Preferential Trade updates May 2024

May 30, 2024

Bangladesh and Japan to hold 1st round of negotiations on Economic Partnership agreement

Bangladesh and Japan had exchanged views on the method of negotiations and a broad range of negotiating areas such as trade in goods, rules of origin, customs procedures and trade facilitation, investment, electronic commerce and intellectual property. Firing the five-day first round of negotiations for the Japan-Bangladesh Economic Partnership Agreement (EPA) held in Dhaka from 19 May to 23 May, both sides decided to work on scheduling the dates of the second round of negotiations through diplomatic channels.

Bhutan and Thailand set to finalise free trade agreement within two years

Bhutan and Thailand launched Free Trade of Agreement (FTA) negotiations last week in Thimphu. During the first negotiation round, the two governments finalised the structure and outline of the FTA, identified the various working groups, focal points, and agreed on a workplan for the negotiations. The FTA aims to provide better market access and enhance bilateral trade and economic co-operation between the two countries. The director of the Department of Trade, Sonam Tshering Dorji, said that there were ten chapters the FTA that would create eight working groups between the two governments. Sonam Tshering Dorji said that one of the working groups would focus on products, with approximately 4,000 to 4,500 products proposed for export. Bhutan has more than 5,000 products tariff lines. The next round of FTA negotiation meetings will be hosted by the Government of Thailand. Trade between the two countries has grown steadily over the years with total trade in goods accounting for USD 23 million (Nu 1.7 billion) in 2023. 

Cabo Verde to benefit from a derogation to the preferential rules of origin

On 6 May 2024 the European Commission granted Cabo Verde a renewal of a derogation that gives originating status to 6 300 tonnes of fish products (tuna, mackerel, frigate tuna) produced in Cabo Verde from fish which is not of Cabo Verde origin. This will enable Cabo Verde to obtain the Generalised System of Preferences preferential tariffs for fish imports to the EU. Cabo Verde encounters regular difficulties to process fish using its “originating” fish, given that the species remain for a short time in its territorial waters and given that Cabo Verde has a shortage of vessels adapted to fishing at long distances. The derogation shall apply to products which have been exported from Cabo Verde and declared for release for free circulation in the EU during the period from 1 January 2024 until 31 December 2025.

China-Serbia free trade deal to take effect in July

A free trade agreement between China and Serbia will take effect on July 1. It is one of six measures announced by the president to support the building of a China-Serbia community with a shared future. Serbia is the first European country to build such a community with China. Among the other measures, there will be more direct flights between Belgrade and Shanghai and airlines will be encouraged to launch direct flights between Belgrade and Guangzhou, and China is ready to import more high-quality agricultural products from Serbia. In a joint statement, the two countries said they decided to deepen and elevate the China-Serbia comprehensive strategic partnership.

China-Ecuador free trade agreement effective from May 1, 2024

The free trade agreement (FTA) between China and Ecuador entered into force from May 1. According to the agreement, China and Ecuador will cancel tariffs on 90 percent of tax items, of which about 60 percent will be canceled immediately after the agreement comes into effect. When most Chinese products such as plastic products, chemical fibers and steel products enter the Ecuadorian market, Ecuadorian import tariffs will be gradually cut to zero from the current 5 to 40 percent. When Ecuador’s major export products such as bananas, shrimps, fish and fish oil enter the Chinese market, China’s import tariffs will be gradually reduced from the current 5 to 20 percent to zero. The gradual elimination of tariffs between China and Ecuador will play an important role in expanding bilateral trade, promoting industrial chain integration and mutual investment. The effective implementation of the FTA will enhance the level of trade and investment liberalization and facilitation between the two countries, further stimulate the potential of trade and investment cooperation, promote the all-round improvement and upgrading of bilateral economic and trade cooperation, MOFCOM added. The biggest advantage of the FTA signed between China and Ecuador is its significant reduction or exemption of bilateral trade tariffs and the cutting of trade barriers.

China, Japan and South Korea to revive FTA talks

Japan, South Korea and China held their first joint summit in more than four years, seeking deeper commercial ties to bolster their economies, including by aiming for progress in stalled negotiations toward a free trade agreement (FTA), but with Seoul and Tokyo also using the occasion to criticize North Korea over a planned satellite launch. South Korean President Yoon Suk Yeol hosted Chinese Premier Li Qiang and Japanese Prime Minister Fumio Kishida in Seoul. None of the three were in office for the last three-way gathering in December 2019, just before the COVID-19 pandemic, in Chengdu, China.

The three countries announced in November 2012 the launch of the negotiations. But the talks stopped after the 16th round, held in November 2019. China has called for restarting them as its economy has weakened. The halt in the talks came amid trade frictions between the U.S. and China and was also affected by the pandemic.

