Free Trade Advances, Just Not in the US
Posted on February 1, 2018
Free trade agreements abound across the globe while the US remains in protectionist mode. Europe and Asia are the most active players, each moving forward with multiple trade deals. The following highlights the agreements being negotiated or completed.
A large pact between the Association of South-East Asian Nations (ASEAN) and its neighboring countries including China and India is underway. The agreement, called the Regional Comprehensive Economic Partnership (RCEP), includes the ASEAN countries of Vietnam, Thailand, Singapore, Philippines, Myanmar, Malaysia, Laos, Indonesia, Cambodia and Brunei in partnership with Australia, China, South Korea, Japan, New Zealand and India. These countries comprise nearly half of the world’s population and almost 30% of global GDP. Many of them already have free trade agreements with one another, but RCEP would simplify the complex tariff rates and rules-of-origin that currently cloud doing business in the region.
RCEP negotiations were due to conclude late last year, but participants hope that continued talks will yield a better deal. The agreement focuses on tariffs on goods and services, investment, e-commerce, economic and technical cooperation, intellectual property, worker migration and other issues. A commonality it has with the former-Trans-Pacific Partnership (TPP) agreement is that it pairs together developing economies with the developed.
Singapore’s Prime Minister said after a recent RCEP summit, “It could potentially transform the entire East Asian region into a single market.”
As for the former TPP agreement, it’s still underway and has been renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The remaining 11 countries involved are set to sign CPTPP in March in Chile.
Beyond the RCEP, China is moving forward with multiple bilateral trade deals. China and the Maldives signed a free trade agreement on December 7, 2017 that eliminated tariffs on all imports. It was the first official free trade agreement for Maldives, which primarily exports fish.
A free trade agreement between China and the country of Georgia was signed last year and came into effect on January 1, 2018. In addition to the agreement, which lowers tariffs to zero on Chinese and Georgian imports, the two countries have also signed a Memorandum of Understanding to establish economic zones and increase entrepreneurial capacity. Chinese investment into Georgia includes several Chinese corporations further developing the Black Sea ports of Poti and Anaklia in Georgia.
Europe has been busy on the trade front lines. Their agreement with Canada, called the Comprehensive Economic and Trade Agreement (CETA), went into effect last September. CETA abolishes about 98% of tariff duties on each side, although it’s still employed on a provisional basis until each of the EU member states ratify it.
In addition, European leaders will soon sign the biggest bilateral trade agreement ever negotiated by the EU, with Japan. The EU-Japan Economic Partnership Agreement will remove “the vast majority” of duties and some regulatory barriers, and is expected to increase European cheese, wine and beef exports to Japan.
The European Union and Vietnam are set to sign an EU-Vietnam Free Trade Agreement this summer, if Vietnam’s workers’ rights issues can be reformed. Singapore is also set to begin free trade with Europe later this year.
The EU is currently upgrading its trade deals with South Korea, Mexico and Chile and beginning negotiations with Australia, New Zealand and the Mercosur countries of Uruguay, Paraguay, Argentina and Brazil. The EU was set to establish free trade with the Philippines but due to EU concerns over human rights, that agreement has been set aside.
As trade becomes more and more important to each country’s economy, “fair and reciprocal” agreements should be the goal of the trading countries. With many countries working towards that objective, continued trade and continued growth are possible.