International Trade Community Preps for Packed Autumn Agenda, Eyeing 2018/2019 Deliverables

2 August 2018

The international trade community will have a busy docket of negotiations and other processes when the autumn semester kicks off in September, while geopolitical tensions on trade are expected to remain a high-profile discussion topic. Meanwhile, electoral processes in various economies will likely have significant implications for these efforts in the months to come. 

The results of these events could be pivotal in reshaping the global trading landscape, as countries across the globe work to advance a series of commercially impactful trade and integration agreements that could also usher in a new chapter in trade rule-making. Many of these processes have target dates for 2018 or 2019. 

On the WTO front, negotiations continue in Geneva on topics such as disciplining harmful fisheries subsidies, while groups of members weigh possible approaches to reforming the global trade club so that it is better equipped to handle burgeoning trade tensions. (For more on WTO negotiations, see related story, this edition) 

Awaiting the outcome of US automobiles investigation

While the US’ recently imposed steel and aluminium tariffs continue to fuel tension with various trading partners, the prospect of new duties on automobiles and automotive parts are expected to loom large over the coming months. The US Commerce Department is currently conducting a Section 232 investigation under the 1962 Trade Expansion Act into whether such imports pose a threat to the country’s national security. 

The results from the Commerce Department are due with 270 days from when the probe was launched, which was 23 May, meaning that a report could come out any time before 17 February 2019. The report could be issued sooner, however. 

A final decision on whether to “adjust imports” of these products, such as by imposing tariffs, would then fall to US President Donald Trump. 

Representatives from countries who are major car exporters met this week in Geneva, according to sources cited by Reuters, to weigh how to address the probe and any potential duties. Participants reportedly included Canada, the EU, Japan, Mexico, and South Korea. 

NAFTA, US midterms

On the negotiating front, US officials are working with various trading partners on different trade accords. The US has now indicated that it hopes to clinch a deal with Canada and Mexico on updating the North American Free Trade Agreement (NAFTA) by the end of August, despite reports that negotiators remain divided on politically sensitive issues such as automobile rules of origin. (For more on NAFTA, see related story, this edition) 

Meanwhile, US Trade Representative Robert Lighthizer said last month that the Trump Administration is hoping to negotiate a trade deal with a Sub-Saharan African country that could serve as a model for future accords with economies in the continent, thus paving the way for a new approach to US-African trade relations when the current version of the African Growth and Opportunity Act (AGOA) expires in 2025. (See Bridges Weekly, 19 July 2018

He also told Senate lawmakers last week that the US is looking to engage more in southeast Asia, naming the Philippines as one economy that could be a viable partner for a bilateral trade accord in the region, and set the stage for more to follow. 

Meanwhile, the US is due to hold midterm elections on 6 November 2018, with Republicans fighting to maintain their grip on both the Senate and House of Representatives and Democrats looking to take control of at least one, if not both, chambers. 

European Union works to advance suite of trade accords

The 28-nation EU has a series of trade negotiating processes underway with partners around the globe, as the current College of Commissioners prepares to wrap up its term on 31 October 2019. 

It is looking to clinch a long-awaited trade accord within the framework of an Association Agreement with Latin American customs bloc Mercosur, though officials from both sides have expressed different views on when a deal could be reached. Some officials, such as Argentine Foreign Affairs Minister Jorge Faurie, have expressed the hope of reaching a political agreement as early as September. Mercosur includes as full members Argentina, Brazil, Paraguay, and Uruguay, and some of these countries are in the middle of electoral cycles, with Brazil due to hold a general election in October. (See Bridges Weekly, 26 July 2018

The EU also launched talks in June with Australia and New Zealand, respectively, for trade accords, and the first rounds of both processes were held in July. (For more on both negotiations, see related story, this edition) 

The bloc is also looking to advance trade talks with members of the Association of Southeast Asian Nations (ASEAN), such as Indonesia, which is the largest economy in that grouping. The EU and Indonesia have held five negotiating rounds to date since launching talks two years ago. The EU is hoping to eventually use bilateral accords with individual ASEAN members as a platform towards a region-to-region accord. 

