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Universal Journal of Finance and Economics
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  5. Volume 3, Number 1, 2023
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  7. Table 5

Is a Mexico-China Competition Emerging in US Supply Chains? A Comparative Perspective

Table 5.

The “PoisonPill" in the US-Mexico-Canada Agreement
Paragraph Number Content
1 For this Article, non-market country is a country:(a) that on the date of signature of this Agreement, a Party has determined to be a non-market economy for purposes of its trade remedy laws; and(b) with which no Party has signed a free trade agreement.
2 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.
3 Upon request of another Party, a Party intending to commence free trade negotiations with a non-market country shall provide as much information as possible regarding the objectives for those negotiations.
4 As early as possible, and no later than 30 days before the date of signature, a Party intending to sign a free trade agreement with a non-market country shall provide the other Parties with an opportunity to review the full text of the Agreement, including any annexes and side instruments, in order for the Parties to be able to review the Agreement and assess its potential impact on this Agreement. If the Party involved requests that the text be treated as confidential, the other Parties shall maintain the confidentiality of the text.
5 Entry by a Party into a free trade agreement with a non-market country will allow the other Parties to terminate this Agreement on six months’ notice and replace this Agreement with an agreement as between them (bilateral Agreement).
6 The bilateral Agreement shall be comprised of all the provisions of this Agreement, except those provisions that the relevant Parties agree are not applicable as between them.
7 The relevant Parties shall utilize the six months’ notice period to review this Agreement and determine whether any amendments should be made in order to ensure the proper operation of the bilateral Agreement.
8 The bilateral Agreement enters into force 60 days after the date on which the last party to the bilateral Agreement has notified the other party that it has completed its applicable legal procedures.

Note: Using the “Poison Pill," the USMCA de facto forbids Mexico from Commencing a free trade negotiation with a non-market Economy, such as China; Source: Article 32.10: Non-Market Country FTA in “Agreement between the United States of America, the United Mexican States, and Canada 7/1/20 Text.” https://ustr.gov/sites/default/files/files/agreements/FTA/USMCA/Text/32_Exceptions_and_General_Provisions.pdf