Preferential Trade updates February 2024

EU Parliament Gives Green Light to EU-Angola SIFA

The EU and Angola have concluded the negotiations for a Sustainable Investment Facilitation Agreement (SIFA). The Agreement will make it easier to attract and expand investment between the EU and Angola and it integrates sustainable development commitments in the EU-Angola investment relationship. 

EU announces new ‘interpretation’ of Canada trade deal in bid to ensure ratification

The European Commission and Canada have agreed on the “interpretation” of parts of the Comprehensive Economic and Trade Agreement (CETA) that relate to investor protection from environmental regulation, in a push by Brussels to persuade member states to ratify the bilateral multibillion-euro deal. EU countries have previously expressed concern that the agreement, which provisionally entered into force in 2017, could effectively allow investors to sue member states if they impose more stringent environmental laws. Ten EU countries have still not ratified the tariff and custom duty-busting deal, which the Commission has described as “the most modern and advanced trade agreement ever made”.

Ecuador’s parliament ratifies free trade agreement with China

The National Assembly of Ecuador, the country’s unicameral legislature, ratified a free trade agreement with China. The agreement includes over 800 agreed exemptions to protect Ecuadorian industry. The agreement is expected to create more than 50,000 jobs and cover 71 per cent of the country’s exports to China by small businesses. China and Ecuador signed the free trade agreement in May 2023 after more than a year of work on the document.

EU-Japan economic partnership agreement: EU and Japan sign protocol to include cross-border data flows

On 29 January 2024, the Council adopted the decision on the signing of the protocol to include provisions on cross-border data flows in the agreement between the EU and Japan for an Economic Partnership. The Council also decided to send the decision to ratify the protocol to the Parliament for its approval. Once the agreement has been ratified by Japan, and the two sides have notified each other about the completion of their internal procedures, it can enter into force.

India seeks service inclusion, investment commitment from Switzerland in EFTA trade deal

India and EFTA (European Free Trade Association) member countries are negotiating a proposed trade deal TEPA (Trade and Economic Partnership Agreement) since 2008, with the latest round of talks took place in January 2024. As part of these discussions, India is pushing for the inclusion of services in the trade deal, aiming to stimulate domestic manufacturing and attract investments from Swiss companies. While Switzerland already levies zero customs duty on almost all its goods, government sources have indicated that India has sought commitment on investment so that the zero duty on goods can be balanced and India’s interests are protected in the bargain. While both the sides are trying to conclude the trade talks soon, a government official informed that several formalities still remain along with the text that remains to be closed.

Indonesia seeks trade deal with EU to compete with Vietnam

Indonesia is urgently pursuing a trade agreement with the European Union. This initiative, according to Indonesian Economic Affairs Coordinating Minister, is largely motivated by the desire to level the playing field with Vietnam, which currently benefits from the EU-Vietnam Free Trade Agreement (EVFTA).

Minister pointed out that Vietnam's existing trade deal with the EU, which has been an aspiration of Indonesia for many years, is significantly advantageous for Vietnamese exporters. The EVFTA, effective since 2020, eliminates 99 per cent of tariffs, paving the way for an array of goods, especially footwear, from Vietnam to penetrate the European market. Footwear is one of Vietnam's key export items to the EU under the EVFTA. The Observatory of Economic Complexity lists Germany and Belgium, both EU members, among the top five destinations for Vietnamese footwear exports in 2021. Vietnam's total footwear export value for that year was just under $20 billion. By contrast, Indonesia's exports were a fraction of Vietnam's, totalling $5.8 billion in 2021, with exports to Germany and Belgium valued at $505 million and $284 million, respectively, compared to Vietnam's $1.04 billion and $722 million. Since 2016, Indonesia has been negotiating a Comprehensive Economic Partnership Agreement (CEPA) with the EU. The two parties have concluded their 16th round of negotiations and plan to meet again next month. The Indonesian government is keen to conclude the CEPA negotiations this year.

