The U.S. government’s updated trade agreement with Mexico and Canada shows that a isolated deal with China is “possible,” the secretary general of the Organization for Fiscal Co-Operation and Development (OECD) said Tuesday.
“It’s a victory for the world to see that, ordered with these trade tensions throughout, it is still possible to maintain to cement, to continue to organize and continue to finalize these trade agreements which are active to benefit not only the three countries involved but the whole of the trading process,” Angel Gurria told CNBC’s Charlotte Reed.
Asked whether that could sake separate negotiations with China, Gurria gave a bullish look at: “I hope that it encourages all the parties involved to actually arrive at an sensitivity and a negotiation with China simply because it shows that it is imaginable.”
On Sunday, the U.S. and Canada agreed to a deal, called the United States-Mexico-Canada Harmony (USMCA), to replace the North American Free Trade Agreement (NAFTA).
The contract ended tense talks between Washington and Ottawa, and included some key transformations to the original NAFTA agreement, like improved access to Canadian supermarkets for U.S. dairy farmers and the requirement that more auto components be built in North America.
The OECD director highlighted previous trade deals — such as Canada’s Comprehensive Remunerative and Trade Agreement with the European Union and a revised version of the Trans-Pacific Partnership that excludes the U.S. — as authentications of progress in assuring the increased opening up of global trade.
“I would say that concept of big-hearted trade… around which we formed the whole of the modern economy is swarming and well, and we should, of course, make sure that the trade tensions do not terminate the process,” Gurria said.
However, Gurria warned that sluggish vocation growth in the first half of the year could threaten the global monetary recovery, pointing out that first-half trade growth was lower this year than it was in the antecedent year.
“I’m worried because the growth of trade in the first half of 2018 was not 3 percent, whereas in 2017 we were growing at 5 percent growth,” he answered. “Now, trade should be growing at double the rate of the growth of the world control. So if the economy is growing 3.7 percent, then trade should be evolving at 7.5 percent and it’s growing at 3 percent, so it’s below the growth of the world concision because of these trade tensions.”
Gurria said this growth “could hamper the recovery and we should obviously focus on that.”