There has been a great deal of hand-wringing the last few days about Clause 32 of the US – Mexico – Canada Agreement (USMCA). Some see it as a threat to Canadian sovereignty but it isn’t, not really. It has more to do with US sovereignty and the paranoia of an out of control US administration than anything else.
For those who are unfamiliar, the CBC’s Neil McDonald describes Clause 32 like this:
It’s long-winded and uses code language, but basically, it says that if Canada wants a trade deal with China, it has to notify the Americans about any negotiations, and tell them the substance of those negotiations, and submit the text of any deal, “including any annexes and side instruments” in advance, for American scrutiny, and then, like a puppy, await Washington’s verdict. If the Americans don’t like the deal – and it’s a safe bet the Americans aren’t going to like any deal that binds Canada to a rival economic giant – Canada will be summarily excluded from the new version of NAFTA, which will revert, at America’s whim, to a bilateral deal with Mexico.
It does not say that Canada cannot pursue free trade with China, or anyone else. It simply says that the US, or at least the current administration, does not want to be in a free trade relationship with countries that have a similar relationship with China. It says that we may be forced to choose between an open trading relationship with China and an open trading relationship with the United States. That is a decision that they are allowed to make and, if we’re honest, the US could pull out of the agreement at any point, for any reason or no reason at all. For its part, Canada could do the same.
So, our sovereignty isn’t threatened but the government could have to make some hard choices.
The USMCA also comes up for review in 6 years and expires in 16 if it is not renewed, so let’s take a look at what is likely to happen over that time.
In the US, under normal circumstances, the Trump administration and its trade war with China will be over in two years. We could then hope to re-examine the issue of trade with China at the point of the six-year review. After all, as of last December, China did not appear to be interested in any new trading agreement with Canada.
It is not a safe bet, however, that “normal circumstances” will prevail in the United States. The country is as bitterly divided as they have been at any time since the US Civil War of the 1860s. There is no telling what the United States may look like 6 or even 16 years from now, so it may be a good thing that the agreement is not permanent.
In Canada, we are waiting to see if the Comprehensive Economic and Trade Agreement (CETA) is ratified by all European countries. This is a process that could take several years. We are also waiting for the ratification of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). It’s possible that sixteen years from now Canada will be far less economically dependent on the United States. That too could have a big impact on future trade agreements.
At any rate, Canada now has a reprieve from threats of economic catastrophe and some time to make adjustments and plans while we wait out the political storm to our south. While the US, and much of the world, rushes from crisis to crisis we have some time to reflect on what kind of country we want to be and what kind of partners we want to work with. And we have gotten there by making relatively minor concessions and without surrendering our sovereignty.
Personally, I think we should surrender a bit of our sovereignty by seeking European Union membership. We could then negotiate trade agreements as part of a major economic and political power, with a market of 600 million people rather than as a country of 30 million that is heavily reliant on soft power and our good reputation to get deals done but that is a discussion for another day.