Preferential Trade updates 07/22
AfCFTA suffers setback as Benin Republic slams CFA9m on Nigeria-bound transit cargoes
The African Continental Free Trade Agreement (AfCFTA), may have suffered setback over huge tariffs and checkpoints delaying smooth movement of transit cargoes along the West African corridor. The AfCFTA is an ambitious trade pact to form the world’s largest free trade area by connecting almost 1.3bn people across the 54 African countries. The agreement aims to create a single market for goods and services in order to deepen the economic integration of Africa. The AfCFTA aims to reduce tariffs among members and covers policy areas such as trade facilitation and services, as well as regulatory measures such as sanitary standards and technical barriers to trade. The agreement was brokered by the African Union (AU) and was signed by 44 of its 55 member states in Kigali, Rwanda on March 21, 2018. The only country still not to sign the agreement is Eritrea, which has a largely closed economy. As of 10 February 2022, 41 of the 54 signatories had deposited their instruments of ratification with the chair of the African Union Commission, making them state parties to the agreement.
Britain launches free trade talks with Gulf countries
Britain will launch talks over a new free trade deal with six Gulf states including Saudi Arabia and charities warned it not to ignore human rights in its latest bid to grow non-EU ties after Brexit. Trade minister Anne-Marie Trevelyan will visit Riyadh to begin discussions with the Gulf Cooperation Council (GCC), which is made up of Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates as well as Saudi Arabia. In 2021 total trade between the UK and the GCC was worth 33.1 billion pounds ($40.35 billion), of which 11 billion pounds in trade was with Saudi Arabia.
Egypt, EAEU discuss launching new free trade agreement
Egypt’s Minister of Trade and Industry Nevine Gamea stated that a free trade agreement between Egypt and the Eurasian Economic Union (EAEU) has been negotiated. This agreement represents a new bridge to strengthen and develop joint economic relations between the two sides in various fields and at all levels.
Minister highlighted the importance of reaching a comprehensive and balanced agreement that meets the aspirations of the Egyptian people and the peoples of the Union to develop trade exchange and enhance industrial and investment cooperation in addition to all aspects of economic cooperation. This came during a meeting between Minister Gamea and Minister in charge of Trade of the Eurasian Economic Commission, Andrey Slepnev, at the conclusion of the Egyptian minister’s participation in St. Petersburg International Economic Forum.
EU teams up with Ecuador, Kenya, New Zealand to forge cooperation on trade and climate
This reflects their shared commitment to bringing the fight against climate change to the forefront of trade policy. The ministers want to enhance ministerial-level dialogue so trade and trade policies can support the Paris climate goals, sustainable development, environmental sustainability and a just transition.
They met trade ministers from a diverse group of countries to start a dialogue and enhance international cooperation on the trade and climate nexus and its contribution to sustainable development and environmental sustainability. The co-leads will meet in July to decide on the next steps for the creation of this new coalition. They will take into account the views expressed by the ministers. Subsequently, the co-leads plan to organise the first Coalition meeting early next year.
EU and New Zealand secure free trade agreement
New Zealand and the European Union (EU) have secured a highly anticipated trade deal, through last-minute negotiations. The deal is estimated to be worth $1.8 billion annually to New Zealand, when it’s fully rolled out by 2035. Geographic indicator rules (GIs) will mean Kiwis can’t sell products called “feta” or “port” in nine years. The deal includes sanctionable commitments to the Paris Climate Agreement. New Zealand has secured a free trade agreement with the European Union, estimated to be worth $1.8 billion annually when it’s fully implemented. The agreement will remove 91% of duties on New Zealand products as soon as the deal is actioned, and the removal of many tariffs will save exporters an estimated $100 million.
German parties agree to ratify EU-Canada free trade deal
The three parties in Germany’s ruling coalition agreed to ratify the European Union’s free trade deal with Canada, a senior Social Democrats official said. The Comprehensive Economic and Trade Agreement (CETA) sets out the removal of tariffs on 99% of all goods types traded between the EU and Canada, some over a period of up to seven years. It has been provisionally in force since September 2017 but has to be ratified by the 27 members of the EU. So far, 15 EU member states had notified the European Council of completing of the ratification procedures.
Iran, EAEU continue negotiations on free trade agreement
Iran and the Eurasian Economic Union (EAEU) representatives have gathered in Tehran for the fifth round of negotiations on upgrading the current preferential trade agreement between the two sides into a free trade agreement, the portal of Iran’s Trade Promotion Organization (TPO) reported.
