Foreign Affairs Minister Chrystia Freeland says that anyone who thinks the new trilateral North American trade agreement limits Canada's trade sovereignty is misguided.
Freeland told Chris Hall, host of CBC Radio's The House, that the section of the United States-Mexico-Canada Agreement that lays out the rules for making pacts with "non-market" countries won't limit Canada's attempts to diversify its markets.
"It's the one element of the modernized NAFTA that has not been fully understood by Canadians," she said Thursday.
"There is nothing new in this clause and in the new agreement that restricts Canadian sovereignty in any way."
Section 32.10 of the deal's text states that a USMCA country must give three months' notice to the other two parties before negotiating a free trade agreement with any country considered to be "non-market" — and therefore ineligible — by one of the USMCA partners.
Many have taken this to be a direct reference to China, as the U.S. has been engaged in a tariff battle with Beijing for months. Hundreds of billions of dollars worth of products have been affected, drawing retaliation from China.
U.S. President Donald Trump has taken aim at the dumping of foreign steel and aluminum by China. He also imposed steel and aluminum tariffs on Canada, Mexico and the European Union back in May, using a little-known U.S. law to declare those metals imports a threat to "national security."
China has been critical of the new trilateral deal, saying the U.S. is trying to undermine its trade with Canada and Mexico.
Approval and withdrawal
Under USMCA's Section 32, USMCA nations would be given the opportunity to review the text of any trade deal between an USMCA partner and a non-market country before it's signed, and also would retain the option of pulling out of the North American trade pact in response.
Freeland said that ability to trigger a six-month withdrawal period without cause is nothing new, since it was in the original NAFTA deal.
However, when asked repeatedly to say why the non-market economy clause was added to the USMCA, she struggled to answer.
"It's there because it was part of the negotiations," she said.
Canadians aren't the only ones asking themselves exactly what Section 32 means. The minister had to explain the agreement to China's foreign minister last week to allay his concerns.
The Trudeau government has brushed away worries about this clause, saying it's standard in most trade deals — even though the European CETA and the Pacific region CPTPP trade deals don't include it.
Meanwhile, the prime minister is continuing to eye opportunities in China.
Justin Trudeau said Canada is open to doing more business with China now that a trade agreement with the United States and Mexico has been finalized.
"Obviously, China is the world's second-largest economy and growing, and will remain an important place to do business and to look for opportunity," Trudeau told the Fortune Global Forum in Toronto on Monday.
While the USMCA proceeds through to Congress on its way to final approval, the U.S. tariffs on Canadian steel and aluminum remain in place, much to the chagrin of the federal government.
"Ottawa is ready to lift those tariffs this afternoon," Freeland said. "It's not good for anybody."