India just decided not to join RCEP, a trade agreement with mostly small countries (most of ASEAN, Australia, New Zealand), plus two medium economies (Indonesia and Republic of Korea), and two large economies (China and Japan, besides India itself). The concern at the top appears to have been about bilateral trade deficits with RCEP countries, especially China. Trade economists are always mystified by political concerns over bilateral deficits. They do not indicate winning, losing, fairness, unfairness, or anything else.
Thoughts on trade, investment and development from the ARTNeT community
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The United States (US) and China are locked into a trade war, wherein actions and counter-actions are being taken at a bilateral level, bypassing the established international trade rules. Although the immediate trigger of the US trade restrictions on imports from China was the trade deficit of the US, it is increasingly becoming clear that technology is the real driver of the tensions.
China has recently initiated a new development plan, the Guangdong-Hong Kong-Macao Greater Bay Area (“GBA”) plan. Notably, the GBA plan was first formally stated in China’s 13th Five Year Plan for Economic and Social Development in 2016 and later written in the Report on the Work of the Government in 2017.
The European Union and its new approach to trade and sustainable development – A promising way forward?
European Union (EU) trade agreements with the following countries include rules on trade and sustainable development (TSD): Canada, Central America, Colombia, Peru, and Ecuador, Georgia, Moldova, Ukraine, and the Republic of Korea. Likewise, its trade agreements with Singapore, Viet Nam, and Japan will contain TSD provisions.
The European Union’s Sustainability Impact Assessments – A Useful Tool for the Facilitation of the Sustainable Development Goals?
Mindful of the socio-economic impacts a free trade agreement (FTA) may have, the European Union (EU) since 1999 has adopted the practice of conducting a so-called Sustainability Impact Assessment (SIA) as an accompanying part of FTA negotiations. Currently, SIAs are being undertaken for the potential FTAs with Indonesia, Malaysia, and the Philippines.
Protectionism has gone digital. With the transition of our economies to the online world, it was only a matter of time before governments would find new ways to protect their companies from foreign competition in this new important economic sphere. Over the last decade, we have seen a rising number of trade restrictions targeting digital goods and services. The tools used are both traditional trade restrictions, such as tariffs on digital goods and restrictions on investment in digital sectors, and new types of restrictions.
More than one hundred years ago, the West, including the United States, used two Opium Wars and other military actions to force then closed-door Qing Dynasty to open the Chinese market to have free trade with them. Ironically, nowadays while China is becoming a strong advocate of freer international trade and globalization, the “America First” policy is steering world toward protectionism, unilateralism and isolationism.
A growing consensus is emerging highlighting that the benefits of international trade are not accruing to everyone within economies with equity. Competition from abroad can often hurt a number of domestic industries, which has prompted many firms to search for cost-savings, potentially resulting in significant downward pressure on wages and labour conditions. A number of governments are attempting to ensure more equitable outcomes from trade liberalization, with labour provisions in trade agreements offered as a solution.
Following Brexit in March 2019, the UK will be effectively a “third country” for purposes of access to the European Union’s single market, in all likelihood facing some significant additional tariff (and non-tariff) barriers. During a further “transition” period lasting until December 2020, the UK will have the right to negotiate new trade deals with other non-EU states, while simultaneously seeking a comprehensive free trade agreement of its own with the EU. A Canada-style FTA (CETA) is the most likely outcome of these negotiations.
In recent years, the power of digitization in international trade to enable sustainable development has been much touted. However, beyond the rhetoric, small businesses and entrepreneurs, particularly in developing countries, still find it difficult to take advantage of the opportunities for trading online. Barriers to accessing finance for trade and efficient delivery services, together with the lack of regulations to govern the flow of data and goods, among others, preclude small businesses from entering large consumer markets.