Trade Deals Around the World: August Edition

Trade Deals Around the World: August Edition

Kelsey Schenk - Marketing Officer
Kelsey Schenk
Marketing Officer

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.

Summer is in full swing, and many people are on Summer break, or are about to go on one. For some negotiators there will be no breaks this summer. This holds especially true for those in the United Kingdom and the European Union. With the clock ticking, both parties are working hard to see if a trade deal can still be reached.

In this edition I will not go into any deals related to the United Kingdom. I’ve recently updated you on both the negotiations with the European Union.

The United Kingdom and Japan

At the time of our last update on negotiations between these two countries negotiations weren’t going that well, but good progress has since been made.

Bloomberg reports:

An agreement in principle is expected in coming weeks, according to a person familiar with the U.K. side of the talks, who asked not to be identified because the negotiations are private. The discussions haven’t yet concluded, and some issues still need to be resolved, the person added.

Trade between Britain and Japan was valued at more than 39 billion pounds ($51 billion) last year, and Japan is the U.K.’s eleventh-largest export market globally. When talks started in June, U.K. International Trade Secretary Liz Truss said she wanted to go beyond the EU’s existing deal and bolster trade in digital services and data.

Read the full story here.

The European Union and Vietnam

The Free Trade Deal between the European Union and Vietnam has entered into force on August 1st.

The European Commission writes:

EU exports to Vietnam will be taxed less as of tomorrow, 1 August. This is the immediate effect of the entry into force of the EU-Vietnam trade agreement that will ultimately scrap duties on 99% of all goods traded between the two sides. Doing business in Vietnam will also become easier for European companies: they will now be able to invest and pitch for government contracts with equal chances to their local competitors. Under the new agreement, the economic benefits go hand in hand with guarantees of respect for labour rights, environment protection and the Paris Agreement on climate, through strong, legally binding and enforceable provisions on sustainable development.

Read the full European Commission Press Release here

 

The United States and China

While China is trying to fulfil its end of the deal by buying a lot of American corn, Trump is on a different path.

China made its largest one-day purchase of US corn on record on Tuesday, its second massive purchase for the agricultural staple in less than a week as it tries to comply with its deal with America.

China on Friday increased its corn and soybean import forecasts for the current season, as the country is expected to step up purchases from the US.

Read the full story here

Forbes reports on Trump's unwillingness to move forward with the phase two negotiations.

President Donald Trump told reporters on Friday that he isn’t even considering a phase two trade deal with China, saying that the relationship between the two countries has been “severely damaged” by the coronavirus pandemic. 

Trump’s comments come as the countries continue to clash on a wide range of issues: The president has blamed the Chinese government for failing to contain the coronavirus outbreak, while U.S. lawmakers have also increasingly pushed back on China increasing its grip over Hong Kong.

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“They could have stopped the plague, they could have stopped it, they didn’t stop it,” Trump said on Friday about China’s handling of the pandemic. 

Read the full story here.

China responded a lot more subtly.

China said on Thursday it will stick to the Phase 1 trade deal it reached with the United States earlier this year but warned that it will respond to “bullying” tactics from Washington, as relations continue to deteriorate.

The New York Times reported that the United States is considering a travel ban against all members of China’s ruling Communist Party, a move that would further strain an increasingly confrontational relationship.

Hua told reporters during a daily briefing that such a ban, if true, would be “pathetic.”

Asked whether the recent sanctions imposed by Washington will impact the trade deal, Hua told reporters that China hopes the agreement can still be implemented.

 

The Asia-Pacific Trade Pact

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), also known as TPP11 or TPP-11, is a trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. It evolved from the Trans-Pacific Partnership (TPP), which never entered into force due to the withdrawal of the United States. At the time of its signing, the eleven countries' combined economies represented 13.4 percent of the global gross domestic product (approximately US$13.5 trillion), making the CPTPP the third largest free-trade area in the world by GDP after the North American Free Trade Agreement and European Single Market. 

(Source: Wikipedia

 

Thailand is considering joining CPTPP, but is not sure it wants to.

Thailand will take until September to study whether to join a trans-Pacific free trade agreement, potentially missing a window for entry this year amid widespread concern that joining the pact may harm its farm and healthcare sectors.

And China is also considering joining.

China is expressing an interest in joining the updated Trans-Pacific Partnership free-trade agreement, which was originally designed as the centrepiece of the Obama administration’s ‘pivot to Asia’, intended to cement a non-Chinese Asian regional group.

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China would derive many advantages from joining the grouping, but one of the most important is that regional supply chains are secured by the mutual tariff cuts and the rules of origin which require goods benefiting from those cuts to have been made from inputs largely sourced within the region.

This is also a benefit that flows from the other major regional trade treaty that is expected to be concluded this year, the Regional Comprehensive Economic Partnership, which includes Japan, South Korea, the 10 ASEAN nations, Australia and New Zealand. It reduces the US’s ability to disrupt the trade of high-tech goods with China.

 

Other News on Trade Deals

Ukraine and Egypt: Ukraine is initiating negotiations on Preferential Trade Agreement with Egypt

Ukraine and Turkey: Ukraine, Turkey to prepare Free Trade Area agreement

China and Cambodia: China, Cambodia Conclude ‘Mutually Beneficial’ Free Trade Agreement

India and the European Union: India-EU virtual summit to focus on limited trade deal, bilateral investment treaty

India and the United Kingdom: India in talks with EU for trade deal, open to pact with UK

Australia and Hong Kong: Calls for Australia to axe free trade deal with Hong Kong amid China crackdown

Taiwan and China: Taiwan Preps for Possible End to Landmark Trade Deal with China

The European Union and Mercosur: EU watchdog to probe trade pact with South American nations

Kenya and the United States: US and Kenya to begin negotiating free trade agreement

Kenya and the United Kingdom: Kenya, UK to negotiate post Brexit trade agreement