Trade Deals Around the World: May Edition

Trade Deals Around the World: May Edition

Martijn Rijk
Martijn Rijk
Project Manager Marketing

In most countries around the world, the focus has become internal, as countries battle to control the global coronavirus outbreak. Negotiations and implementations of trade deals are being affected by this. They are slowed down, and in the worst cases even stopped.

Still, all is not quiet on the trade agreement front. Below you will find our monthly round-up of news on trade deals around the world.

The European Union and Vietnam

The Council today adopted a decision on the conclusion of a free trade agreement (FTA) between the EU and Vietnam. This decision clears the path, on the EU side, for the entry into force of the agreement.

Once the Vietnamese National Assembly also ratifies the FTA, the agreement can enter into force, most likely in early summer 2020.

This agreement is the second one we are concluding with a Southeast Asia country, after Singapore. It is also the most ambitious free trade agreement ever concluded with a developing country. We are opening up new trading opportunities, but we are also creating new tools to give impetus to the enforcement of basic freedoms and labour rights in Vietnam.

Read the full article here.

The European Union and Mexico

The European Union and Mexico concluded today the last outstanding element of the negotiation of their new trade agreement. Trade Commissioner Phil Hogan and Mexican Minister of Economy Graciela Márquez Colín – in a phone call today – agreed on the exact scope of the reciprocal opening of public procurement markets and a high level of predictability and transparency in public procurement processes. With this, the EU and Mexico can advance to the signature and ratification of this agreement in line with their respective rules and procedures.

Under the new EU-Mexico agreement, practically all trade in goods between the EU and Mexico will be duty-free. The agreement also now includes progressive rules on sustainable development, such as a commitment to effectively implementing the Paris Climate Agreement. It is also the first time that the EU agrees with a Latin American country on issues concerning investment protection. Simpler customs procedures will further help boost exports.

Read the full article here.

The European Union and Argentina / Mercosur

The European Union (EU) has expressed its satisfaction that Argentina will continue to be part of talks on the sweeping free-trade agreement between the bloc and the Mercosur, despite the government withdrawing from all future talks involving the Latin American bloc.

"The EU welcomes Argentina's continued commitment to the EU-Mercosur Association Agreement and maintains its firm commitment that the agreement enter into force as soon as possible," read a statement from a spokeswoman for European Union's High Representative Josep Borrell issued on Tuesday.

Last Friday, the government decided to withdraw from all future free-trade deal negotiations involving the Mercosur, placing talks with countries such as South Korea, Singapore, Canada and India in doubt.

The government said, however, that it would continue to with existing talks, including negotiations over the implementation of the agreement with the EU.

Read the full article here.

The European Union and the United Kingdom

One of the biggest ongoing negotiations, at least for the European Union, is the trade deal with the United Kingdom. We have written about this at the end of last month, and the news in this trade agreement update is more of the same. The negotiations are not going as well as they should, of both parties are to have agreed on a deal before the end of this year. The European Union looks to extend the transition period, while the United Kingdom is adamant there will be no extension whatsoever.  

A quick overview of news on this:

Boris Johnson’s plan to seal a deal with Brussels on the future relationship with the UK by the end of December has been described as “fantasy land” by EU officials, as a leaked letter revealed the scale of the bloc’s inability to function during the coronavirus pandemic.

Read the full article here.

The progress made in post-Brexit trade talks between the UK and EU has been disappointing, Michel Barnier has said.

The EU's chief negotiator said "genuine progress" and a decision on whether to extend the transition period were both needed by June.

The UK said "limited progress" had been made and talks needed to "move forward in a constructive fashion".

The two sides will hold two further rounds of talks before the end of the transition period in December.

Mr Barnier said a joint decision would be taken on 30 June about whether to extend the transition period.

But the UK government has already said it will refuse to extend it beyond December, even if the EU requested a delay.

Read the full article here.

The United Kingdom and Japan

In view of the future of the Japan-U.K. economic partnership, Tokyo has two goals. First, and more immediately, it needs to protect the interests of Japanese companies operating in the U.K. Though the outcome of the EU-U.K. FTA negotiations will have a greater impact on those interests, a Japan-U.K. FTA will be seen as a reassuring factor that could attenuate the uncertainty.

Second, Tokyo — and London, for that matter — wants to avoid a no-FTA end of the transition period. Until then, the Japan-EU EPA remains applicable to the U.K., but it will end with the termination of the transition period. Unless there is a bilateral Japan-U.K. deal in place, trade between the two countries will be on the World Trade Organization terms, causing trade disruptions.

Read the full article here.

The United Kingdom and the United States

The global outbreak has also put a stop on trade agreement talks between the United States and the United Kingdom.

Negotiations on a UK-US free trade deal have been postponed indefinitely due to the coronavirus crisis, raising fresh doubts about whether an agreement can be struck before Donald Trump faces re-election in November. 

The Telegraph understands that formal talks were due to start in the week beginning March 23, with Liz Truss, the International Trade Secretary, flying to Washington DC with her top trade officials. 

However, the plans, which would have seen around 100 politicians and negotiators discuss terms over multiple days, were cancelled along with events across all aspects of public life as lockdowns were announced due to the virus outbreak.

Read the full article here.

The United States and China

The coronavirus has also impacted the relationship that the United States and China were further developing. Trump has been calling coronavirus a Chinese disease and has been threatening China with new economic measures. In the meantime, China has been very clear: they want to honour the current agreement and further develop the relationship.

China remains "very, very committed" to meeting its commitments under a Phase 1 trade deal with the United States, despite the unprecedented economic and health impacts of the new coronavirus outbreak, a senior U.S. trade official said on Wednesday.

Read the full article here.

The U.S.-China Economic and Security Review Commission, established by Congress two decades ago and appointed by members of both parties, said that stalled trade and depressed consumer demand in China from the virus “raises the possibility that implementation could be disrupted,” upending Trump’s efforts to end a two-year trade war with Beijing that he began in 2018.

Despite the trade war, China remains the United States’ largest trade partner, accounting for nearly $740 billion in trade in 2018 alone, meaning China’s economic hardships are likely to reverberate across the U.S. economy.

“Because China is a global manufacturing hub, domestic supply chain disruptions sparked by COVID-19 have triggered shocks across the global economy and brought into sharp relief the risk of reliance on China as a source of intermediate and finished goods,” the report reads.

Read the full article here.

The African Continental Free Trade Area Agreement

Coronavirus is also impacting the implementation of the African Continental Free Trade Area Agreement. Although coronavirus has not hit the African region as hard as it has Asia, Europe and the Americas.

At the core of the AfCFTA’s objectives is the free movement of people, goods and services within the continent. Transportation is no doubt an essential factor for this free movement. With African countries declaring total or partial lock-down on travel and movement, it means that only the transportation of necessary goods and services, medical supplies and emergency supplies will be given priority.

In essence, the requirements for a successful containment of Covid-19 by African countries means that if the pandemic were to still persist by 1 July, 2020, the take-off date for trading under the AfCFTA may inevitably be postponed or suspended until further notice. This is because containing the virus may entail a restriction on international trade contrary to the principles of the AfCFTA Agreement. African countries however, have the option of concentrating more on manufacturing and trading in essential and medical goods and thereby creating a market for these if Covid-19 still persists by 1 July 2020.

Read the full article here.