The talks started with the presence of a Eurasian delegation comprised of representatives of the union’s member states and the Eurasian Economic Commission, as well as TPO Head Alireza Peyman-Pak and representatives of various Iranian ministries and agencies. The negotiations on turning the preferential trade agreement into a free trade agreement began about 1.5 years ago and are expected to conclude before the end of the current year. The purpose of these negotiations is to determine the commodity items that should be included in the agreement. If the free trade agreement is implemented, 80 percent of the goods traded between the two sides will be exchanged with zero tariffs.
India, UK to hold fifth round of talks on FTA in July
India and the UK said that they will hold the fifth round of talks for a free trade agreement in New Delhi in July, with leaders of the two countries having already set a target for concluding the negotiations by October. The two sides concluded the fourth round of talks for the India-UK Free Trade Agreement (FTA) on June 24, according to a joint outcome statement. During the fourth round of negotiations, a “detailed draft treaty text was advanced across the majority of chapters”, the statement said. The fourth round of technical talks was held in a hybrid format, with some teams meeting in London and a majority of the officials joining virtually. “The fifth round of negotiations is due to take place in July 2022 in New Delhi,” the statement said.
India, EU resume free trade talks after 9-year lull
India and the European Union (EU) have resumed free talks for free trade agreement (FTA) after a nine years lull. The talks were re-launched at an event held at the European Union headquarters in Brussels on June 17. India’s Commerce and Industry Minister and Executive Vice-President of the European Commission formally re-launched the India-EU Free Trade Agreement (FTA) negotiations. The first round of India-EU free trade agreement negotiations was conducted in New Delhi on June 27. This would be one of the most significant FTAs for India as the EU is its second-largest trading partner after the US. The India-EU merchandise trade has registered an all-time high value of $116.36 billion in 2021-22 with a year-on-year growth of 43.5%. India’s export to the EU jumped 57% in FY 2021-22 to $65 billion. India has a surplus trade with the EU. During India-EU Leaders’ meeting held in Porto on 8th May 2021, an agreement was reached for resuming negotiations for a balanced, ambitious, comprehensive and mutually beneficial FTA and starting fresh negotiations on the IPA and a separate agreement on GIs.
Japan, Bahrain sign investment agreement
Japan and Bahrain signed an investment agreement that is expected to help bolster economic ties between the two countries, the Japanese Foreign Ministry said. The deal, called the Agreement between Japan and Bahrain for the Reciprocal Promotion and Protection of Investment, was signed by Japanese Parliamentary Vice-Minister for Foreign Affairs Taro Honda and Undersecretary for Financial Affairs at Bahrain’s Ministry of Finance and National Economy Yusuf Abdulla Humood in Manama, the ministry said in a press release.
The bilateral agreement aims to further protect and promote investment between the contracting parties, the ministry said, adding that it stipulates the treatments accorded to investment activities and investments when an investor of a contracting party invests in the other contracting party.
Malaysia, Turkey to expedite negotiations on free trade agreement expansion
Malaysia and Turkiye have committed to continue to work expeditiously to accelerate the completion of negotiations on the expansion of the Malaysia-Turkiye Free Trade Agreement (MTFTA) as soon as possible, says the International Trade And Industry Ministry (MITI). MITI said this includes the commitment for concessions with regard to trade in services, e-commerce, and investment.
Mexican workers file USMCA complaint against VU Manufacturing
A group of Mexican workers at VU Manufacturing has filed a petition under the US-Mexico-Canada trade agreement (USMCA) alleging that the Michigan-based auto-parts maker is pushing them to join a union friendly to the company. VU workers at the plant on the US-Mexico border had been organizing independently until the company invited the Confederation of Mexican Workers (CTM) into the Coahuila factory to become the employees’ union representative without their consent, the group said in a statement. When one worker complained during a CTM presentation, he was escorted off the premises and fired.
Norway Customs has removed Uruguay from the list of GSP countries.
Effective from 01 July 2022, Norway Customs has removed Uruguay from the list of GSP (Generalized System of Preferences) countries.
New Zealand secures major free trade deal with European Union
The European Union and New Zealand completed negotiations for a free trade agreement that could boost the flow of goods and services by 30% and highlights Europe's push for alliances to make up for its business withdrawal from Russia. The agreement will remove tariffs on a wide range of products and be the first struck by the EU to include potential sanctions for violations of environmental or labour standards.