Japan and Bangladesh to negotiate economic partnership agreement

Japan and Bangladesh are set to agree to launch negotiations for an economic partnership agreement as early as end of the month, with the countries aiming to seal the deal in 2025. Bangladesh exports a significant amount of textiles to Japan, with many Japanese companies investing in the South Asian nation. However, Bangladesh is expected to be upgraded from a United Nations list of "least-developed countries" in 2026, meaning that it will no longer be exempt from tariffs on exports to developed nations.

An EPA would suppress the effect of the status change on Bangladesh’s exports to Japan. Meanwhile, Tokyo hopes Dhaka will lower tariffs on imported steel and automobiles — which are around 10% and 25%, respectively — as the Bangladeshi economy grows quickly and demand for infrastructure expands. The sides will negotiate tariffs on rice and Japanese beef, or Wagyu, with Tokyo hoping to increase its agricultural product exports. Japan imported about $1.72 billion of goods from Bangladesh in 2022. Apparel, such as clothes and shoes, made up over 90% of the imports. Japan’s exports to Bangladesh totaled about $2.57 billion, of which roughly 30% was iron and steel.

Kenya and South Africa launch first consignment under the continental free trade agreement

Kenya and South Africa have jointly launched the first consignment under the African Continental Free Trade Agreement (AfCFTA) framework, signalling commitment to a united African market. South Africa, taking the lead, dispatched a consignment featuring refrigerators, paperboard, and steel products destined for the Kenyan market, demonstrating a clear readiness for business within the AfCFTA framework. The launch occurred during the 13th AfCFTA Council of Ministers Meeting in Durban, where the President of South Africa Cyril Ramaphosa, presided over the ceremony.

Modernisation of the EFTA–Chile free trade agreement conclusion of negotiations

On 19 January 2024, Member States of the European Free Trade Association (Iceland, Liechtenstein, Norway and Switzerland) and Chile concluded negotiations on the modernisation of the existing EFTA–Chile Free Trade Agreement (FTA). The EFTA States signed an FTA with Chile in Kristiansand, Norway, on 26 June 2003. The Agreement entered into force on 1 December 2004. With the modernisation, the FTA is upgraded to an ambitious and broad-based Agreement, updating trade in goods, trade in services including financial services, intellectual property rights (IPR) and government procurement. The modernised FTA will further include new chapters on trade and sustainable development and digital trade and, for the first time, a chapter on small and medium-sized enterprises (SMEs). Bilateral EFTA–Chile merchandise trade reached almost EUR 847 million in 2022. EFTA’s main exports to Chile were pharmaceutical products, machinery and mechanical appliances, ships, boats and floating structures, precision instruments (optical, medical, surgical) and watches. For the same year, imports from Chile consisted mainly of chemicals, fruits and nuts, fats and oils, beverages and spirits, and animal feed.

Nepal, Australia sign trade and investment framework arrangement

A trade and investment agreement has been signed between Nepal and Australia. The agreement was signed during Foreign Minister NP Saud's visit to Australia. Nepal's Ambassador to Australia, and Australia's Assistant Foreign Minister, have signed the agreement. According to the Ministry of Foreign Affairs (MoFA), the agreement was signed in the presence of Foreign Minister Saud and his Australian counterpart Penny Wong. After the signing ceremony, Foreign ministers of both countries expressed confidence that the agreement would be important to further enhance the friendly relations between Nepal and Australia.

Nigeria, UK to sign enhanced trade investment partnership agreement

Governments of Nigeria and the United Kingdom has signed the Enhanced Trade Investment Partnership (ETIP) Agreement to not just boost its trade volume but also reduce market access and regulatory barriers discouraging people from investing in either of both nations. The ETIP, which is just a step below the Free Trade Agreement between both nations, is the first-of-its-kind partnership between the two nations.

