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.
Canada’s embrace of American-style protectionist measures to prop up domestic steelmakers is set to increase costs for consumers and secondary manufacturers — assuming they can even find steel to buy amid current shortages.
It’s also offending key trading partners.
As of next Thursday, a 25 per cent surtax will be applied to all foreign imports of seven specific kinds of steel once they exceed historical average volumes. It’s an emergency tool the federal government’s never used before. Many manufacturers would love to stop it from being used now.
“It is going to kill businesses,” said trade lawyer Cyndee Todgham Cherniak. Her firm, LexSage, represents clients trying to persuade the Canadian International Trade Tribunal to reverse Finance Minister Bill Morneau’s decision at hearings scheduled for January.
“Exactly what we said shouldn’t be done to us, we’ve done to other countries. And, quite frankly, to our own businesses.”
Canada already has 78 different trade remedies (duties) in place for countries like China who’ve been caught dumping steel. This new surtax is part of a push to curb global overproduction and keep cheap steel from sneaking into North American supply chains.
But in the process, Canada’s surtax also hits fairly-traded steel from countries Canada normally counts as allies, including Japan and the European Union.
Companies already finding it hard to source quality, affordable steel are about to see more of their best options taxed.