EU and Japan deepen cooperation to ensure stronger and more reliable supply chains

The EU and Japan aim to coordinate and advance their efforts to address strategic dependencies and systemic vulnerabilities in global supply chains by improving their resilience and reliability, particularly in the context of addressing risks related to non-market economies and unfair competition. They pledged to work closely together on climate change, energy security, cyber security and stability of supply, based on jointly agreed principles. The EU and Japan stressed the importance of enhancing their cooperation on economic security. They reiterated the essential role of the international rules-based trading system in underpinning the stability of global trade.

European Commission proposes new rules to help SMEs with dispute resolution under CETA

The new rules streamline and simplify dispute resolution procedures, making it easier for SMEs to access the investment court system (ICS) foreseen by CETA, and saving them time and money. Such improved access is particularly relevant in the context of the tremendous uptake by SMEs of the opportunities created by CETA. Since the agreement provisionally entered into force in 2017, more than 2,500 new EU SMEs have started exporting to Canada or investing in the country. The Commission’s proposal, which follows the conclusion of technical negotiations between Canada and the EU on the new rules in February 2024, will now go to the Council for approval. It will be formally adopted by the CETA Joint Committee once internal approval procedures on the EU and Canadian sides are complete. The new rules will enter into force together with the rest of the investment protection and investment dispute resolution parts of CETA, once the agreement has been fully ratified.

EU – Albania - conclusion of an operational agreement

In accordance with Council Decision (EU) 2023/2105, the Agreement between the EU and the Republic of Albania concerning operational activities carried out by the European Border and Coast Guard Agency in the Republic of Albania was signed on 15 September 2023, subject to its conclusion at a later date. It is now approved in accordance with EU Council Decision 2024/1169. The agreement is a development of the provisions of the Schengen acquis that do not apply to Ireland and Denmark. Link

EU-New Zealand trade agreement enters into force on 01st May 2024, opening new opportunities for EU exporters

EU businesses, producers and farmers are now able to take advantage of a host of new export opportunities with the entry into force of the EU-New Zealand trade agreement today. The deal is expected to cut €140 million a year in duties for EU companies. Thanks to this deal, EU-New Zealand trade is expected to grow by up to 30% within a decade, with EU exports potentially growing by up to €4.5 billion annually. EU investment into New Zealand has the potential to grow by up to 80%. This landmark agreement also includes unprecedented sustainability commitments, including respect of the Paris Climate Agreement and core labour rights. EU farmers will benefit from the elimination of tariffs on key EU exports such as pig meat, wine and sparkling wine, chocolate, sugar confectionary and biscuits. Moreover, the agreement protects the full list of EU wines and spirits (close to 2,000 names), such as Prosecco and Champagne, as well as 163 of the most renowned traditional EU products (Geographical Indications), such as Feta cheese, Istarski pršut ham and Lübecker Marzipan.  Meanwhile, sensitive EU agricultural products such as beef, sheepmeat and dairy products are protected with carefully designed tariff rate quotas.
EU business can now take advantage of benefits such as:

  • Zero tariffs on EU exports to New Zealand.
  • A more open New Zealand services market in key sectors such as financial services, telecommunications, maritime transport and delivery services.
  • Non-discriminatory treatment of EU investors in New Zealand.
  • Improved access for EU companies to New Zealand government procurement contracts for goods, services, works and works concessions.
  • A dedicated chapter to help small business exports.
  • Significantly reduced compliance requirements and procedures.

India to develop SOPs for free trade agreement negotiations

India is gearing up to formulate standard operating procedures (SOPs) for negotiating free trade agreements (FTAs) as the country engages with multiple trade partners for such pacts, according to a senior government official. The move comes amid a flurry of FTA negotiations with countries like the UK, the European Union (EU), Peru, and a comprehensive trade deal with Australia, as well as talks with the Eurasian Economic Union. To chart out a comprehensive strategy, the Ministry of Commerce is organising a two-day ’Chintan Shivir’ (brainstorming session) on FTA strategy and SOPs for trade negotiations, scheduled for May 16-17 in Neemrana, Rajasthan. The deliberations will see participation from former commerce secretaries, industry experts, and government officials. Key issues on the agenda include India’s trade strategy and vision for 2047, economic assessment and modelling of FTAs, inclusion of new disciplines like labour, environment, gender, and indigenous people, services and digital trade, and SOPs for FTA negotiations. Participants will also discuss industry experiences in utilising existing FTAs.