Sri Lanka to join Regional Comprehensive Economic Partnership

Sri Lanka will soon join the Regional Comprehensive Economic Partnership (RCEP), said President Ranil Wickremesinghe at the opening of the fifth session of the Ninth Parliament and presenting his policy statement. Signed in November 2020, RCEP is the first free trade agreement among the largest economies in Asia, including China, Indonesia, Japan, and South Korea. Subsequent to the recent free trade agreement signed with Thailand, steps are being taken to enhance the trade agreement with India, and the free trade agreement with Singapore is fully operational. There are also plans to pursue a free trade agreement with China, Indonesia and Bangladesh in the future.

South Korea, India to hold new round of talks on upgrading free trade pact

South Korea and India will launch a new round of negotiations to upgrade their bilateral trade pact. The bilateral CEPA was implemented in January 2010, and the two sides began talks for its revision in 2015 to better reflect changing global trade circumstances. The last session took place in November 2022 after a three-year hiatus due to the COVID-19 pandemic and other issues. During the upcoming round of negotiations, the two sides are expected to discuss ways to improve the deal regarding tariffs on goods and services, investment and origin rules, among other issues.

Singapore ratifies UK’s accession to transpacific free trade pact

Singapore has formally ratified the UK’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on January 2023. This means that more than 99 per cent of UK goods exports – including British whisky and cars – to member nations of the Pacific Rim free trade pact will be eligible for zero tariffs. The UK first applied in February 2021 to join the 11-member Indo-Pacific trade group that comprises Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Negotiations concluded in March 2023 and the UK formally signed the treaty later in July.
For the agreement to enter into force, each of the existing member nations will first have to ratify the UK’s accession in accordance with their domestic law. Japan was first to ratify the UK’s membership in December last year, and Singapore stands as second.

Thailand and EFTA expect to wrap up free trade agreement by year-end

Both parties are determined to have the deal finalised by the end of the year. Officials from the EFTA, comprising Liechtenstein, Iceland, Norway, and Switzerland, last met with Thai delegates in November, concluding the seventh round of talks. In 2022, bilateral trade between Thailand and EFTA member nations exceeded $3.5 billion. Negotiations between the EFTA and Thailand first began in 2005 but halted a year later, before being revived again in 2022. According to EFTA, electronic machinery and parts for clocks and watches ranked among Thailand’s top exports to member countries.

Thailand, Sri Lanka sign free trade agreement

Thailand and Sri Lanka signed a Free Trade Agreement on 03rd February, a move Sri Lanka hopes will help it emerge from its worst financial crisis in decades. The island nation has been renewing a focus on trade deals to foster economic growth and help its battered economy, which is estimated by the World Bank to have contracted 3.8% last year, after a severe foreign exchange crunch plunged it into a wider financial crisis. The Free Trade Agreement (FTA) is aimed at enhancing market opportunities, with negotiations covering various aspects such as Trade in Goods, Investment, Customs Procedure and Intellectual Property Rights, the short statement added. The two countries also signed a new bilateral air services agreement, providing for liberalized air services between the two countries. The countries' two-way trade was worth about $460 million in 2021, Sri Lankan central bank data shows. Sri Lanka exports mainly tea and precious stones to Thailand and imports electronic equipment, food, rubber, plastics and pharmaceuticals.

UAE’s Comprehensive Economic Partnership Agreement with Cambodia enters into force

The UAE’s Comprehensive Economic Agreement with Cambodia has officially entered into force, promising to enhance trade flows, create opportunities for strategic investment, and accelerate economic diversification for both countries. The agreement will do so through the removal or reduction of tariffs on more than 92% of product lines, eliminating unnecessary barriers to trade, and improving market access for service exports. The UAE-Cambodia Comprehensive Economic Agreement is the fifth CEPA to come into force; the deal has the potential to more than double the total value of non-oil trade between the UAE and Cambodia to US$1 billion by 2030. It builds on growing bilateral relations that resulted in non-oil trade exceeding US$407 million in 2022, a growth of 33% compared to 2021.

UK signs landmark economic partnership with Nigeria

Business and Trade Secretary visits Nigeria to sign a landmark UK-Nigeria economic partnership.

