China Hits Back at USMCA Provision Aimed at Them

A provision in the U.S.-Mexico-Canada Agreement (USMCA) is drawing the ire of China. Commerce Secretary Wilbur Ross described article 32.10 of the USMCA as a "poison pill."According to the text of the USMCA agreement, "For purposes of this article, a non-market country is a country that on the date of signature of this agreement at least one party has determined to be a non-market economy for purposes of its trade remedy laws and is a country with which no party has a free trade agreement."If a party to USMCA enters into an free-trade deal with a non-market economy, other parties to USMCA could then terminate the trilateral agreement on six-month notice. That party and the other remaining USMCA member would then revert to a bilateral trade deal "comprised of all the provisions of this agreement, except those provisions the relevant parties decide are not applicable as between them," per the agreement text.Inclusion of the provision was as "another move to try to close loopholes," Ross said in an interview with Reuters. He added China was trying to "legitimize" its unfair practices on issues like intellectual properties (IP) and subsidies – which the US has taken action against – by protecting them in new trade agreements with other nations. The USMCA provision, in turn, is meant to constrain China's ability to do that – at least with Canada and Mexico.China sees the provision, favored by the U.S., as a means to muscle it out of any potential future FTAs with Canada or Mexico. Spokesperson for the Chinese Embassy in Canada, Yang Yundong, was sharply critical of article 32.10. He accused the provision of "fabricating the concepts of 'market country' and 'non-market country' outside the World Trade Organization framework."Further, in words aimed squarely at the U.S., Yang remarked, "We condemn the hegemonic acts by related countries of publicly interfering with the sovereignty of other countries, and we feel sorry for the damaged economic sovereignty of the countries concerned."