Trade Deals Around the World: February 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.
A country that was in the news a lot the past month was China, which intends to expand its number of trade deals, while in the meantime having trouble fulfilling its commitments to the United States. But we start off with the United Kingdom again. For the United Kingdom, January 2021 has been the first month of not being part of the European Union.
The United Kingdom and CPTPP
Besides the Brexit deal with the EU, The United Kingdom has announced its intention to join CPTPP, which stands for The Comprehensive and Progressive Agreement for Trans-Pacific Partnership. CPTPP is a Trade Agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.
Sky News Reports:
Prime Minister Boris Johnson said: "One year after our departure from the EU we are forging new partnerships that will bring enormous economic benefits for the people of Britain.
"Applying to be the first new country to join the CPTPP demonstrates our ambition to do business on the best terms with our friends and partners all over the world and be an enthusiastic champion of global free trade."
The United Kingdom and South Africa
The U.K. completed its divorce from the EU on Friday, leaving the bloc’s single market and customs regime more than four years after voting for Brexit and with the country still in the grip of the pandemic.
The accords mean exports can continue seamlessly to the U.K., one of South Africa’s largest trading partners and that legal and administrative processes for preferential trade under the African Continental Free Trade Area have been put in place, the DTIC said.
China and the United States
Although China has repeatedly assured the United States it would honour the phase one trade agreement that both countries signed, it hasn’t been able to do so.
Supply Chain Digital reports:
Last January China agreed to buy an extra $200bn (£146bn) in US imports over the next two years, as well as strengthen intellectual property rules. In exchange, the US was to cut the new tariffs it had imposed on Chinese products by half on a $120 billion worth of Chinese goods, reducing the rate to 7.5%.
As the agreement included only manufactured, agricultural and energy products, approximately $35bn worth of goods didn't count, bringing the total applicable under the agreement to $100bn. China imported 60% of its original target for manufactured products, 64% for agricultural products and 39% for energy products.
Hellenic Shipping News reports:
Economists have attributed the shortfall in part to the impact of the Covid-19 pandemic, which dented Chinese domestic demand for foreign goods and lowered the prices of imported energy.
Even though China fell short on purchase targets, U.S. exports of goods to China rose 13% from a year earlier during the first 11 months of the year, according to the U.S. Census Bureau.
As imports fell slightly, China’s trade surplus with the rest of the world grew to $535.03 billion, the largest since 2015.
China is projected to be the only major economy to report growth in 2020, drawing a contrast to the U.S. and Europe, which are struggling with the fallouts of the resurgence in Covid-19 cases.
The Biden administration is reconsidering the position the United States has taken with regard to China until now. Yahoo Finance reports:
The Biden administration has former President Donald Trump’s so-called phase-one trade deal with China “under review” along with the rest of the U.S. posture toward Beijing, White House Press Secretary Jen Psaki said Friday.
Asked ... whether the deal was still in effect, she added: “I would not assume that things are moving forward.” The administration is “coordinating with our allies, members of Congress, and making a determination before we engage further.”
In the meantime, China is working on closing more trade deals. The Straits Times reports:
China is working to sign free trade deals with more trading partners, the country's new commerce minister said, as part of the nation's efforts to build a global network of free trade zones.
The government will push for the implementation of the Asia-Pacific trade agreement, known as the Regional Comprehensive Economic Partnership, as soon as possible, Mr Wang Wentao said in an interview with state-run Xinhua News Agency on Thursday (Jan 7).
China will also accelerate negotiations with Japan and South Korea on a free trade pact, as well hold talks with countries in the Gulf Cooperation Council, Israel and Norway.
China has signed 19 free trade agreements with 26 countries and regions, with the trading value accounting for 35 per cent of China's total foreign trade, he said.
The government is also actively considering joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
China and New Zealand
China and New Zealand signed a deal ... upgrading a free trade pact to give exports from the Pacific nation greater access to the world’s second-largest economy.
The pact widens an existing trade deal with China to ensure it remains fit for purpose for another decade, Trade Minister Damien O’Connor said in a statement.
Read the full story by Reuters here.
China and Mauritius
TRT World reports:
China’s first FTA with an African country provides a stepping stone into the continent through the geopolitical hotspot Indo-Pacific region.
The agreement aims to deepen economic and trade relations, while also bringing “new ideas to the China-Africa comprehensive strategic partnership to China,” according to the Chinese Ministry of Commerce when the deal was first signed. “It elevates China-Africa economic and trade cooperation to a new height and creates a new situation,” the statement continued.
The African Continental Free Trade Area
On January first of 2021, the African Continental Free Trade Area (AfCFTA) went into effect.
The trade agreement, which will cover a market consisting of 1.2 billion people and a combined GDP of $3 trillion, has been signed by 54 of the 55 African Union member states; Eritrea has not yet joined. Thirty-four of those countries have ratified it as of early December.
In brief, AfCFTA will create a single market for goods and services, in hopes of boosting trade among its nations. Africa has historically had low internal trade. In 2017, intra-African exports were 16.6% of total exports, compared with 68% in Europe, and 59% in Asia.
The treaty seeks to lower or eliminate cross-border tariffs on most goods, facilitate the movement of capital and people, promote investment and pave the way for a continent-wide customs union. The bloc has a potential market of 1.2 billion people with a combined gross domestic product of $2.5 trillion, and could be the world’s biggest free-trade zone by area when the treaty becomes fully operational by 2030.
Other Trade Agreements
There were several other trade agreements which we will not focus on in detail. According to Foreign Brief Singapore and New Zealand entered a digital trade agreement. The Tehran Times reports a trade deal between Iran and Afghanistan. The Saudi Gazette reports a deal between the United States and Bahrain. And finally, Focus Taiwan is reporting that Taiwan wants to start talks with the United States about a trade agreement.