Additionally, the European Union is looking to secure deeper ties with the Pacific Alliance, though it is not yet negotiating a formal trade agreement with the four-country coalition, which includes Chile, Colombia, Mexico, and Peru. It does, however, have accords in place with the Alliance’s individual members, and is negotiating a modernisation of its trade agreement with Chile after having negotiated an update to its deal with Mexico. 

Meanwhile, EU and UK negotiators working on Brexit are aiming to wrap up withdrawal negotiations by an 18 October summit of the European Council, in order to keep processes on track for the UK’s impending end-March 2019 exit. (See Bridges Weekly, 26 July 2018

Industrial overcapacity, trade irritants, WTO reform: meetings coming up

On industrial overcapacity, which has been a hot-button topic in trade circles over the past few years and has faced additional urgency following the US aluminium and steel tariffs, a series of key meetings are set for autumn, including at ministerial level. 

A trilateral group encompassing EU, Japan, and US trade officials is due to reconvene this autumn to discuss both how to tackle industrial overcapacity and other topics of shared concern, such as forced technology transfers and state-owned enterprises, and the possibility of a WTO reform agenda to tackle them. One source indicated that this meeting could occur in early autumn, though dates have not been announced publicly. Officials from all three countries are due to have a session at the WTO Public Forum on “making the playing field level again,” which would focus largely on market-distorting industrial subsidies. (See Bridges Weekly, 7 June 2018

Meanwhile, the EU-US Executive Working Group launched last week has a similar agenda, though dates for this new group to begin meeting have not been confirmed. The EU and China have their own WTO reform working group, chaired by vice ministers and set up following a leaders’ summit in July. While an agenda for those discussions has not been announced, European officials have said that industrial subsidies, intellectual property and forced tech transfers, and dispute settlement would be topics that they would like to see discussed. (See Bridges Weekly, 19 July 2018

Canada, for its part, is also planning to hold a ministerial-level meeting on WTO reform, sources say. According to Bloomberg, this gathering would not involve either the US or China, but instead would bring together a mix of advanced and middle-income economies from different world regions, spanning Africa, Europe, Latin America, Asia, and Oceania.

In addition, the Global Forum on Excess Steel Capacity, set up following the 2016 G20 leaders’ summit in Hangzhou, China, is due to submit a report on progress achieved to this year’s G20 gathering, held under the Argentine presidency from 30 November to 1 December. 

Asia-Pacific trade landscape

On the Asia-Pacific front, various processes are underway with an eye towards a 2018 or 2019 conclusion. For example, the 11 countries that are signatories to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) are in the process of ratifying the deal, in the hopes that it can enter into force next year. 

To date, three countries have ratified the CPTPP so far. These are Mexico, Japan, and Singapore, in that order. Three more will need to ratify in order to reach the minimum threshold for the deal to take effect. 

Countries such as Australia, Canada, and New Zealand are working through their own legislative processes for approving the accord domestically, though the new government in Malaysia has indicated that it plans to review the CPTPP and other policies endorsed by the previous administration. (See Bridges Weekly, 28 June 2018

Separately, ministers from the 16 countries negotiating a Regional Comprehensive Economic Partnership (RCEP) said in early July that they hope to see a “package of outcomes” by the end of this year, and will be holding meetings throughout the rest of 2018 to that end. 

RCEP includes all 10 members of the Association of Southeast Asian Nations (ASEAN) and their six FTA partners, namely Australia, China, India, Japan, New Zealand, and South Korea. 

Ministers are due to meet in August, and officials have indicated that a possible target date for delivering this “package” could be an ASEAN leaders’ summit in Singapore from 11-15 November. (See Bridges Weekly, 5 July 2018

ICTSD reporting; “Global auto powers plotting response to Trump auto tariff threats,” REUTERS, 30 July 2018; “U.S. trade chief eyes deals on NAFTA, Philippines, sub-Saharan Africa,” REUTERS, 26 July 2018; “Canada Cuts U.S., China Out of Talks on Reforming Global Trade,” BLOOMBERG, 27 July 2018.

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