Opportunity or Impediment? What the USMCA means for Canada’s trading relationship with China

With the USMCA in effect, Canada has entered a brand-new trade deal, with its counterparts, U.S. and Mexico. While this agreement is said to be an “opportunity” for the Canadian economy; firstly, by bringing more certainty in the Canadian business environment, and secondly, through strengthening trading relationships with the United States, it has its fair share of challenges.

Even though, Canada aspires to enhance its trading relationship with China, provision 32.10 in the agreement impedes Canada’s ability to engage in trade talks with China by setting forth requirements that any USMCA partner must satisfy before entering free-trade talks with “non-market economies” (i.e. China). With Canada’s strong trade-dependence on the United States, it is imperative that Canada diversifies its trading relations with fast-growing economies, such as China, which can create more jobs and improve incomes for Canadians. With China currently constituting approximately 33% of the global economic growth, it will be interesting to see how Canada sets its diversification strategy to work without pursuing China as a key trading partner.

©2020 by Centre for Global Enterprise

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