Trade Update August 2019
August Trade Update
The global situation continues to deteriorate. The next tranche of Trump’s China tariffs kick in on 1 September. China has retaliated by imposing its own tariffs and by essentially banning US agricultural imports. Distortions in global markets that have resulted from this trade dispute are becoming increasingly apparent. An essentially political dispute between Japan and Korea is escalating and increasingly flowing over into then trade arena. The US has withdrawn GSP privileges for India. Chances of a hard Brexit are increasing every day. And then there is trade tension between the EU and US. This will be a central feature of the G7 summit next week in France. There are no positive signs from the US that it might reverse course on the appointment of new Appellate judges to the WTO dispute settlement body.
New Zealand, with its network of bilateral and regional FTAs, is as well placed as any jurisdiction to weather this storm. But the seas are very choppy and we will not be immune from all the negative effects of global tensions. Brexit, in particular, risks direct negative impacts on some exporters should the exit occur on 31 October without a deal. There could be chaos at the UK and EU borders for some days. It is essential that New Zealand exporters who might have product due to land in the EU or UK around late October/early November undertake contingency planning in case the worst-case scenario happens. The MFAT and NZTE website are very helpful.
As we have been reporting, the initially good progress has slowed considerably as market access difficulties and EU demands on geographic indications highlight differences between the two sides. There is no way this negotiation will be completed by the end of 2019 as some were suggesting at the start of the year. The next round of negotiations will now not be until late 2019.
As Brexit looks increasingly inevitable, the chances of a FTA negotiation with UK being launched increase.
The 8th round of negotiations on the NZ-China FTA upgrade took place in Beijing in early August. More negotiations are going to be necessary, but officials still hope for an outcome this year. Forestry and services are the priority targets for progress.
The politics around this negotiation are continuing to improve but Colombia remains resistant to negotiating with New Zealand and others. An outcome, perhaps by the end of the year, is still being talked about.
RCEP and CPTPP
The increasing tension between Japan and Korea is the latest complication to the Regional Comprehensive Economic Partnership negotiation. The tensions also mean that Korea is unlikely to be joining CPTPP anytime soon.
Peru, Brunei and Malaysia are finding it difficult to ratify CPTPP. Chile is expected to do so this year.