Trade Deals Around the World - April 2021
Trade Deals Around the World is our periodic 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.
In this edition, the leading players are the European Union, the United Kingdom, the United States and China. You can find a round-up of other trade agreement news at the bottom of this page.
The European Union and Australia
The European Union is stepping up its climate efforts. The European Parliament intends to push other countries in the world to do so by adopting a non-binding resolution calling for a levy on products from countries with lacking pollution reduction programs. You can see the first signs of this around the trade agreement negotiations with Australia. Bloomberg:
A lawmaker in Brussels is warning that a free-trade deal being negotiated with Australia won’t be ratified by the European Union until it does more to reduce its emissions...an agreement was contingent on “a clear vision” from Australia on “when and how they will become climate neutral and by when and how they will phase out coal.”
The European Union and India
The European Union will start negotiations with India on a free trade agreement at an aggregate level. The Economic Times:
Sweden Ambassador to India, Klas Molin, on March 06 said that the Free Trade Agreement (FTA) between the European Union (EU) and India will be negotiated at an aggregate level as per the special mechanism set up during the last summit. "Trade agreements, as Sweden is member of EU, is negotiated by European Commission. Talks on for investment and trade, the special mechanism was set up during the last summit between India and EU so agreements on it will be negotiated at an aggregate level,"
The European Union and Canada
The German Federal Constitutional Court, the highest court in Germany, threw out a lawsuit by opposition party Die Linke. The reason for the suit is the Comprehensive and Economic Trade Agreement (CETA). CETA is the trade agreement between the European Union and Canada. The ruling neither bans nor clears the trade agreement. Bloomberg:
Germany’s top court threw out a lawsuit by lawmakers demanding more scrutiny over participation in the CETA trade pact between the European Union and Canada.
The Federal Constitutional Court in Karlsruhe on Tuesday rejected a suit by the opposition party Die Linke claiming that Germany’s parliament failed to adequately oversee the trade talks and should have passed a law in 2016 on the government’s remit in the negotiation between the EU and Canada.
The European Union and the United Kingdom
The European Union still needs to vote on the trade agreement between the Union and the United Kingdom. The European Parliament has to the end of April to do so. The European Parliament cancelled the vote scheduled for March 24 as a warning to the United Kingdom over their changes to the Northern Ireland Brexit arrangements. The European Parliament sees these changes as unlawful. Reuters:
If it does not do so and provisional application of the agreement is not extended, then the trade deal would cease to apply, leaving Britain and the European Union to trade on WTO terms with tariffs and quotas.
“We are ready to use this hard weapon,” Bernd Lange, the chair of the parliament’s trade committee, told Reuters. “This is the last resort. What we really want is a de-escalation of the situation.”
And more on the subject by Reuters:
Frost ... defended Britain’s unilateral move to smooth post-Brexit trade between Britain and Northern Ireland, over which the EU has promised to launch legal action for breaching the terms of the Brexit deal.
Since Britain left the EU last year, relations between the two have soured, with both sides accusing the other of acting in bad faith in relation to part of their trade agreement that covers goods movements to Northern Ireland.
The United Kingdom and the World
In the meantime, the United Kingdom is lobbying at the WTO for a global deal that harmonises services trade worldwide. Institute of Export & International Trade:
The UK will use its newly independent voice at the World Trade Organisation (WTO) to lobby for a global deal that harmonises regulations and promotes services trade across the globe.
As the clock ticks down on talks with the EU to recognise the regulatory status of the UK financial services sector, ministers and City lobby groups are forming a plan to open up global markets instead.
The United Kingdom and Canada
The United Kingdom and Canada are working on a new trade deal. In the meantime, they have agreed on an interim deal called the Canada-U.K. Trade Continuity Agreement. The Canadian Government:
The Canada-United Kingdom Trade Continuity Agreement entered into force on April 1, 2021 - preserving preferential market access for both Canadian and UK businesses.
The United Kingdom and Ghana, and Cameroon
The United Kingdom has signed trade agreements with both Ghana and Cameroon. Two press releases on the signings said:
The UK has today signed a trade partnership agreement with Ghana that secures tariff-free trade and provides a platform for greater economic and cultural cooperation.
