Preferential Trade updates April 2023

April 19, 2023

ASEAN, China start negotiations on upgrading bilateral FTA

The Association of South East Asian Nations (ASEAN) and China started the first round of negotiations on the upgrade of the ASEAN-China Free Trade Area (ACFTA) at a meeting of the Working Group on Standards, Technical Regulations, and Conformity Assessment Procedures (WG-STRACAP) on April 11.

This meeting is a follow-up to the results of the 21st AEM Forum – Ministry of Commerce (MOFCOM) Consultation on September 17, 2022, which agreed to increase the implementation of the ACFTA through the endorsement of the Joint Feasibility Study Report to Further Enhance the ASEAN-China Free Trade Area (ACFTA3. 0). The upgrade of the ACFTA will focus on sectors that benefit the interests of both parties (ASEAN and China), including the digital economy, green economy, non-tariff measures, consumer protection issues, and MSMEs, as well as the rearrangement of chapters structure of the ACFTA.

In this meeting, AMS and China also exchanged views and input on elements that might be accommodated in the STRACAP ( Upgraded AFCTA Structure) chapter. Both parties agreed to further explore the dispute settlement process in the next round of negotiations. Apart from that, the two parties also agreed to explore technical issues in Article 6.5 International Standards, Guides, and Recommendations in the ACFTA STRACAP chapter.

Denmark to withdraw from Energy Charter Treaty

Denmark will withdraw from the Energy Charter Treaty (ECT) as it creates more uncertainties about investments than certainties. The Danish government decided to withdraw from the trade and investment agreement that aims to create secure framework conditions and attract private investors to invest between countries in the energy sector, protecting both green and fossil fuel energy investments. Denmark thus joins other EU countries that expressed their intention to leave the treaty last year, such as Germany, Poland, Spain, the Netherlands or France, for which the withdrawal ECT will take effect in December 2023.

EU seeks to conclude Australian free-trade deal the summer

The European Union is seeking to conclude a free-trade agreement with Australia by the summer, even as the two sides still need to work through some of the more contentious issues. Further discussions are due to take place later this month, which will likely be the last round before chief negotiators tackle any outstanding issues, according to a European Commission spokesperson, who confirmed the time line. Issues that still need to be agreed include the geographical indication of food goods such as cheese as well as matters pertaining to data and privacy.

An accord would boost trade between the EU and Australia by liberalizing tariffs on swathes of goods. It would also fit into the bloc’s strategy to increase its geopolitical weight in the Indo-Pacific region and further its aim to diversify the EU’s supply of critical raw materials.

EU and Thailand relaunch trade negotiations

The EU and Thailand announced the relaunch of negotiations for an ambitious, modern and balanced free trade agreement (FTA), with sustainability at its core. This announcement confirms the key importance of the Indo-Pacific region for the EU trade agenda, paving the way for deeper trade ties with the second largest economy in South-East Asia and further strengthening the EU's strategic engagement with this burgeoning region. The aim of the FTA will be to boost trade and investment by addressing a wide range of issues such as: market access for goods, services, investment and government procurement; swift and effective Sanitary and Phyto-Sanitary procedures; the protection of intellectual property rights including Geographical Indications, and the removal of obstacles to digital trade and trade in energy and raw materials, thereby supporting the digital and green transitions. Sustainability will also be at the heart of this agreement, with robust and enforceable disciplines on Trade and Sustainable Development (TSD). These will be in line with the Commission's TSD review Communication of June 2022, supporting high levels of protection for workers' rights, for the environment, and the achievement of ambitious climate goals.

Next steps:
The EU and Thailand are committed to advancing swiftly in the FTA talks and aim to hold a first substantive round of negotiations in the coming months. The EU text proposals will be published after the first negotiating round, in line with our exemplary transparency policy. The EU will also commission a Sustainability Impact Assessment in support of the negotiations, to carry out an analysis of the possible economic, environmental, human rights and social impacts of the agreement, and to provide recommendations on how to maximise the expected positive effects, whilst minimising potential negative ones.

Ghana and Netherlands commence Bilateral Investment Treaty renegotiation

Ghana and the Kingdom of Netherlands have commenced renegotiations of their Bilateral Treaty (BIT) in Accra. The current BIT between Ghana and the Kingdom of Netherlands was signed in 1989, and entered into force on 1st July, 1991.

India -UK FTA: Carbon tax hurdle looms over India-UK FTA talks

India’s proposed free trade agreement with the UK could face a major roadblock, as the latter is considering imposing a carbon tax akin to the European Union’s policy, which proposes to levy steep tariffs on imports with higher carbon footprints. An EU-style carbon border adjustment mechanism (CBAM) is expected to dent India’s metal exports to the UK even if India and the UK agree on significant tariff concessions, experts said. India and the UK have completed six rounds of negotiations and are expected to sign the agreement shortly. However, both the governments have refrained from announcing any deadline to complete negotiations. The EU carbon tax, also known as CBAM, aims to cut carbon emissions by imposing a levy on imported goods based on their carbon footprint.

India, Latin America in talks to expand preferential trade agreement

India and the MERCOSUR group of Latin American countries are in discussions to expand their preferential trade agreement, according to persons aware of the matter. The MERCOSUR trading bloc comprises Brazil, Argentina, Paraguay and Uruguay. India and MERCOSUR signed the PTA in 2004, which allowed New Delhi to forge closer economic ties with one of the world’s largest trade blocs. In 2020, the combined GDP of the four MERCOSUR countries was $1.9 trillion with a total market of 295 million people.

Under the deal India and MERCOSUR have agreed to give tariff concessions ranging from 10% to 100% on 450 and 452 tariff lines respectively, according to the ministry of commerce and industry. Both sides are currently discussing expanding the number of goods included in the agreement, according to persons aware of the negotiations, which are in their early stages.

