negotiating teams will meet individually and “come back with fresh ideas later this afternoon”, Freeland told reporters outside Lighthizer’s offices in Washington.

“There is no political necessity to keep Canada in the new NAFTA deal,” US President Donald Trump said on Twitter on Saturday. “If we don’t make a fair deal for the US, after decades of abuse, Canada will be out. Congress should not interfere w/ these negotiations or I will simply terminate NAFTA entirely & we will be far better off.”

Braun said Canada has a good bilateral relationship with China and is pursuing its own free trade agreement with Beijing, which is “always ready” to restart free trade talks with Canada.

“I’m optimistic that there will be progress,” Braun said. “So, the first thing I’m looking at now is what will happen with the trade relationship between Canada and the US, then we will see what is the next step between the US and China, and how the US, Canada and China will make adjustments to that kind of agreement.”

Braun suspects there first will be an agreement between the US and Canada before there is one between the US and China.

Despite the escalating trade war between the world’s two largest economies, both China and the US have shown interest in continuing talks. Bloomberg.com contributed to this story.