Tariffs will fall for EU exports such as clothing, chemicals, pharmaceuticals and cars, as well as wine and confectionary. The EU will increase by 10,000 tonnes its quota of New Zealand beef, a sensitive area for France in particular, as well as raising volumes for lamb, butter and cheese. The deal may enter force in 18-24 months, subject to approval by the European Parliament and EU governments, a process which has in cases dragged on for years.
Philippines ready to sign free trade pact with S.Korea
The Philippines’ free trade agreement (FTA) with South Korea is inching closer to formalization with the initial signing of the economic pact seen within the next two weeks. An initial signing means that negotiating parties have agreed on the terms of the FTA. In October last year, Manila and Seoul concluded their FTA negotiations after over two years of discussion. This was followed by “legal scrubbing” of the provisions of the FTA. By the time FTA talks were done, the Philippines secured zero tariffs for exports of bananas and canned pineapples to Korea, which are expected to take effect in five years and seven years, respectively.
The Philippines’ free trade agreement (FTA) with South Korea is inching closer to formalization with the initial signing of the economic pact seen within the next two weeks.
UAE, Indonesia sign free trade agreement
Indonesia and the United Arab Emirates today signed a free trade agreement, strengthening economic ties between Southeast Asia’s largest economy and the major oil producer Gulf state. This came as Indonesia’s Defence Minister, Prabowo Subianto, is on an official visit to the UAE where he met with his Emirati counterpart Mohammed Bin Ahmed Al Bowardi.
During the meeting, the parties discussed cooperation and joint coordination between the two friendly countries in the defence and military fields and ways to enhance them in the best interest of the two countries. The two sides attended the signing of Memoranda of Understanding and agreements, including a protocol agreement between the Ministries of Defence in both countries regarding cooperation in the field of defence industries and military procurement, a protocol agreement between the Indonesian Ministry of Defence and the Tawazun Economic Council. The two sides also signed a MoU for cooperation in the design, manufacture and marketing of mechanisms fields between the Indonesian Ministry of Defence and the UAE company Calidus.
UK launches ambitious trade deal with Gulf nations
Trade Secretary launches free trade negotiations between the UK and the Gulf Cooperation Council, made up of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.
Equivalent to the UK’s seventh largest export market, the GCC bloc’s demand for international products and services is expected to grow rapidly to £800 billion by 2035, a 35% increase – opening huge new opportunities for UK businesses. A free trade deal would also open the door to increased investment from the Gulf, supporting and creating jobs across the country. In a visit to Riyadh, Saudi Arabia, the Secretary of State will meet the GCC Secretary General, Dr Nayef Falah M. Al-Hajraf, and her counterparts from all six GCC countries, to launch talks expected to culminate in a trade deal worth £1.6 billion more a year to the UK economy. It is the fourth major set of Free Trade Agreement (FTA) negotiations launched by the Trade Secretary this year, following visits to begin talks in India in January, Canada in March, and the launch of negotiations with Mexico last month.
UAE and Indonesia sign comprehensive economic partnership agreement
The UAE and Indonesia, the biggest South-East Asian economy, signed a Comprehensive Economic Partnership Agreement to boost mutual trade between the two nations. Following the signing of the agreement, bilateral non-oil trade is expected to jump from about $3 billion currently to $10 billion in the next five years. The two countries eliminated or will gradually reduce the tariff for almost 99 per cent of “most of the commodities we’ve been trading in the last three years.
USTR announces new declaration on good regulatory practices
The United States announced a new joint declaration on Good Regulation Practices (GRP) alongside Argentina, Brazil, Canada, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Haiti, Panama, Paraguay, and Uruguay. The announcement came as trade ministers and other officials convene in Los Angeles for the Ninth Summit of the Americas. Good regulatory practices are fundamental to transparent governance and fair trade. They promote development of better regulations, prevent and reduce non-tariff barriers, and support compliance with international trade obligations. Many trade agreements in the Hemisphere, such as the USMCA, MERCOSUR, the Pacific Alliance, as well as other bilateral arrangements, contain provisions on good regulatory practices.
The new GRP Declaration builds on this understanding with a broad set of regional partners. The declaration identifies actions and practices adhering countries intend to take to instill confidence, accountability, and predictability in regulatory processes. They include providing easy access to regulatory information, conducting public consultations in an open and inclusive manner; engaging all interested persons in the regulatory process; conducting reviews of regulations in effect; and using relevant international standards, guides and recommendations to avoid unnecessary obstacles to trade. The adhering countries plan to assess progress on actions and practices by the end of 2023 to provide forward momentum to this important trade initiative.