Liberia, the only country in Africa yet to ratify the Africa Continental Free Trade Area

Liberia, an ECOWAS member state where importers mostly experience high tariffs on goods, which lead to inflation of prices on the local market, is yet to ratify the Africa Continental Free Trade Area (AfCFTA). The agreement has been signed by 54 of the 55 African Union member states, with 44 countries depositing their instruments of ratification. However, Liberia, which signed the AfCFTA document on March 21, 2018, is yet to ratify. The AfCFTA is a trade agreement with a comprehensive scope that includes critical areas of Africa’s economy, such as digital trade and investment protection. It became operational on January 1, 2021, with an objective to significantly boost intra-Africa trade by eliminating barriers to trade in Africa.

Mercosur, Canada to resume trade deal talks

Negotiations for an agreement between Mercosur and Canada to eliminate tariffs on industrial and agricultural goods, services, intellectual property, and government purchases are to resume after more than three years. The South American bloc of Brazil, Argentina, Uruguay, and Paraguay had been negotiating with Canada since 2018 when other priorities took center stage. Three years later, a team of Canadian negotiators is due in Brasilia for the first round of discussions in the first week of May.

Next round of India-UK free trade agreement talks from April 24

The ninth round of the India-United Kingdom free trade agreement (FTA) talks is scheduled from April 24 to 28. While negotiations cover 26 policy chapters, 13 chapters have been closed so far. The eighth round of negotiation was completed last month in New Delhi. Bilateral interaction between the two trade ministers was also held in March to take stock of the progress in the India-UK trade agreement-related negotiations. Government officials said an investment treaty was also being negotiated as a separate agreement–Bilateral Investment Treaty. It will be concluded simultaneously with the India-UK FTA.

Somalia pursues AGOA membership to bolster trade

The Somali government officially applied to join the 36 African countries, benefiting from the African Growth and Opportunity Act (AGOA). The announcement was made during the Somalia AGOA application ceremony, where outgoing U.S. Ambassador to Somalia, Larry André, highlighted the United States’ commitment to expanding and modernizing partnerships in Africa and Somalia.

South Korea, Dominican Republic sign bilateral trade promotion agreement

South Korea and the Dominican Republic clinched a bilateral framework agreement on trade and investment to boost economic cooperation and push for various joint projects on supply chains, the digital and green sectors, and other new industry fields.

Singapore and EU sign digital trade agreement

Singapore and the EU signed a digital trade agreement in February, making it the fifth of its kind signed by the city-state. The agreement seeks to promote interoperability between digital systems to encourage more seamless cross-border data flows as well as to develop an open and trustworthy digital environment for businesses.

Singapore and the European Union (EU) signed a digital trade agreement in February 2023 to allow consumers and businesses from Singapore and the EU to transact online more seamlessly. The EU-Singapore Digital Partnership (EUSDP) will see both jurisdictions collaborate on facilitating digital trade, electronic payments, digital identities, and 5G/6G communication networks, among others.

The EUSDP is one of several digital economic agreements (DEAs) that Singapore has signed. These DEAs are the world’s first “digital only” trade agreements, aimed at establishing digital collaboration between jurisdictions to maximize the economic benefits from the surge in online business activity, accelerated by the COVID-19 pandemic.

Singapore and the EU are major trading partners and the EU-Singapore Free Trade Agreement came into force in 2019. The EU was Singapore’s second-largest services trade partner in 2021 with bilateral trade in services reaching more than S$67 billion (US$50.4 billion). Moreover, the EU was Singapore’s fourth largest goods trade partner for the same year with bilateral trade reaching S$102 billion (US$76.7 billion).

UAE and Vietnam begin talks for Cepa deal

The UAE and Vietnam have agreed to start Comprehensive Economic Partnership Agreement (Cepa) negotiations to strengthen bilateral trade ties as the Emirates pushes ahead with its plans to develop trade and investment relations with partners around the world.

UK strikes biggest trade deal since Brexit to join major free trade bloc in Indo-Pacific

UK Prime Minister announces deal to join CPTPP – a huge trade bloc in the Indo-Pacific which will now have a total GDP of £11 trillion. The UK will join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a vast free trade area of 11 countries spanning the Indo-Pacific. The historic agreement follows two years of intense negotiations by the Department for Business and Trade and puts the UK at the heart of a dynamic group of economies, as the first European member and first new member since CPTPP was created. We would not have been able to join as a member of the EU, demonstrating how the UK is seizing the opportunities of our new post-Brexit trade freedoms to drive jobs and growth across the country. The bloc is home to more 500 million people and will be worth 15% of global GDP once the UK joins. It is estimated that joining will boost the UK economy by £1.8 billion in the long run, with wages also forecast to rise by £800 million compared to 2019 levels.

Being part of CPTPP will support jobs and economic growth across the country, with every nation and region expected to benefit. More than 99 percent of UK goods exports to CPTPP countries will now be eligible for zero tariffs, including key UK exports such as cheese, cars, chocolate, machinery, gin and whisky.

Total UK exports to CPTPP countries were already worth £60.5 billion in the 12 months to the end of September 2022 and are set to grow under CPTPP. Our leading services industry will also benefit from reduced red tape and greater access to growing Pacific markets with an appetite for high-quality UK products and services.

Vietnam, Israel conclude FTA negotiations 

Vietnam and Israel announced the conclusion of negotiations for their free trade agreement (FTA), creating a premise for the two countries to sign the deal right this year. The announcement was made at a working session between Vietnamese Minister of Industry and Trade and Israeli Minister of Economy and Industry during the former’s ongoing visit to Israel.


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