When news of a bilateral agreement between the US and Mexico was announced, with the expectation that Canada would join, we notedthat several clauses were pointedly aimed at giving China market access. This week, Canada agreed to joinNAFTA 2.0 (or what the US administration is insisting on calling the "United States-Mexico-Canada Agreement"), and there text of the agreement was revealed, in order to comply with the US fast-track (“trade promotion”) ratification law.
Japan has applauded that the agreement would allow the auto companies that have established supply chains in the Bajío and elsewhere to keep running.
Observers of China’s trade with the Western Hemisphere quickly zeroed in on clauses deep within the agreement, namely Article 32.10: Non-Market Country FTA:
1. At least 3 months prior to commencing negotiations, a Party shall inform the other Parties of its intention to commence free trade agreement negotiations with a non-market country. For purposes of this Article, a non-market country is a country that on the date of signature of this agreement at least one Party has determined to be a non-market economy for purposes of its trade remedy laws and is a country with which no Party has a free trade agreement...
4. Entry by any Party into a free trade agreement with a non-market country, shall allow the other Parties to terminate this Agreement on six-month notice and replace this Agreement with an agreement as between them (bilateral agreement).
While not named, the phrase “non-market country” reads as “China,” which the US and EU have so far not let the World Trade Organizationdesignate as a "market economy." Canada-based observers see the agreement as limiting the Great White North’s ability to deepen trade with China: “The USMCA has an axe to grind — what does this mean for the future of the Sino-Canadian trade?” (美墨加协议藏杀机 加中贸易前路更难). Juan Pablo Castañón, head of Mexico’s Business Coordinating Council (CCE) noted that in agreeing to stick with NAFTA, Mexico was “slamming the door” on a Free Trade Agreement (FTA) with China. Even Russian propaganda outlet Sputnik is piling on: 俄罗斯专家：美国企图建立全球反华经济联盟("Russian expert: U.S. attempt to establish a global anti-China economic alliance”).
So is this a dagger "aimed" by the administration of US President Donald Trump at China’s growing global economic presence? Certainly Trump and his team think so.
Which brings us to the question: Was there ever that big of a door to open between China and Mexico? Fierce competitors in the global value-added manufacturing chain, beyond Mexican oil and increased Chinese interest in avocados, they never had much to export to each other. So while Mexico had been exploring an FTA with China, it was more casting about in desperation in case Trump blew up NAFTA than looking for a large new market. Former Mexican Ambassador to China Jorge Guajardo summed it up best:
Regarding the non-market economy clause on the NAFTA Agreement, the biggest winner with this is Mexico. Of the 3 partners, Mexico’s economy is the least complimentary with China. We were the most displaced when China joined the WTO. We have no interest in entering a FTA w China.
While many have noted the similarities of the improvements of NAFTA to TPP clauses that had been spurned by Trump, the article represents a hardening of trade stances against China. As former US treasury official Brad Setser notes:
TPP countries agreed to liberalize trade among themselves (which in some cases thanks to the liberalization of the rules of origin would have meant new opportunities for China too), not to coordinate any actions v China. personally think that is an important distinction
Many have hoped that the US would eventually pursue a more pragmatic route and rejoin the TPP, which could provide a framework for China to fully-integrate into a rules-based system if it chose. This clause gives the US a say over the trade relations of three of the world’s biggest economies. Refusing to give up that leverage this could close the door on the US ever joining the TPP.
China offers rescue package for Argentina and Macri— Bloggings by Boz
Argentina says it’s close to the $9b dollar swap deal with China, which couldn’t come soon enough for the BCRA.
Energy is humming.Mexico says that energy reform and the US-China trade spat are leading to $161b being invested in the country. Separately, subsidiaries of China’s CNOOC and CNPC, as well as Qatar’s QPI bid on four areas of Brazil’s Pre-salt fields last week, part of an auction expected to general an extra R$6.82b ($1.74b) in addition income.