• Kemi Badenoch to sign first-of-its-kind trade and investment partnership
• Partnership will build on strong UK-Nigeria trading relationship worth £7 billion and unlock new opportunities in sectors such as legal, financial services and energy
• Visit comes as UK energy firm Konexa sign deal to support Nigeria’s transition to sustainable energy

The UK signed a partnership with Nigeria to boost trade and investment and unlock new opportunities for UK and Nigerian businesses.  The Enhanced Trade and Investment Partnership (ETIP) is the first the UK has signed with an African country and is designed to grow the UK and Nigeria’s already thriving trading relationship, which totalled £7 billion in the year to September 2023. The partnership will create opportunities across a breadth of sectors crucial to both economies, such as financial and legal services.  

It will see the UK and Nigeria’s shared aspiration to facilitate each other’s lawyers practising foreign and international law in each other’s jurisdictions - a step which could significantly enhance legal services collaboration and exports. It will also pave the way for further collaboration in the film and media industry and encourage world-leading UK education providers to offer high quality education in Nigeria.

Nigeria is the biggest economy in Africa and one of the world’s fastest growing economies – predicted to be in the top 20 by GDP by 2035. It is also predicted by the UN to nearly double its population to over 370 million people by 2050.

UK halts post-Brexit trade negotiations with Canada

Negotiations between the UK and Canada on a post-Brexit trade deal have broken down after nearly two years, following a row over beef and cheese. Canada has been pushing for the UK to relax a ban on hormone-treated beef, which its producers say in effect shuts them out of the British market. The UK have concerns about 245% import taxes Canada put at the start of the year on British cheese. The pause in talks mean British car firms could also face higher tariffs. It will also mean the UK's trading terms with Canada will now be worse than when it was part of the EU's deal with the country. 

The British Chambers of Commerce (BCC) and the Society of Motor Manufacturers and Traders (SMMT) described the news as unwelcome. A time-limited agreement allowed the UK to continue to sell cars and cheese without high import taxes. But talks about extending these as part of a new deal have now broken down. This is the first time the UK has formally suspended talks with a trade partner since formally leaving the EU trading regime in 2021. The previous agreement had allowed the UK to continue to sell cars and cheese in Canada without it charging import tax. However, Canada’s government has been facing pressure from the beef industry and domestic cheesemakers.s

Vietnam, UAE speed up negotiation for comprehensive economic partnership agreement

Officials from Việt Nam’s Ministry of Industry and Trade (MoIT) and the UAE Ministry of Economy have agreed to speed up negotiations for a comprehensive economic partnership agreement (CEPA) between the two countries. Welcoming Minister of State for Foreign Trade of the UAE Ministry of Economy in Hà Nội, MoIT Minister hailed the Việt Nam- UAE economic and trade cooperation in recent years. The two countries have been expanding cooperation in many fields, notably with the launch of their negotiations for Việt Nam-UAE CEPA. Appreciating the efforts and results that the negotiation delegations of the two countries have made, the two officials discussed measures to address issues on which the two sides have different points of view. Regarding bilateral cooperation, Minister Diên called on the UAE side to consider and facilitate business delegation exchanges and coordinate to organise trade promotion activities. He also proposed UAE businesses invest in Việt Nam in areas of mutual interest. The two sides agreed to cooperate more closely to speed up the Việt Nam - UAE CEPA negotiation process and conclude it soon.

Currently, the UAE is the largest export market and the second-largest trade partner of Việt Nam in West Asia. In 2023, Việt Nam's exports to the UAE reached over US$4 billion and its imports from this market hit over $676 million, marking a year-on-year increase of 4.3 per cent and 16 per cent respectively.

Việt Nam's main exports to the UAE include mobile phones, computers and components, electrical products, household electronics, pepper, seafood, footwear, textiles, grain products, plastic, and wooden furniture. It imports raw plastics, liquefied petroleum gas (LPG), petroleum products, animal feed materials, metals and chemicals.