The deal supports a trading relationship worth £1.2bn and reinstates the terms of the economic partnership agreement between the two sides when the UK was part of the EU.
Read the full release here.
Today (9 March 2021) the United Kingdom has signed an Economic Partnership Agreement with Cameroon.
The UK-Cameroon trade was worth around £200m in 2019, and this deal lays a foundation to extend our trading relationship in the future. The UK market accounts for 12% of total exports of bananas from Cameroon and this agreement will maintain tariff-free market access to the UK. It also guarantees continued market access for UK exporters, who sold £50m in goods to Cameroon in 2019.
Read the full release here.
The United Kingdom and Kenya
The Kenyan parliament has ratified the trade agreement between Kenya and the United Kingdom. Fresh Plaza:
The Trade Committee has listed products designated by Kenya as sensitive, attracting hefty import duties if sourced from the UK.
An array of agriculture products will also not be exempted in the UK-Kenya agreement whether in raw and processed form. These will include fresh and chilled potatoes, tomatoes, onions, garlic, vegetables of all kinds - cabbage, sprouts, lettuce, cucumbers, mushrooms peas, beans, and so on.
Fresh and chilled fruits - cashew nuts, bananas, pineapples avocados, mangoes, pawpaw, watermelons, and apples will not be exempt from duties.
China and the European Union
The trade agreement between China and the European Union may be in trouble. The European Union is putting pressure on China to resolve several human rights issues by punishing Chinese officials. China responded with its own sanctions on EU officials. CNN:
"China's retaliatory sanctions are regrettable and unacceptable," Dombrovskis told the Financial Times in remarks confirmed by his spokesperson. "The prospects for ... ratification will depend on how the situation evolves."
The European Commission, which negotiates trade deals for the 27 EU countries, had already come under fire from members of parliament and activist groups for moving ahead with the investment agreement without securing stronger commitments from China on labour and human rights protections.
China and the United States
The relationship between China and the United States is also on rocky ground. China is not meeting the set targets in the first phase trade agreement it struck with the United States. Bloomberg:
China is well behind on the two-year targets set in its trade deal with the U.S., having purchased only about a third of the goods it said it would buy so far.
There was widespread scepticism that China would ever meet the promised targets, even before the pandemic broke out, damaging both demand and the U.S.’s ability to supply goods. However, it’s unclear if China will face any repercussions from the U.S. for failing to meet its goals.
China and the Gulf States
China wants to reach a trade agreement with the Gulf Cooperation Council states. The GCC consists of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. Arab News:
A Chinese-Gulf Free Trade Agreement would represent a major boost for the region with the Gulf currently accounting for about two-thirds of China’s trade with the Arab world...
China already imports about 35 percent of its crude oil requirement from the Gulf which could rise to as much as 60 percent by the end of the decade.
China and the Regional Comprehensive Economic Partnership
China has already ratified the Regional Comprehensive Economic Partnership (RCEP). The ratification is three months ahead of schedule, which signals the eagerness of China to join. China Briefing:
The landmark agreement consists of 15 countries: 10 member states of the Association of Southeast Asian Nations (ASEAN), China, Japan, South Korea, Australia, and New Zealand.
While China is party to a number of bilateral trade agreements, this is the first time it has signed up to a regional multilateral trade pact.
China and Iran
China and Iran have signed a 25-year trade agreement at the end of March. UPI:
It's the first time Iran has signed a long-reaching agreement with another major world power, though a 10-year deal the country made with Russia underwent two five-year extensions, making it last 20 years total.
Few details on the agreement have been published, but media reports say the agreement addresses a variety of economic sectors, including oil and mining as well as transportation and agricultural collaborations.
Other Trade Agreements
A free trade agreement between South Korea and Centra America has entered into force. Dubai and Israel have signed a trade agreement. India and Mauritius have signed a free trade pact. Australia and New Zealand signed a new trade deal, the Australia New Zealand Closer Economic Agreement.
And the final note is less optimistic. There is some more trouble for the European Union-Mercosur Trade Agreement, as Austria has rejected it.
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