Liquid Natural Gas keeps keeping the new Panama Canal feeling warm and toasty, with a record four LNG ships crossing in a single day, heading from the Gulf of Mexico to South Korea, Japan, and Chile. But the Colón Free Trade Zone still struggles with recovering from the effect of Colombia’s tariffs on re-exported goods.
EEUU-China: El contraste no ayuda— El Heraldo de México
China y Estados Unidos llevan su diplomacia naval a América Latina— Economía y Negocios
China en América Latina, según EEUU— La Haine Mundo
China and the US continuing their sparring, with more details on efforts by the US to push around Central American countries that have done what the US did in recognizing Beijing, and the IMF’s Christine Lagarde weighs in.
China — LAC
驻秘鲁大使贾桂德在国庆招待会上的讲话— Ministry of Foreign Affairs
Ambassador Jia Guide’s comments on Peru-China relations at his embassy’s China National Day event: "We will take advantage of of the opportunities of the “Belt and Road” in Latin America, to push bilateral relations to a new level.”
Beijing And The Bahamas - A Developing Story— Tribune 242
Chinese Ambassador to the Bahamas Huang Qinguo pens an op-ed extolling the benefits of the Beijing-Bahamas bilateral relationship.
A great survey from the Boston College team of how Chinese policy banks are driving infrastructure construction in the Andean Amazon.
Comercio entre Perú y China alcanza los US$ 11,500 millones— Agencia Andina
Peru is gearing up for a trade deal with China, which they hope to get done by 2020. Trade is already up to $11.5b for the first half of 2018.
Argentina is cutting tariffs on shoe inputs from 15% to 35% in the wake of storied firm Alpartgatas closing two shoe factories. The government expects this will close the cost of making shoes in Argentina over in China from $6-8 per pair to $1-2 per pair.
El espejo chino en América Latina— Panamá América
An academic looks at how countries in Latin America need to learn from the China model to spur economic growth.
Peru is looking to overtake Chile in copper production, driven by demand from China.
Especial de TTC: Aumenta el interés de China en América Latina y el Caribe— Travel Trade Caribbean
Everyone in Latin America is looking to get a slice of the 130m international Chinese tourists a year.
Etchevehere concluyó su visita a China— MDZ Online
Argentina Agriculture Secretary Luis Miguel Etchevehere traveled to China this week to keep pushing open the door to Argentine products.
Relación con China impulsará crecimiento en 2019, según BCR— Diario El Mundo
El Salvador expects increased trade relations thanks to bilateral diplomatic recognition with Beijing to increase 2019 growth to 2.6%.
China Railways has landed a S/1.2b ($375m) deal to improve a highway in Peru’s Huánunco.
Peru is looking to raspberries to be its next breakout specialty food.
Argentina expects to see beef exports open up the Chinese market.
The silver lining of a currency crisis is that now Argentina is well positioned as China’s cheapest source of soy.
BYD has officially closed the deal to supply 100 electric buses to Transantiago.
Agricultura asegura precio del arroz se mantiene estable desde hace 12 años— Periódico el Dinero
The Dominican Republic is looking to benefit from rice exports to China.
Concerns about the deal with China Harbour to build a dry dock in La Brea still swirl.
Korea — LAC
‘Chile-Korea commerce clear sailing with revised FTA’— Korea Herald
The Chile-Korea FTA is well on its way to becoming an FTA 2.0
Japan — LAC
AMLO’s planned energy review is starting to have bite.
Chile is pushing limes in Japan.
Gobierno japonés apoya diversos proyectos educativos en el Perú— Panamericana Televisión
Japanese government supports education projects in Peru.
India — LAC
A report from the 8th India –LAC Conclave in Santiago.
India eyes rupee-route, barter for Venezuelan crude— The Hindu Business Line
India is playing footsie with the Maduro regime to get more oil.
GCC — LAC
Ambassador Ahmed Hatem Al Menhali met with Mexican business to promote bilateral trade and investment.
Emir Tamim bin Hamad Al-Thani visited Ecuador, Peru, Paraguay and Argentina this week.