US ready to squeeze China partners with ‘poison pill’ trade deals
Commerce Secretary Wilbur Ross says veto clause in deal with Canada and Mexico is ‘logical’ and could be added to future agreements
The United States is ready to add a “poison pill” to future trade agreements, aimed at exerting pressure on China, US Commerce Secretary Wilbur Ross said on Friday.
Ross said the “poison pill” provision in the recently completed pact with Canada and Mexico could be replicated with additional trading partners to pressure China to open its markets.
Under the provision in the United States-Mexico-Canada Agreement (USMCA), if any of the three countries enters a trade deal with a “non-market country” – as China has been described – the other two are free to quit in six months and form their own bilateral deal.
The effect is to give Washington a veto over Canada and Mexico’s other free-trade partners to ensure they are governed by market principles and lack the state dominance that is at the core of President Donald Trump’s tariff war against China.
“It’s logical, it’s a kind of a poison pill,” Ross said.
The US is now in the early stages of talks with Japan and the European Union to lower tariff and regulatory barriers and try to reduce its large trade deficits in autos and other goods.
