When Mexico and later Canada signed the new United States-Mexico-Canada Trade Agreement (USMCA), it represented more of a capitulation to Donald Trump than a genuine new era of NAFTA, the now expunged agreement between the three North American nations that was originally ratified in 1994. While the USMCA forces Canada and Mexico to receive more US agricultural products than they were previously required to do while also putting some restrictions on the exports of finished industrial goods to the US, there is one clause to the USMCA that should be worrying both Mexican and Canadian policy makers but which has thus far received little attention in the North American media.
According to the new agreement, both Mexico and Canada must consult with the United States and effectively ask permission before entering into new trading agreements with any country outside of North America. While this clause represents a degrading assault on the sovereignty of Mexico and Canada, for practical purposes the target of this clause is China, a nation that in recent years has developed an ever more intensely positive relationship with Mexico in particular.
Yang Yundong, the spokesman for the Chinese Embassy in Canada has condemned this clause in a public statement, calling the clause in question a “dishonest move” that was clearly aimed at retarding the progress of Chinese economic partnerships with both Canada and Mexico.
While Mexico’s burgeoning relationship with China has been viewed by many Mexicans as a golden opportunity to diversify and expand their economy, there were always obstacles in the way of such a partnership due to prevailing geographic and geopolitical circumstances revolving around Mexico’s economic relationship with the USA.
The USMCA however represents a clear attempt by the US to artificially meddle in the relations of Mexico and Canada with third parties. While the geography of North America automatically ties the USMCA partners together, the trade agreement should serve as a warning to China’s Asian and particularly its African partners regarding the dangers of being trapped in a US partnership in which one’s national sovereignty is eroded and from which exculpation is no easy task.
While the US seeks to reel its partners into an effectively closed economic system that does not allow for nations to consider the US one of many economic partners, China’s relationship with its partners is based on the principles of unalienable sovereignty, respect for local economic aspirations and challenges and a deep understanding of a nation’s historical and cultural characteristics.
Thus, while the US falsely claims that Belt and Road partnerships with China are “debt traps”, the only traps one sees in geo-economic partnerships are those which the US attempts to instigate among its partners. The Belt and Road “debt-trap” myth is flawed not only in terms of the fact that it is based on exceptions which prove the rule that most Chinese projects throughout Asia and Africa result in win-win outcomes for both parties, but the myth is also flawed in the sense that it fails to grasp real world realities beyond the ideological and purely theoretical. In life like in geopolitics there is no such thing as a free lunch. While China is more generous in terms of loans, investments and cash injections than most other wealthy nations, it is not in any nation’s interest to rebuild entire continents without getting anything in return.
In this sense, China is engaging in normal business practices that are international standards when it comes to expecting to be paid back on loans that it readily gives to nations aspiring to further develop their economies and infrastructure and does so at levels that are history making in terms of their forward thinking generosity. Of course, instead of offering loans and other investment schemes or otherwise giving away money for free, China could simply come to a foreign state, build infrastructure and keep 100% of the profits from such projects forever more. This however would totally exclude China’s partner nations from the project and would amount to little more than soft imperialism.
Instead, China seeks to cultivate win-win partnerships by including the partner nation in question at all stages of a joint project. In this sense, China is willing to share the benefits and the responsibilities as is normal in a genuine partnership of any kind. Implicit in such relationships is the reality that every now and then one side will negate some of its responsibilities. In the case of Sri Lanka, the government simply bit off more than it could chew and in agreeing to take over Hambantota port, Beijing actually saved Colombo both money and grief.
While Sri Lanka clearly did not think ahead before signing the final agreements regarding Hambantota, the fact is that the port is there and being run by Chinese operations means that it is nevertheless still bringing added value to the Sri Lankan economy. Even if for example China took operational control/ownership of Zambia’s international airport (as was recently falsely reported in multiple fake reports from African media), China would still be working towards making Zambia’s airport more functional and attractive. It goes without saying that having a functional and attractive airport brings added value to any economy irrespective of who owns the airport. This is for example true of England’s Heathrow airport which is operated by a company originating in Spain.
The fact of the matter is whether a Chinese project in a foreign nation goes well (as such things typically do) or whether they require some sort of reassessment as many kinds of projects throughout the world do, China is always blamed by those sowing Sinophobic narratives when in reality China is engaging in normal business practices yet tends to be hated by those infected with a zero-sum mentality because China tends to have a larger success record in foreign infrastructure projects than do rivals including the US and India.
Another problem that arises is that when nations take a step back from deals with China to reconsider – something Sri Lanka clearly did not do though it very well could have done, China absolutely gets the blame here too from those who see the world through a zero-sum prism. When Malaysia’s Prime Minister Mahathir Mohamad looked to suspend some of the vanity projects that his corrupt predecessor Najib Razak agreed to begin building with Chinese companies, he was, according to some hyper-Sinophobic media outlets “Standing up to China”. In reality he was simply revising business deals the way the new head of a private company would do so with a partner company after taking over from a failed predecessor. There was no anti-China malice in Mahathir’s revisions of deals – just normal business practices.
When understood holistically, it becomes clear that Sinophobic governments and media outlets tend to blame China no matter what it does, even when Beijing works to secure bespoke deals on a win-win model with any willing and able partner. The fact that China requires partners to exercise joint responsibility in exchange for sharing in the joint success of a project is in fact the opposite of exploitation – it is geo-economic empowerment. Ironically, those who criticise China the most are those whose records of partnerships with developing nations have been the most historically scandalous.
Thus, while China offers its partners the empowerment that comes with both shared wealth and shared responsibility in projects for sustainable economic development, the US clearly looks down upon its partners by forcing them into deals which strangulate their sovereignty. The sad reality is that both Mexico and Canada are less robustly sovereign nations today than they were just months ago.