Trade Deals around the World: October Edition
Trade Deals Around the World is our monthly recurring update, which gives you a quick and easy overview of what has been happening in the many trade deal negotiations going on around the world.
Whether it is an effect of the pandemic or something else, we don’t know for sure. It has been relatively quiet on the trade deal front. Main players in this month’s edition are Japan, the United Kingdom, and the European Union of course.
The United Kingdom and the European Union
Negotiations are still ongoing. We are constantly keeping you up to date on what is happening with Brexit, through our Brexit news page. For those that missed the last updates:
The United Kingdom and Japan
Japan is the first country to reach a post-Brexit trade deal with the United Kingdom. The trade deal is for the biggest part a rollover of the trade deal the United Kingdom had in place with Japan under the flag of the European Union. According to Associated Press, there are also rollover deals in the works with Canada and South Korea.
Associated Press reports:
“The agreement we have negotiated — in record time and in challenging circumstances — goes far beyond the existing EU deal, as it secures new wins for British businesses in our great manufacturing, food and drink, and tech industries,” said Britain’s international trade secretary, Liz Truss, who pointed to concessions on English sparkling wine and Wensleydale cheese.
The government said U.K. businesses will benefit from tariff-free trade on 99% of exports to Japan and that it will give British businesses a gateway to the Asia-Pacific region. Overall, it said the deal with Japan, the world’s third-largest economy, will increase commerce with Japan by around 15 billion pounds ($19 billion) and deliver a 1.5 billion-pound boost to the U.K.
Skeptics say the deal with Japan is little different to the one already in place via the U.K.‘s former membership of the EU. They also say that nothing can mitigate the losses Britain would suffer in the event of a ‘no-deal’ outcome with the EU. Such a scenario would see tariffs and other impediments imposed on trade between the U.K. and the EU. Though both sides would suffer from the new barriers to trade, most economists think Britain would be hit disproportionately.
Read the full article here.
The United Kingdom and the United States
In September the United Kingdom and the United States held a fourth negotiating round.
The British Government writes:
In the fourth round, both sides continued to have detailed textual discussions, and negotiators are now in the process of consolidating texts in the majority of chapter areas.
Shortly before the fourth negotiating round both sides exchanged their first tariff offers, allowing a series of detailed market access discussions to be held during the round.
The exchange of tariff offers is a notable milestone, and the speed at which this stage has been reached demonstrates the momentum behind these negotiations.
The fifth round of talks is planned for later this month. The United Kingdom aims to have a trade deal in place by the middle of next year.
Read the full update by the British Government here.
In the meantime, the United States House Speaker Nancy Pelosi has warned the United Kingdom that there will be no trade deal with the United States if the Irish Pact is broken. This message comes after Boris Johnson launched his Internal Market Bill.
Mercosur and the European Union
The trade deal between Mercosur and the European Union has still not been ratified.
The European Union expects a clear commitment from Mercosur countries, particularly Brazil, that it will respect the sustainability issues included in the EU/Mercosur trade agreement before any deal is ratified.
This follows growing concern among EU countries, particularly Germany with the Brazilian government's environmental policy and the fires consuming the Amazon rainforest, under the administration of president Jair Bolsonaro.
Read the full article here.
Why Are There Trade Agreements?
Global Trade Magazine has published a nice article on why trade deals still exist. A short excerpt:
Trade agreements are not only about duty rates anymore; the collaboration and facilitation part is just as, if not more, important. That means trading partners make efforts to reduce the paperwork on the trade lane, give priority to incoming shipments, and collaborate on data exchange and simplification of procedures. In today’s economies, these elements are just as crucial as a few duty points. In addition to the facilitation, environmental clauses are included in new FTAs. Got to start somewhere. Customs unions (like the EU) take it one step further—they usually allow for goods to move freely between member states and have a single common tariff for the outside world.
Per the WTO, over 300 Regional Trade Agreements (RTA) are currently in force. This number only reflects agreements that include preferential duty rate schemes, as agreements such as bilateral investment treaties or Joint Commissions would increase this number two- or three-fold.
Read the whole article here.
Other News on Trade Deals
- Chile seeks to resume FTA negotiations with South Korea
- Iran, Azerbaijan hold talks to sign preferential trade agreement
- Canada drops free trade talks with China
- Ukraine, Turkey restart free trade agreement talks
- Switzerland gets ready to vote on ending free movement with EU
- China Makes Slow Progress on U.S. Trade Deal as Purchases Slide