Preferential Trade updates January 2025

January 16, 2025

China-Maldives free trade agreement to take effect

The China-Maldives Free Trade Agreement (FTA) entered into force on Jan 1, 2025, China’s Ministry of Commerce (MOC). The vast majority of China’s industrial exports to the Maldives, including ships, electrical equipment, furniture and agricultural products, will benefit from the FTA after its implementation. The vast majority of the Maldives’ aquatic exports to China will also enjoy zero tariffs, according to the statement. The implementation of the FTA is expected to provide a solid institutional guarantee for the improvement of the trade and investment liberalization and facilitation levels between the two countries, significantly promote the development of bilateral economic and trade relations, and continuously improve the well-being of businesses and people in both countries.

EU – Colombia, Peru and Ecuador preferential trade: update to Harmonised System 2022

Trade Committee established by the Trade Agreement between the EU and Colombia, Peru and Ecuador updated the list of working or processing operations required to confer originating status on products manufactured from non-originating materials, in line with the Harmonised System (HS) 2022. This means that if a product is made in one of those countries using materials from outside, certain conditions must be met for the product to count as "made in" that country. The changes will enter into force on 29 January 2025.

EU - Chile Interim Trade Agreement (ITA) will enter into force on 1 February 2025

The EU-Chile Interim Trade Agreement (ITA) will enter into force on 1 February 2025, replacing the previous EU-Chile Association Agreement. The ITA introduces a simpler approach to establishing preferential origin. Instead of the EUR.1 movement certificate or invoice declarations, the exporters and importers can now use self-certification, based on statements on origin even for multiple shipments of identical products, or importer’s knowledge.

From 1 February 2025 the following changes apply:

  1. The EUR.1 movement certificates and the invoice declarations issued in accordance with the (old) EU-Chile Association Agreement will no longer be accepted as proof of preferential origin for the goods imported or released for free circulation in the European Union or Chile starting from 1 February 2025. From that date, the claims for preferential origin should be based on a statement on origin or importer’s knowledge, as appropriate. 
  2. The claims for preferential origin for the products in transit, temporary storage, warehousing or in free zones on 1 February 2025 should be based on the statements on origin, as provided under ITA.
  3. The Approved Exporter numbers under the (old) Association Agreement are replaced by the REX number. Accordingly, the statements of origin for the EU originating products in consignments above 6000 Euro should contain the REX number. EU exporters requiring a REX number can find out where to apply here.

A detailed guidance on the new ITA rules on preferential origin is under preparation and will be published as early as possible. In case of any questions please contact DG TAXUD.

EU deforestation law: Parliament set to adopt one-year delay

The EU deforestation law aims to ensure that products sold in the EU are not sourced from deforested land anywhere in the world. The provisional political agreement between Parliament and the Council will postpone for one year the application of the EU deforestation regulation, which was originally to be applied by companies from 30 December 2024. The plenary vote is scheduled for Tuesday. Large operators and traders will now have to respect the obligations of this regulation as of 30 December 2025, and micro- and small enterprises from 30 June 2026. The additional year is intended to help companies around the world implement the rules more smoothly from the beginning, without undermining the objectives of the law.

India-UK free trade pact talks to resume by Jan-end

India and Britain will resume their talks on a free trade agreement by the end of January.
The countries have held start-stop talks over the agreement for two years. British Prime Minister Keir Starmer’s office had said last month that talks would be restarted in the "new year". Earlier, Starmer had stated his wish to negotiate a trade deal with India, saying that boosting trade abroad would be highly important in order to strengthen the domestic economy. Both countries aim to begin a new strategic partnership, including a trade agreement, while furthering cooperation in areas such as security, education, technology, and climate change. Both Starmer and Prime Minister Narendra Modi underscored the importance of promptly resuming Free Trade Agreement (FTA) negotiations to address pending issues to mutual satisfaction.

India, Asean trade agreement review faces delays

The planned makeover of India’s 14-year-old goods trade pact with Asean may take longer than expected as members of New Delhi’s fourth largest trading partner press to negotiate tariffs individually.

Indonesia-EU trade pact deadline pushed to first half of 2025

Indonesia has delayed the completion of its trade agreement with the European Union (EU), now aiming to conclude negotiations by mid-2025. While 85% of the agreement is reportedly finalized, disagreements on export/import restrictions and investment conditions remain. The EU’s concerns about Indonesian palm oil production, particularly related to deforestation, have also been a point of contention.

