The United States and Mexico can’t exclude Canada from entering formal trade negotiation with China, Agriculture Minister Lawrence MacAulay says — despite an ongoing global trade war and questions about a clause in the trilateral trade deal.
MacAulay was asked by reporters on Monday about a clause in the United States-Mexico-Canada Agreement (USMCA) that allows any member of the trade pact to veto a free trade agreement with a “non-market economy” — including China.
A non-market country is a country that doesn’t operate on free-market principles that go beyond traditional trade protections. As a result, pricing doesn’t reflect the true value of a product.
“Well, first of all, they cannot exclude Canada,” MacAulay replied.
“It’s important to note that in the former NAFTA deal, if one country did not like what the other country did, (it) had the opportunity to give the six-month notice and remove itself from NAFTA,” he said. “That still exists here.”
“It certainly does not inhibit us from dealing with China, or any other country around the world. And we told them that quite clearly in China, I might add.” China is a major trading market for Canadian agriculture products.
Under the not-yet-ratified USMCA, all signatories are required to give three months’ notice before starting free-trade talks with a non-market country, and to provide the text of a trade deal with that country in advance. It also gives the USMCA signatories the option to bow out of the agreement if they don’t like what they see in the separate deal.
Washington, where the Trump administration is currently embroiled in a full-fledged trade war with Beijing, considers China to be a non-market economy. China has said it believes the clause is designed to deter trade with Beijing.
Prime Minister Justin Trudeau has repeatedly said Canada remains open to increased trade with China.
This weekend, MacAulay wrapped up a 10-day trade mission to China, where he met with Chinese officials and attended trade shows to promote Canadian agriculture.
Canada and China also agreed to double agricultural trade by 2025 — a goal Canada’s farm and food sectors have said could be difficult if restrictions on imports aren’t addressed, including: high tariffs, the slow approvals process for new biotechnologies, import quotas for certain goods, and lengthy market-access approvals for individual commodities.
“I don’t see how agriculture trade can double without addressing barriers with China,” Brian Innes, vice-president of the Canola Council of Canada, told iPolitics in an interview Tuesday.
Canada’s canola industry has been trying to secure approvals for three new canola seed traitssince 2012, technology farmers say will help improve yields. At the time, industry was full of “optimism” about the process, Innes said. Five years later, that optimism is “now becoming desperation” as farmers grapple with problems such as drought and disease.
On Monday, MacAulay said Canadian officials continue working with Chinese officials to improve the flow of trade between Canada and China, but “countries make their own laws.”
The issue of canola-seed approvals was raised twice during the trade mission, MacAuley said. “Is it resolved? No. But we are continuing to work on it.”
By Kelsey Johnson