Washington’s anti-China poison pill in its trade deal with Mexico and Canada – the 32.10 clause – could be copied in agreements with Asian countries to ratchet up the pressure on Beijing
C all it what you want: the “poison pill” clause, the “China” clause, the “US veto” clause… but will Washington’s latest weapon in its escalating trade war with Beijing be capable of isolating Asia’s biggest economy from its stalwart trading allies in the region?
Unlikely in the near future, say regional trade experts – but China shouldn’t expect to emerge unscathed.
It might sound innocuous enough, perhaps even a little dry, but clause 32.10 in the recently concluded US-Mexico-Canada Agreement (USMCA) has got water-cooler areas across Asia buzzing with speculation that it will be replicated in future US trade deals to ratchet up the pressure on Beijing.
Under the clause in the USMCA – a replacement for the 24-year-old North American Free Trade Agreement deemed lopsided against the US by President Donald Trump – participant countries can withdraw from the pact if one of the others enters into a fresh trade deal with a “non-market economy”. That is widely seen as a thinly veiled threat by the US, warning its two neighbours about China.
With rising talk that Trump is positioning the Western superpower for a cold war-style showdown with China, some observers say the clause could be used as an “us or them” test for America’s trading partners in Asia, too.
Trump’s commerce secretary Wilbur Ross last week signalled the provision might be replicated in upcoming trade pacts.
In the works are new free-trade agreements with Japan, the European Union (EU) and a post-Brexit Britain.
Asked in a Reuters interview if the US would replicate clause 32.10 in future trade deals, Ross said: “We shall see. It certainly helps that we got it with Mexico and with Canada, independently of whether we get it with anyone else.