India-Canada FTA talks unlikely to resume soon

India and Canada, talking off and on since 2010 about a comprehensive economic partnership agreement, re-launched negotiations for an interim agreement in March 2023. Premium India and Canada, talking off and on since 2010 about a comprehensive economic partnership agreement, re-launched negotiations for an interim agreement in March 2023. Free trade agreement (FTA) talks between India and Canada, on pause since September 2023, will not be resumed unless political issues that have soured bilateral relations are addressed. Canada halted the talks in September 2023, after they resumed nearly after a decade in March 2022, stating that both countries would mutually decide on resuming the talks in the future. At the time of pausing the talks, over half-a-dozen rounds of negotiations had taken place.

Israel to abolish free trade deal with Turkey, impose 100% tariff on imports

Israeli Finance Minister Bezalel Smotrich said Israel would abolish its free trade agreement with Turkey and also impose a 100% tariff on other imports from Turkey in retaliation for Turkish President Tayyip Erdogan’s decision to halt exports to Israel. The plan would be submitted to the cabinet for approval. Under Smotrich’s plan, all the reduced customs rates applicable to goods imported from Turkey to Israel according to an agreement to the free trade deal would be abolished. At the same time, a duty would be imposed on any product imported from Turkey to Israel at a rate of 100% of the value of the goods in addition to the existing duty rate.

Philippines, UAE set next round of free trade deal discussions for July

Government negotiators from the Philippines and the United Arab Emirates (UAE) have set the next round of negotiations for the planned free trade agreement between the two countries for July. 

Taiwan and US wrap up latest round of talks for trade deal

The second round of a second phase of talks under the United States-Taiwan Initiative on 21st-Century Trade wrapped up in Taipei, after discussions about agriculture, environmental protection, and labor issues. In June last year, the two sides signed accords on small and medium enterprises, measures against corruption, regulatory practices, and customs procedures. The second phase of talks began with a round in Washington, D.C. last August, with a second round of talks conducted in Taiwan over the past five days. 

UAE and New Zealand to being formal negotiation for a free trade agreement

New Zealand and the UAE announced the launch of negotiations on a free trade agreement, also known as a Comprehensive Economic Partnership Agreement (CEPA) on 6 May 2024.
New Zealand Minister for Trade Todd McClay met with his counterpart UAE Trade Minister Thani bin Ahmed Al Zeyoudi in Dubai on the launch of negotiations on a Comprehensive Economic Partnership Agreement (CEPA) and strengthening economic ties between the two countries. The UAE is an important bilateral partner for New Zealand and a key export destination and hub in the Gulf region, McClay said, adding that there are significant opportunities to enhance cooperation across a range of areas, including agriculture and sustainable energy. A high-quality trade agreement will boost New Zealand’s economy and unlock greater export opportunities, he said, adding that new opportunities in the UAE will open further commercial opportunities that will lift domestic incomes and reduce the cost of living.

UK urges Canada to ratify its entry into Pacific trade pact

A British trade official called on Prime Minister Justin Trudeau’s government to ratify the U.K.’s entry into a Pacific trade deal by the end of the year, despite opposition from some Canadian agriculture groups. The two countries are at an impasse in their bilateral free trade talks, which may also be delaying Canadian action to help the U.K. join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, known by the acronym CPTPP. The U.K. signed onto the latter accord last July, and its Parliament formally ratified the deal last week. But before it can start enjoying the benefits, the U.K. needs six of the CPTPP’s 11 members to ratify its accession — and so far only Singapore, Japan, and Chile have done so.

Canadian Trade Minister Mary Ng has yet to introduce a ratification bill in the country’s House of Commons. Jennifer Fagan, head of economics and trade at the U.K. High Commission in Canada, said her country is especially keen to have Canada’s support, given their close ties as allies and Canada’s status as chair of the CPTPP Commission this year.

United States: Expands Section 301 Tariffs on Imports from China, Targeting Green Energy, Metals, Minerals, Port Cranes, Medical Supplies, and Semiconductors

On May 14, 2024, The US administration announced expansions to the United States’ Section 301 tariffs on imports from China, proposing to raise tariffs on solar panels, electric vehicles, batteries, green energy supply chain inputs, ship-to-shore port cranes, steel products, aluminum products, medical syringes, and personal protective equipment (PPE).1 If adopted, some of the new tariffs would enter effect this year, while others would phase in gradually in 2025 and 2026. All current tariffs under the Section 301 action would also remain in place. The United States Trade Representative (USTR) plans to issue more information on the specific products that would be covered by the tariffs, the new exclusion process, and the implementation timeline in a Federal Register Notice (FRN) next week. The announcement is the culmination of the statutory four-year review of the Section 301 Investigation of China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, which USTR commenced two years ago in May 2022.


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