SINGAPORE (Oct 29): Inserted by the US and locked deep down in Chapter 32 of the renegotiated North American Free Trade Agreement is a poison pill. It gives the US veto rights over Canada’s and Mexico’s signing of free trade deals with China, although the language is couched in terms of “non-market’ economies as defined by the US. It is actually more than a veto, as any China deal would invalidate the new Nafta, allowing the US to unilaterally walk away.
This is not an issue confined to only Canada, the US and Mexico because, if successful, it may act as a template for the way the US proceeds with negotiations with other trade partners.
After decades of supporting China’s integration into the global economy, the US is now focused on disrupting commercial supply chains between Beijing and the US’ foreign partners. This drags previously uninvolved third parties into the dispute and limits their ability to pursue their own interests in trade.