Trade Deals Around the World: June 2023 Edition
Trade Deals Around the World is our periodic update, giving you a quick and easy overview of what has happened in the many trade deal negotiations worldwide.
We focus on the European Union and the United Kingdom and watch China and the United States. We look back at May and focus on trade deals only in this update.
The European Union
Advancements in regulations surrounding the Windsor Agreement
Since Brexit, Northern Ireland has been a shared concern for both the United Kingdom and the European Union as the country effectively sits within both territories.
The Northern Ireland Protocol was introduced to manage trade between the three regions, but this has proven to be an ineffective long-term solution. In February, the Windsor Agreement was agreed in principle by the EU and UK as a way to resolve the issues.
This last month, the EU council has fast-tracked principals to move forward with joint solutions regarding public, animal and plant health issues, medicines and certain steel products.
Some of the requirements will include labelling goods “UK Only” or “Not for EU”, depending on which commodity you are moving.
EU and UK open talks surrounding car manufacturing
In 2020, the EU and UK agreed on a phased change in the rules of preferential origin for car manufacturers. Cars traded between the two regions currently need 40% of their parts to originate in the UK or EU to claim preferential origin, but this will raise to 45% in January and 55% in 2027.
Manufacturers on both sides of the English Channel have expressed concerns that most electric vehicle batteries originate outside of the EU and that these make up a significant percentage of an electric cars. More time to find solutions due to supply chain issues following the pandemic and war, and enforcing the tariff raise will slow down the adoption of cleaner electric vehicles.
The United Kingdom
2022’s FTAs with Australia and New Zealand come into effect
From 31st May, the free trade agreements between the United Kingdom and Australia (A-UKFTA), and the United Kingdom and New Zealand (NZ-UKFTA) are in effect.
Both the A-UKFTA and the NZ-UKFTA allow for reduced red tape during the provision of services, and lower duty rates for goods that are being traded.
However, British farmers have criticised the deal due to the unilateral benefits for Australasian producers. This, along with Brexit affecting trade with the EU, has spurred a support package for British agriculture and the promise of priority in future trade deals.
An update is coming to the EU-Swiss free trade agreement
More than 69% of UK services exported to Switzerland are delivered digitally, yet the current FTA is based on a deal made over 50 years ago – before the internet and digitalised customs agreements.
UK Trade Secretary Kemi Badenoch has met with Swiss officials this month to begin negotiations over a new FTA, which will benefit businesses on both sides of the agreement by removing red tape.
Other trade deals around the world
China extends its Latin American trading presence with Ecuador FTA
China and Ecuador have signed a free trade agreement which allows for lower tariffs on goods, including agricultural and agro-industrial goods. This adds to China’s other FTAs within the region with Chile, Costa Rica, and Peru.
The Indo-Pacific Economic Framework for Prosperity (IPEF) highlights priority commodities
The Indo-Pacific Economic Framework for Prosperity (IPEF) is an economic collaboration strategy that was proposed by the US in 2022, seeking to connect the USA and Asia-Pacific countries that rely on Chinese goods. The concept of the IPEF is to create a crisis network in the event of supply chain emergencies, such as those experienced during the Covid19 pandemic.
Although not considered a trade deal due to the lack of free trade agreements or blocs, the framework is designed to improve relationships between the countries involved and focus on trading standards so that their economies can be fair, clean, resilient, and connected.
In a meeting in May, the members of the IPEF agreed on essential technologies and goods that need to be given priority, such as minerals, semiconductors, and medicines.
The US and Taiwan progress in negotiations over 21st-century trade initiative
Taiwan and the US have agreed upon the first part of their 21st-century trade initiative, which covers regulations about customs and border procedures, regulatory practices, and legislation for small businesses.
The next step for this trade deal is to negotiate terms over agriculture, digital services, environmental and labour standards, and non-market policies.
Both countries aim to finalise the deal by the end of the year.
Africa to streamline digital customs and eCommerce policies
The African Development Fund and Smart Africa Alliance are collaborating on a project to boost digital economies across African countries.
The Institutional Support for Digital Payments and e-Commerce Policies for Cross-Border Trade Project (IDECT) seeks to boost compliance and provide payment infrastructure for SMEs trading across borders.
Need help navigating the ever-changing landscape of customs?
Customs Support provides import declarations, export clearances, and customs consultancy to businesses across the EU and UK. Contact us for more information on how we can help you today.