Trump is writing a most favored nation clause that nobody signed
Trump is writing a most favored nation clause that nobody signed
Trade agreements are bargains. President Trump seems to think the United States should get the benefits of other countries’ bargains. But if countries expect Washington to claim the best concessions later without paying for them, they have every reason to offer less in the first place, including to American negotiators.
That idea connects two unrelated fights with Brazil and Canada. In both, Washington objects that other countries give some trading partners better treatment than they give the United States. It increasingly calls that difference “discrimination”.
Start with Brazil. Brazil, independently and through Mercosur, has “partial scope” trade agreements with Mexico and India. Those lower tariffs on select products, meaning Mexican and Indian exporters sometimes pay lower Brazilian tariffs than their American competitors.
The U.S. Trade Representative made these “unfair, preferential tariffs” part of its Section 301 investigation of Brazil, complaining that Mexico receives preferences on more than 1,000 tariff lines and India hundreds more.
Partial-scope agreements sit awkwardly in the trading system, and Congress has long questioned whether they satisfy the World Trade Organization requirement that free trade areas cover “substantially all trade.” But Washington’s argument goes further, claiming that American exporters are disadvantaged because somebody else negotiated better treatment.
Now consider Canada. Canada has its own trade agreements. Under the Canada-European Union Comprehensive and Economic Trade Agreement, Europe negotiated preferential access for cheese. The United States negotiated a different dairy package under the United States-Mexico-Canada Agreement (USMCA).
Yet, in invoking Section 338 of the Tariff Act of 1930 against Canada, Washington has cited more favorable treatment for........
