February Trade Update
The trade policy world has not sat still for Christmas or the New Year!
China FTA Upgrade
New Zealand and China held a virtual signing ceremony for the FTA Upgrade on 26 January. This had been launched by the previous National government so was several years in the making.
This upgrade agreement is currently going through the Parliamentary Treaty Ratification process (Submissions close on 3 March).
The gains are not spectacular but are good to have. Outcomes include the elimination of over 10 years of tariffs on 12 wood and paper products, improved commitments from China for a range of services, and useful facilitation measures including a commitment that perishable goods will be released from ports/airports within 6 hours wherever possible. New Chapters have been added on Government Procurement, e-commerce, competition policy, and environment trade.
The 9th round of FTA negotiations with the EU concluded on 1 December 2020.
Some progress was made in some areas and three Chapters were completed – SMEs, Capital Movements, and Dispute Settlement. However, there has been no improvement in the EU market access offer. Without this, it is unlikely that this negotiation can make much more progress. The negotiators are due to meet again in March.
The third round of negotiations with the UK was held between 26 January and 10 February. Crucially the UK has tabled a goods market access offer. New Zealand has stated that improvements need to be made (we understand that it is poor for agriculture). The UK has undertaken to revise the offer before the next round of negotiations.
Interestingly the two sides have not yet exchanged offers for services and investment.
While the third round of NZ-UK negotiations was underway, on 1 February the UK formally applied to join the CPTPP. This was not a surprise move, but the timing is curious given that the UK is still in mid-negotiation on FTAs with Australia and New Zealand. Given that it is most unlikely that the UK could join CPTPP until these negotiations are concluded the UK has given Australia and New Zealand extra leverage in their bilateral actions through this application.
CPTPP members will consider the UK application and will establish a working group to do this.
US Trade Policy Under President Biden
Those expecting a major and rapid change in the policies adopted by the Trump Administration will have been disappointed by the early trade policy moves made by Washington.
The people being appointed to key roles are good and the Administration did remove the US block on the consensus candidate for WTO Director-General. However, there is no sign that the Trump tariffs will be removed and there is a publicly stated focus on the interests of the American worker. USTR nominee has yet to be confirmed by the Senate (indeed her confirmation hearings are coinciding with the publication of this report) but her comments in writing are focused on enforcement of rules, on the need for new rules, and China. Tai makes it clear that the US will be wanting to work jointly with friends to address the challenge posed by China.