Is article 32.10 in the United States-Mexico-Canada Agreement a tempest in a teapot or a slow-building hurricane?
Whatever it is, it could have an effect on Canada’s agricultural trade with China.
Article 32.10 says any country that pursues a trade agreement with a non-market country must provide the text of the deal to the other two countries for review. And if they don’t like what they see, they can use that trade deal to pull out of the USMCA.
Most trade observers agree that the non-market clause is a U.S. initiative and that to some degree it infringes on Canada’s ability to strike a free-trade deal with China.
However, opinions vary on the clause’s burden. An editorial in the Globe and Mail argues that it can only be interpreted as “an agreement by Mexico and Canada not to sign a free-trade deal with China in the near future.”
Some have said it’s a symbolic clause meant to send a signal to China to alter its trade practices, but trade expert Peter Clark says that’s “nonsense.” He says the article is included because “somebody will want to use it.”
Blayne Haggard, associate professor of political science at Brock University, said article 32.10 will make it “incredibly difficult” for Canada or Mexico to negotiate a free-trade deal with China. The Ottawa-based Public Policy Forum calls the clause an “unprecedented ceding of sovereignty.”
Yet Brian Lee Crowley, managing director of the Macdonald-Laurier Institute, says commentators are indeed “making a bit of a tempest in a teapot.”
The thinking is that any Canada-China trade deal could take upwards of 10 years to negotiate and by then, President Donald Trump will be out of the picture.
Not so fast. For the last four decades — from Reagan to Trump — the Republican party has moved steadily to the right. The ground has shifted with a manner of permanence, and future Republican presidents will not be inclined to retreat.
You see how this matters to Canada’s agriculture sector when you look at the numbers.
China is Canada’s second-largest trading partner after the U.S. Exports to China are $23.6 billion annually. Agri-trade (including seafood) is valued at $6.3 billion.
Canada is China’s largest supplier of canola oil, seeds and meal ($3.6 billion annually), dried peas ($480 million), flax ($275 million) and durum ($650 million).
Canada is also the second largest supplier of barley ($1.1 billion) and the fifth largest supplier of pork products ($7.6 billion).
“China will be crucial to Canada’s economic future over the next 50 years,” the Canadian Agri-Food Trade Alliance says.
Yet there is plenty of competition for Canada’s treasured supplier status. Half of the G20 countries sell more to China than Canada does. And China has said it would pursue options given these “trade restrictions.”
A Canada-China trade deal remains a faint notion, but China does have 16 free-trade agreements, including deals with Australia, New Zealand and South Korea.
Aside from ensuring that Canada’s agricultural trade remains robust with China through a trade deal, it could also serve to head off testy quarrels such as the 2016 dockage dispute affecting canola — the single biggest commodity Canada exports to China.
It is important that Canadians speak up about article 32.10. The USMCA deal is to be reviewed every six years. A significant chorus of Canadians objecting to this clause will send a strong signal to the Americans during that review period that Canada will not readily support a deal that contains this kind of intrusion into Canada’s national sovereignty.
Karen Briere, Bruce Dyck, Barb Glen, Brian MacLeod and Michael Raine collaborate in the writing of Western Producer editorials.