Even as Prime Minister Mark Carney basks in adulation from his Davos speech proclaiming the end of the globe’s “rules-based order,” he is trying to maintain a North American continental trade pact — a treaty which itself is based on international law.
This contradiction — and the confused posturing around the Canada-U.S. trading relationship that has followed Carney’s outing on the world stage — highlight a stark fact: even as multilateral institutions decline, the rule of law itself remains a key instrument to guide interactions between nations. The prime minister ought to take note.
The much vaunted “rupture” in the international order that Carney spoke of — embodied notably in U.S. President Donald Trump’s declaration that he does not feel bound by international law — has been a tough pill to swallow for international lawyers.
During his visit to Beijing, Carney declared that Canada had reached “a preliminary but landmark trade agreement” with China, only to walk this back the following week once Trump threatened to impose a 100 per cent tariff on all Canadian goods in response.
Carney now insists Canada has no intention of signing a trade agreement with China, rightly acknowledging that doing so could violate the Canada-United States-Mexico Agreement (CUSMA).
It’s not clear whether Carney knew that his remarks about an “agreement” would invoke Article 32.10 of CUSMA, sometimes known as the “China Clause.” This article requires CUSMA parties to notify each other if they are entering into trade agreement negotiations with a non-market economy.
CUSMA parties are allowed to review the full text of any such agreement and, should they wish, terminate the CUSMA on six months’ notice as a consequence. In short, Canada, the U.S. and Mexico are forbidden from entering a trade agreement with China without the others’ permission.
In addition to geo-strategic national security concerns, the reason for the China clause is that the U.S. in particular does not wish to become a dumping ground for cheap Chinese inputs channelled through its preferential trade agreement partners.
Tight rules of origin in the CUSMA also help address this issue by ensuring a sufficient component of composite goods crossing the Canada-U.S.-Mexico borders was actually made in one of the three countries and not elsewhere.
However, the arrangement that Carney achieved in Beijing is not — nor was it intended to be — a “free trade agreement” that would trigger Article 32.10. Rather, what emerged was a narrow set of reciprocal tariff relief commitments, notably on canola oil and electric vehicles.
The confusion appears to have arisen in part because, in recent years, the terms “agreement” and “deal” (a word which Trump tends to favour, as in the title of his famous book) are used interchangeably. But the phrase “trade agreement” has a distinct meaning in international trade law.
Under the World Trade Organization (WTO)’s Most Favoured Nation (MFN) principle — whereby all members of the WTO community get equal tariff treatment — preferential trade agreements must satisfy certain conditions. The most significant of these is that they must cover “substantially all trade” between the partner countries. This means that unless the agreement is comprehensive, across all or nearly all sectors, then it doesn’t count as a WTO-certified free trade agreement.
What Carney negotiated in Beijing, much as what Trump agreed with China President Xi Jinping a few months ago, are better described as “accords.” In the case of slightly more ambitious ones, they may be called “strategic partnerships,” such as the U.K.-U.S. Economic Prosperity Deal. The word “deal” could be used too, but its ambiguity risks fomenting misunderstandings, as would seem to have happened here.
It is not entirely clear why Trump originally appeared unfazed by Canada’s trade mission to China, only to change his mind later. U.S. Trade Representative Jameson Grier had cautioned at the time that Canadian trade negotiations with China could jeopardize the CUSMA’s 2026 renegotiation because of the risk of Chinese inputs finding their way into the U.S. through Canada. Perhaps Trump consulted with Grier after the fact and this changed his mind.
Or it may be, as some have suggested, that Trump was resentful for Carney stealing the spotlight from him at Davos, which itself is debatable.
Here’s the bottom line: even as international law is being dismissed in some circles as irrelevant, countries still need international treaties, like free trade agreements, as well as their lesser cousins — deals, accords and agreements in principle — so that they get along with their neighbours and prosper.
When it comes to trade agreements, as with all treaties, precise language is important. These instruments need to be negotiated by specialized lawyers and interpreted by experienced arbitrators if challenged.
While the international “order” embodied by multilateral institutions like the UN and the WTO itself may be in decline, nation states will continue to interact with each other, hopefully peacefully. For this, the rule of law remains indispensable.
I disagree with your premise that PM Carney is using loose language with his agreement with China. Mark Carney is a man who speaks so precisely and chooses every word so carefully that some people describe him as dry or boring. He and his team went to China and negotiated a solution to a serious trade issue. They ended up with what Carney described as “Friendly Nation trade tariffs”. A further proof Craney chooses his words extra carefully is that if you closely examine , the three main public statements Carney made in China, Quater, and Davos, you will find that they could have been the first, second and third sections of one large speech. The general theme flowing through the speeches, is that Trump has upset that the world order by disregarding the international rule of law between nations ,and has with no respect for individual sovereignty (Venezuela, Greenland, Canada) . Regarding CUSMA & NAFTA , Canada as a nation survived for 125 years without it and can do so again if necessary. The most vocal group reliant on CUSMA are the number of Canadian businesses that have become lazily dependant on CUSMA from having the majority of their product sales going solely to the US. So the question is that Canada as a nation is suppose to bend over backwards to maintain CUSMA so a number of business can continue to get rich off of it.