India-EFTA trade pact likely to be implemented before end of 2025

The implementation process of free trade agreement (FTA) between India and the four-nation European bloc EFTA is progressing fast and is expected to come into force before the end of this year. The two sides signed the Trade and Economic Partnership Agreement (TEPA) on March 10, 2024. Under the pact, India has received an investment commitment of USD 100 billion in 15 years from the grouping while allowing several products such as Swiss watches, chocolates and cut and polished diamonds at lower or zero duties. The European Free Trade Association (EFTA) members are Iceland, Liechtenstein, Norway, and Switzerland.

The commitment is the key substance of the TEPA (Trade and Economic Partnership Agreement), which took almost 16 years to conclude, for India in return for opening its markets for several products coming from the EFTA nations. There is a provision in the agreement that if the proposed investments would not come because of some reasons, India can suspend duty concessions to the four countries. Domestic customers will get access to high-quality Swiss products such as watches, chocolates, biscuits, and clocks at lower prices as India will phase out customs duties under the trade pact on these goods over 10 years. India and the UK are expected to hold the next round of talks for a proposed FTA later this month to resolve the pending issues and close the negotiations. The talks for the proposed FTA began in January 2022. The 14th round of talks stalled as the two nations stepped into their general election cycles.

Japan, GCC strengthen economic ties with 1st round of FTA talks

Economic ties between Japan and the Gulf Cooperation Council advanced with the successful completion of the first round of Free Trade Agreement negotiations in Riyadh on Dec. 12. Led by Saudi Arabia’s General Authority for Foreign Trade, the discussions aimed to lay the groundwork for future trade agreements, covering key areas such as trade in goods and services, customs procedures, digital trade, rules of origin, intellectual property, and general provisions.

This milestone marks a significant step towards deeper economic collaboration between the two regions. Fareed Al-Asaly, deputy governor of International Organizations and Agreements at GAFT, underscored the importance of the talks, emphasizing that the agreement could lead to increased trade volumes and closer economic integration. He also noted that Japan is a key market for GCC exports. The Saudi delegation included representatives from multiple ministries and government bodies, such as the ministries of energy, investment, environment, water and agriculture, industry and mineral resources, economy and planning, and interior. Additionally, officials from the Saudi Authority for Intellectual Property, the Zakat, Tax, and Customs Authority, the National Cybersecurity Authority, the Saudi Export Development Authority, and the Saudi Central Bank participated in the discussions.

New Zealand ratifies upgraded ASEAN-Australia-New Zealand free trade agreement

New Zealand has ratified the upgraded ASEAN-Australia-New Zealand Free Trade Area (AANZFTA) agreement, further solidifying economic ties with Southeast Asia and creating new opportunities for exporters. The Association of Southeast Asian Nations (ASEAN)—which includes Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam—remains a critical trading partner for New Zealand, ranking as its fourth-largest in two-way trade.
The upgrade to the agreement focuses on:

  • Reducing Trade Barriers: Simplifying regulations and creating more streamlined processes for goods to cross borders.
  • Improving Trade in Services: Enhancing conditions for New Zealand businesses offering services such as education, tourism, health, and financial services.
  • Boosting E-Commerce: Supporting modern digital trade by improving frameworks for online businesses and transactions, ensuring greater efficiency and security.

Philippines  - Korea free trade deal takes effect 

The Philippine-Korea Free Trade Agreement (PH-Korea FTA) is expected to deliver some $189 million in tariff savings for banana exporters within its first five years as the trade deal comes into force. Under the FTA, tariffs on Philippine bananas will gradually reduce over five years. The current 30 percent most favored nation (MFN) rate has decreased to 24 percent by Dec. 31, 2024 and further to 18 percent by 2025, 12 percent by 2026, 6 percent by 2027 and zero by 2028. Trade Undersecretary and BOI managing head said the phased reduction would place the Philippines on par with Vietnam, Peru, Honduras and Costa Rica, which already enjoy duty-free banana exports to Korea.

