Trade Deals across the World: June Edition
As an increasing number of countries is getting a grip on the COVID-19 outbreak, economies around the world are starting up again. Ahead of the pack is China, which was hit hard, but was hit first. Chinese production facilities are returning to their pre-COVID capacity and the backlog of shipments waiting to leave the country is slowly declining.
More countries are starting to look outside their borders again and the trade agreement activity is picking up again. In this month’s edition, we bring you the most important news on the biggest trade deals and refer to some interesting reading material for the smaller ones.
Our Trade Deal Around the World series always deals with the past month’s news, but this edition we start with some fresh news from today on Mercosur.
Mercosur and the European Union
Mercosur, a trade bloc of South American countries, has negotiated and closed a trade agreement with the European Union. The problem with these agreements is that they need to be ratified by all European Union member states. While this usually isn’t a big issue, this time it will be different. The Dutch Parliament today voted down the trade deal, which poses a threat to more than the Mercosur deal, according to the ING Bank:
This not only puts the largest-ever EU trade deal at risk, it also doesn’t bode well for the upcoming Dutch vote on the ratification of the trade deal between the EU and Canada
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.
The Dutch government will soon try to get the 2016 trade deal of the EU and Canada (CETA) passed in the First Chamber of the Dutch parliament. The Second Chamber voted in favour of ratification, but it was a close call to keep the CristenUnie on board, whose constituency is relatively dependent on farmers.
Read the full article here.
The United Kingdom and the European Union
One of the most important trade deals currently under negotiation is the trade deal between the United Kingdom and the European Union. June is an important month in the negotiation process as it is the last month in which the European Union and the United Kingdom can agree to an extension of the transition period. So far the negotiations are not going very well. No extension might even mean a No Deal Brexit at the end of this year.
We refer to our Brexit Support page for the latest news on the negotiations.
The United Kingdom and the United States
Negotiations for a new trade deal between the United States and the United Kingdom started last month as well. The United States is making negotiations about more than just trade between the two nations. They are involving the United Kingdom’s potential deal with China as well.
The Guardian reports:
The US government has been privately pressing the UK in bilateral trade talks to make a choice between the US and China.
The US is seeking to insert a clause that would allow it to retreat from parts of the deal if Britain reaches a trade agreement with another country that the US did not approve.
The proposed clause made no mention specifically of China, but is seen by British diplomats in Washington as intended to be a lever to deter closer UK-China relations.
In a Harvard Kennedy school of government paper jointly written by the former Treasury minister Ed Balls, the authors claim a full trade deal before the US presidential election in November is impossible.
Some UK officials believe there is still merit in the UK trying to reach a preliminary outline deal with China before the US presidential election, arguing it will put pressure on the EU to reach a deal with the UK by the end of the deal.
They also believe the prospect of a UK deal could be used as leverage to persuade Trump to adopt a more multilateral approach to the coronavirus crisis.
Read the full article here.
A document detailing the U.S. trade negotiating objectives with the UK, released last February, said: "The United States seeks to support higher-paying jobs in the United States and to grow the U.S. economy by improving U.S. opportunities for trade and investment with the U.K."
"Our aim in negotiations with the U.K. is to address both tariff and non-tariff barriers and to achieve fairer and deeper trade."
Meanwhile, the U.K. spoke of the desire to "cut red tape" for smaller businesses trading with the U.S.
It also suggested a new deal could boost trade between the U.K. and U.S. by more than £15.3 billion ($18.7 billion).
The United States and China
Donald Trump has been calling COVID-19 China disease and has been increasingly negative when it comes to China. This change of tone comes only months after the United States and China agreed on a Phase One Agreement. The negative rhetoric picked up after rumours emerged that China wasn’t going to keep its end of the deal. The rumours were later denied and rectified by China.
China pledged... to uphold its commitments under the phase one trade deal with the U.S., including purchasing of American goods like soybeans and pork, as tensions between the world’s two largest economies flare up once again.
The phase one agreement has come under threat as the U.S. and China escalate disputes over a range of issues, including blame for the coronavirus pandemic, financial oversight of Chinese companies and new national security laws for Hong Kong.
A spokesperson for the National People’s Congress, Zhang Yesui, said ... that a “stable and growing relationship between China and the United States is in the best interest of the Chinese and American people.” While China’s top priority is to “work together to fight Covid-19” and ensure global economic stability, it will be forced to react if the U.S. maintains a cold war mentality, Zhang said.
Read the full article here.
Below some of the articles on related subjects and smaller deals that came across this past month
- U.K. International Trade: Government Announces the U.K. Global Tariff
- UK should make Japan trade deal post-Brexit priority
- African Executives Urged Free-Trade Deal to Fight Pandemic
- Indonesian Free Trade Agreement is good news for growers
- Netherlands aligns with “protectionist” French policy in trade deals conditions
- Cambodia seeks Russia’s help for free-trade agreement
- Australia-EU free-trade deal faces testing final hurdle
- Azerbaijan’s National Assembly approves 4 agreements with Turkey