Trade Deals around the World: July Edition
Trade Deals Around the World is our monthly recurring update, which gives you a quick and easy update on what has been happening in the many trade deal negotiations going on around the world.
With more countries returning to a (new) normal state of business, the focus will be shifting again from solving the internal COVID-19 crisis to international trade. If there is one country where trade deals are top of mind at the moment, it is the United Kingdom.
The United Kingdom and the European Union
In our two latest Brexit Updates we already wrote about what the biggest hurdles in the negotiations are, and what the next steps are now that the deadline for requesting an extension to the transition period has ended. Read more here:
Four Years Since Brexit: Where Are We Now?
The Extension Deadline Has Passed. What's Next?
The United Kingdom and the United States
Negotiations between the United Kingdom and the United States are also full of challenges. According to SKY News the biggest hurdles are:
Digital Service Tax: a recent tax which recently came into operation and which taxes social media platforms (Facebook, Twitter), search engines (Google), and online marketplaces (Amazon)
NHS: Trump may demand higher prices for drugs being exported to the UK
Food standards: Fears of chlorine-washed chicken and hormone-fed beef entering the UK
Climate: the UK wants to be carbon neutral in 2050, the US has nog such plans
The United Kingdom and Canada, or the Pacific Trade Pact
In six months the free trade deal between the United Kingdom and Canada expires, and instead of renegotiating or extending that deal, the United Kingdom has indicated it intends to join a trade agreement that Canada is already a part of: the Comprehensive and Progressive Trans-Pacific Partnership.
Canada was one of the original countries to ratify and implement the CPTPP, which in 2018 began to cut tariffs and introduce common standards among the six members that have ratified the deal to date: Australia, Japan, Mexico, New Zealand, Singapore and Vietnam.
Brunei, Chile, Malaysia and Peru are also signatories to the agreement but have yet to ratify.
The United States was one of the original signatories to the deal but pulled out after President Donald Trump took office.
The current 11 members represent 13 per cent of global GDP. Adding the U.K. would bring that figure up to 16 per cent.
Additional members can join the CPTPP, subject to a defined accession process. Notwithstanding Tuesday's statement, the U.K. has not yet served its official notice to request negotiations toward membership, although informal talks with other CPTPP members have been underway for months.
Read more in this CBC article.
The United Kingdom and Japan
Negotiations with Japan have also started. If these negotiations are to be concluded successfully before the end of the year, there is a lot of work to be done. While some question the feasibility of this endeavour, the United Kingdom’s International Trade Secretary Elizabeth Truss is convinced it can be done.
The coronavirus pandemic has prompted the U.K. to reaffirm its commitment to free trade over protectionism, and it is reassessing global supply chains to ensure they are secure and diverse.
"The whole environment of coronavirus has shown how important it is that we work together, that we seek to lower the barriers to trade, that we seek to work with allies in areas like technology, in areas like manufacturing," Truss said.
She added that a trade deal with Japan would signal to the world that the answer to the current economic crisis is "not looking inward, it's actually reaching out across the world and working with like-minded partners."
Read more in this article on the Nikkei Asian Review website.
The United Kingdom and Australia and New Zealand
Australia and New Zealand are about to begin negotiations on a free trade agreement with the UK in what the Australian trade minister said was “a strong signal of our mutual support for free trade” in a post-Covid-19 world.
“As the UK embarks on its next steps post-Brexit, New Zealand is pleased to be among the first countries to negotiate a trade agreement with one of our oldest friends,” Parker said.
New Zealand and Britain had “a close relationship, including strong trade and economic ties, common values and traditions and a shared history”, he said.
The new talks come at a time when Australia is also negotiating a trade agreement with the European Union. Birmingham described the EU as “a massive high income market of almost 450 million people and as a bloc it’s already Australia’s third-largest trading partner and our third largest source of foreign investment”.
Asked whether the UK or EU trade deal was a higher priority for Australia, Birmingham said: “I don’t have any favoured children in that regard – I want to love them both equally.”
He acknowledged that the EU was a much bigger market than the UK but he said the latter was also significant, and had a bigger economy than Australia’s.
Read more in this article by The Guardian.
The European Union and Mercosur
With the voting down of the Mercosur trade deal by the Dutch parliament, there is a threat on the horizon for other trade deals, according to the ING Bank
The fact that even a typical outward-looking trading nation such as the Netherlands turns more and more away from negotiated free trade deals, shows how the anti-free trade movements in Europe have gained popularity in Europe over the last five years which started with successful campaigns to stop trade and investment negotiations with the US.
Read more here.
More News on the European Union and Trade Agreements:
The European Union and Mexico have completed the last stage of negotiations for a new trade agreement. The negotiation was started in 2016 and will probably enter into force some months from now, as the text needs to be approved by the Council and Parliament.
Vietnam’s parliament unanimously approved a free-trade agreement with the European Union that will scrap almost all tariffs on goods traded between the bloc and the Southeast Asian country.
Read more: Vietnam’s National Assembly Approves New Trade Deal With Europe
China and the European Union have not changed their goal of concluding talks regarding the EU-China Comprehensive Agreement on Investment in 2020, set after the 21st China-EU leaders’ meeting in Brussels last year, the Ministry of Commerce said on June 4.
Read more: China-EU trade deal still on track
The US may slap new tariffs on $3.1 billion of exports from France, Germany, Spain and the UK, escalating a trade battle with Europe as the UK’s top trade official ripped the Trump administration for “talking a good game” on free trade while restricting import access.
The new tariffs would affect the price of everything from imported aircraft to French cheese, British gin and German beer, Bloomberg reported Wednesday.
Read more: US threatens new tariffs on European imports amid escalating trade war
“If Georgia wants to implement a Free Trade Agreement with the European Union faster, we are ready to do so,” Oliver Varhelyi, European Commissioner for Neighborhood Policy and Enlargement told Georgian First Channel, Trend reports.
Read more: European Commissioner: If Georgia wants to implement a Free Trade Agreement faster, we are ready to do so
Other Trade Agreements
Chinese officials recently expressed “strong dissatisfaction” with U.S. sanctions that came in response to a new national security bill on Hong Kong, warning that crossing “red lines” and meddling in what China considers its own internal affairs could put the trade deal at risk, The Wall Street Journal first reported on Friday.
Read more: China Warns U.S. ‘Meddling’ In Hong Kong Could Derail Phase One Trade Deal
Thailand has set up a committee to consider by mid-July whether the country should join a trans-Pacific free-trade agreement, as opposition parties and some business groups say membership could harm the farm and healthcare sectors.
Read more: Thailand to consider membership of trans-Pacific trade partnership
Kenya's president says talks on trade deal with U.S. delayed