New North Amer­i­can trade pact un­likely to hit China-Mex­ico trade co­op­er­a­tion

Global Times US Edition - - FORUM - By Luis Brito The au­thor is a writer with the Xin­hua News Agency. opin­[email protected]­al­times.com.cn

A new North Amer­i­can free trade agree­ment reached ear­lier this month among the US, Mex­ico and Canada, dubbed the USMCA, is un­likely to im­pact trade co­op­er­a­tion be­tween Mex­ico and China, ex­perts have said.

Ob­servers in both Mex­ico and Canada fear a clause – which obliges a USMCA sig­na­tory to in­form the other part­ners of any free trade ne­go­ti­a­tions with a “non­mar­ket coun­try” – gives the US un­due lever­age over its po­ten­tial trade with China.

“That clause can lend it­self to [dif­fer­ent] in­ter­pre­ta­tions, but it does not pro­hibit us from trad­ing with China,” said Jorge Sanchez Tello, head of ap­plied re­search at the Fi­nan­cial Stud­ies Fund of Mex­ico’s Au­ton­o­mous Tech­no­log­i­cal In­sti­tute.

The clause gives the other part­ners the right to re­view the text of any pro­posed deal with a non-mar­ket econ­omy – vaguely de­fined as any coun­try that a part­ner “de­ter­mines” to be in vi­o­la­tion of its free-mar­ket poli­cies – and to with­draw from the USMCA with a six-month no­tice should they dis­sent.

The clause doesn’t men­tion any coun­try by name, but most ob­servers agree it refers to China, which the US govern­ment does not con­sider to have a mar­ket econ­omy, as its com­plaints to the World Trade Or­ga­ni­za­tion at­test.

How­ever, China-Mex­ico ties are too well de­vel­oped to be im­pacted by the clause, China ex­pert En­rique Dus­sel, co­or­di­na­tor of the China-Mex­ico Stud­ies Cen­ter at Mex­ico’s Na­tional Au­ton­o­mous Univer­sity said, not­ing China has been Mex­ico’s sec­ond-largest trade part­ner, af­ter the US for sev­eral years now, and the two coun­tries have a com­pre­hen­sive strate­gic part­ner­ship.

“Are we barred from think­ing about a free trade agree­ment? But keep in mind, the re­la­tion­ship be­tween Mex­ico and China is much more than a free trade agree­ment,” said Dus­sel.

“One can imag­ine dozens of other points of en­counter in cul­ture, pol­i­tics, econ­omy, trade and in­vest­ment with­out there be­ing a free trade agree­ment,” he added.

Ac­cord­ing to Sanchez, Mex­ico needs to rec­og­nize China’s in­creas­ing geopo­lit­i­cal and geo-eco­nomic im­por­tance, even though trade ex­changes be­tween the two coun­tries are still rel­a­tively small com­pared to Mex­ico’s trade with the US.

Mex­ico’s govern­ment has dis­missed the pos­si­bil­ity that the clause could af­fect its ties with China, say­ing the stip­u­la­tion only aims to en­sure the ex­change of in­for­ma­tion be­tween the highly-in­te­grated North Amer­i­can part­ners, which must sub­mit the text of the USMCA to their re­spec­tive leg­is­la­tures for ap­proval be­fore lead­ers sign the deal into law some­time this year.

Mex­ico’s Econ­omy Min­is­ter Ilde­fonso Gua­jardo, the coun­try’s head ne­go­tia­tor to the trade talks that re­sulted in the USMCA, main­tained Mex­ico has not closed the doors to a pos­si­ble trade deal with China.

In a re­cent in­ter­view with lead­ing daily Re­forma, Gua­jardo ad­mit­ted the Trump ad­min­is­tra­tion wanted the clause to specif­i­cally bar the part­ners from en­ter­ing into a free trade deal with China.

Mex­ico re­fused, say­ing it had the right to sign trade agree­ments with any coun­try it chose, said Gua­jardo.

On Satur­day, Mex­ico’s For­eign Af­fairs Min­is­ter Luis Vide­garay tele­phoned his Chi­nese coun­ter­part Wang Yi, say- ing the USMCA will not af­fect bi­lat­eral ex­changes or limit trade, in­vest­ment or po­lit­i­cal ties be­tween the two coun­tries.

To what ex­tent the clause will af­fect bi­lat­eral ties will de­pend on Mex­ico’s in­com­ing ad­min­is­tra­tion, said Dus­sel, as pres­i­dent-elect An­dres Manuel Lopez Obrador is set to take of­fice on De­cem­ber 1.

Lopez Obrador’s pro­gres­sive party, the Na­tional Re­gen­er­a­tion Move­ment (Morena), de­clared in Septem­ber its in­ten­tion to boost co­op­er­a­tion with China.

“Mex­ico did well in not giv­ing in to the pro­tec­tion­ist pol­icy the US wanted to dic­tate what coun­tries its re­gional part­ners could trade with,” said Sanchez Tello.

Once ap­proved, the USMCA, which re­places the 1994 North Amer­i­can Free Trade Agree­ment, is ex­pected to be signed on Novem­ber 29 and put into ef­fect in the sec­ond half of 2019.

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