Trade Deals Around the World: September 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.

Summer is coming to an end, which means most businesses are back at full capacity. The same goes for the trade deal negotiators it seems. In this month’s overview a lot of stories of negotiations that didn’t go as well as hoped, or deals that have been postponed. Let’s start with those, so we can end on a positive note.

The European Union and the United Kingdom

One of the biggest negotiations going on at the moment is the negotiation of the Trade Agreement between the European Union and the United Kingdom. Interestingly enough both sides are giving off opposing messages.

The BBC reports on the view of the UK on the trade agreement:

The UK still believes it can agree a post-Brexit trade deal with the EU next month, according to Downing Street.

The PM's spokesman said UK negotiators would "continue to plug the gaps" when talks enter their seventh round in Brussel...

The two sides remain divided over competition rules, fishing rights and how a deal would be enforced.

The UK has ruled out extending the December deadline to reach an agreement.

Read the full story here.

Time is running out, as the European Union has indicated that a deal needs to be agreed on before the end of October. November and December are necessary to get the agreement ratified by all 27 European Union member states before the transition period ends on December 31st 2020.

The BBC reports on the view of the European Union on the trade agreement:

A post-Brexit trade deal between the UK and the EU "seems unlikely" at this stage, the bloc's negotiator has said.

Speaking after the latest round of talks, Michel Barnier said he was "disappointed" and "concerned".

His UK counterpart David Frost spoke of "little progress", amid differences on fisheries policy and state aid rules.

In a statement released after the seventh round of talks, Mr Frost said the EU had made it "unnecessarily difficult" to make progress by insisting that differences over state aid and fisheries have to be resolved before "substantive work can be done in any other area of the negotiation, including on legal texts".

It looks like companies may need to get ready to start trading with the United Kingdom under WTO terms, which mean high tariffs for the trade between the United Kingdom and the European Union. The WTO terms will enter into effect if the two parties don’t reach an agreement before the end of the transition period.

The United Kingdom and Japan

At the beginning of August, it was still expected that Japan and the United Kingdom would reach a trade agreement before the month was over.

“We agreed to accelerate talks with an aim of reaching an outline agreement by the end of August,” Japanese Foreign Minister Toshimitsu Motegi, who is in London for talks, told reporters in an online briefing.

Read the full story here.

It would be the first big post-Brexit trade deal that Prime Minister Johnson would have managed to agree on. Unfortunately, things took a turn at the end of the month. Despite having reached an agreement in most areas, the talks have stalled over blue cheese.

Business Insider reports:

The United Kingdom’s negotiations with the Japanese government over a post-Brexit free trade agreement have reportedly stalled because Britain wants to sell the Asian nation more blue cheese.

UK and Japanese negotiators were close to finalizing an agreement last week but talks encountered an obstacle in UK Trade Secretary Lizz Truss’ desire for Britain to export more Stilton cheese to Japan as part of the deal…

Japanese negotiators have argued that Tokyo’s new deal with the UK cannot go further than its existing agreement with the EU as the latter is a much bigger trading partner of 27 economies, compared to the UK alone.

Read the full story here.

The deal is not off, but another round of negotiations is now in place, leading to a short delay.

The Japan Times reports:

The Japanese and British governments stopped short of reaching a broad accord on a new bilateral trade deal on Friday, citing the need for further negotiations on how to handle Japanese tariffs on British blue cheese.

Foreign Minister Toshimitsu Motegi and British International Trade Secretary Liz Truss had considered holding talks on Friday to clinch the deal via videoconference, but the meeting was postponed. Japan and Britain now aim to reach an agreement by the end of September, after holding working-level talks.

Read the full story here.

The United States and China

Another negotiation that has been going on for some time has hit a bump. The United States and China had already reached a ‘first phase’ agreement earlier this year. China is still working on fulfilling its part of the deal, while the United States seems reluctantly moving forward with the talks. There is more at stake than China spending money on American goods.

CNBC reports:

The U.S.-China trade deal is more than just about buying more American goods, said a former top White House trade negotiator on Friday.

“There is a whole structural side to this deal and on the structural components, whether it comes to intellectual property, financial services, market access and having China change some of its laws on agriculture, China is more or less, doing what it said it was going to do,” said Clete Willems, a former deputy director of the National Economic Council.

Read the full story here.

In a later story CNBC reports on the call between representatives of both governments:

  • Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin participated in Tuesday’s discussions, according to releases from both governments.
  • The U.S. statement included details such as protection of intellectual property rights, while the Chinese statement kept to broad generalities.
  • Tensions between the world’s two largest economies have escalated over the last two years, beginning with a focus on trade and spilling over into technology and finance.

Read the full article here.

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