 

Thailand, South Korea begin third round of Economic Partnership Agreement talks

During the three-day meeting in Bangkok, the two sides will discuss ways to enhance bilateral ties in 18 sectors, including services, investment, finance and the environment. Thailand is South Korea’s 18th largest trade partner globally and fifth among Southeast Asian nations. According to South Korean Deputy Minister for FTA Negotiations Roh Keon-ki, his government is currently engaging in trade negotiations proactively with key partners without disruptions. South Korea will seek to speed up negotiations for an EPA with Thailand, a key member of the Association of Southeast Asian Nations (ASEAN), to expand trade and investment exchanges with the region and help Korean firms enter markets with strong domestic consumption and growth potential, he added. An EPA aims to establish a mutually beneficial trade network with partner nations beyond a simple market opening, though it covers a smaller scope compared to a traditional FTA.

UAE finalises economic partnership deal with Eurasian bloc, including Russia

The UAE finalized an economic agreement with the Eurasian Economic Union aimed at increasing non-oil bilateral trade through the reduction of tariffs and elimination of trade barriers. The agreement will encompass the five members of the EAEU bloc - made up of Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia. Bilateral non-oil trade between the UAE and the Eurasian Economic Union reached $13.7 billion during the first-half of this year, according to a statement. That’s an increase of nearly 30% on an annual basis.

Along with its growing network of partners around the globe, the UAE will aim to offer access to the competitive, high-growth markets in the Middle East, Africa, Asia and South America, according to the statement. In 2021, the Gulf country said it planned to deepen its trade ties with fast-growing economies by attracting $150 billion in foreign investment. It has since signed pacts to grow trade with several countries, such as India, Israel and Turkey. That push has resulted in record non-oil trade of Dh1.4 trillion ($381.2 billion) in the first six months of 2024, an increase of over 11% compared with the same period in 2023.

United Kingdom joins trans-Pacific pact in biggest post-Brexit trade deal

UK officially became the 12th member of a trans-Pacific trade pact which includes Japan, Australia and Canada as it seeks to deepen ties in the region and build its global trade links after leaving the European Union. UK announced last year it would join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in its biggest trade deal since Brexit. The accession means Britain will be able to apply CPTPP trade rules and lower tariffs with eight of the 11 existing members from Sunday - Brunei, Chile, Japan, Malaysia, New Zealand, Peru, Singapore, and Vietnam.

The agreement enters into force with Australia on Dec. 24, and will apply with the final two members - Canada and Mexico - 60 days after they ratify it. The pact represents Britain’s first free trade deals with Malaysia and Brunei, but while it had agreements with the other countries, CPTPP provisions go further, especially in giving companies choices on how to use "rules of origin" provisions. UK estimates the pact may be worth 2 billion pounds ($2.5 billion) a year in the long run - less than 0.1% of GDP. But in a sign of the strategic, rather than purely economic, implications of the pact, Britain can now influence whether applicants China and Taiwan may join the group. The free trade agreement has its roots in the U.S.-backed Trans-Pacific Partnership, developed in part to counter China’s growing economic dominance. The U.S. pulled out in 2017 under then-President Donald Trump and the pact was reborn as the CPTPP.

United States prevails in USMCA dispute on biotech corn

United States Trade Representative announced that the United States has prevailed in its dispute under the United States-Mexico-Canada Agreement (USMCA) challenging certain Mexican biotechnology measures concerning genetically engineered (GE) corn. The USMCA panel agreed with the United States on all seven legal claims, finding that Mexico’s measures are not based on science and undermine the market access that Mexico agreed to provide in the USMCA.

USA and Taiwan’s first FTA now in force

The first agreement signed under a trade initiative between Taiwan and the United States came into force on 10thJanuary 2024, both governments announced, as Taipei hopes a raft of ongoing talks will eventually lead to a free trade deal. Taiwan was excluded from the US-led Indo-Pacific Economic Framework, part of the Biden administration’s effort to counter what it says is Beijing’s increasing economic and military coercion in the region, when it was set up in 2022. But the United States then set up the US-Taiwan Initiative on 21st Century Trade, which joined the US-Taiwan Economic Prosperity Partnership Dialogue and Technology Trade and Investment Collaboration Framework the two sides have.

In a statement, United States Trade Representative Katherine Tai said the first agreement under the 21st Century Trade initiative that will come into force covers areas including anti-corruption, customs administration and trade facilitation, and small and medium-sized enterprises. Taiwan’s Office of Trade Negotiations said in a separate statement the agreement showed the "rock solid partnership" between Taiwan and the United States.

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