Free Trade Makes Significant Strides At APEC Summit

Trade & Policy

Free Trade Makes Significant Strides At APEC Summit

It has been an eventful fortnight for free trade agreements. The annual Asia-Pacific Economic Cooperation Forum summit witnessed the signing of some FTAs, with promise of many others progressing faster. The most important among these is the Trans-Pacific FTA without US. Another important development was the ASEAN Hong Kong trade deal. In another move, India is trying to fasttrack FTAs with the EU and Canada. Latam countries too are integrating trade within the region, and some are consolidating their trade partnership with China. Meanwhile, the US has shown its willingness for a FTA with the Philippines.

11 countries move forward with Trans-Pacific free-trade agreement without US

An annual Pacific Rim summit is sticking with its tradition of promoting free trade and closer regional ties, shrugging off President Donald Trump's ''America First'' approach. Draft documents issued by ministers of the 21-member Asia-Pacific Economic Cooperation forum omitted the leaders' usual vow to combat protectionism, but still expressed support for ''free and open trade and investment'' and for institutions such as the World Trade Organization.

Trade ministers from 11 Pacific Rim countries announced an agreement on pushing ahead with a free-trade deal whose destiny was uncertain after Trump dropped it. Revisions of the deal to allow the remaining 11 countries to proceed without US involvement involved a difficult balance between maintaining high standards and pragmatism, Japanese economy minister Toshimitsu Motegi said after late-night talks culminated in a preliminary agreement. ''The substance is something all the TPP countries can agree on,'' said Motegi. ''This will send a very strong message to the US and the other countries in the region.''

The ministers dropped key provisions the Americans had required on protection of intellectual property, among others. They also changed the trade accord's name to Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

More work needs to be done for the agreement to be endorsed by leaders of the member countries at some unspecified point in the future.

As an institution, apart from its pageantry and its tradition of drawing leaders together for face-to-face meetings, APEC mainly serves as a laboratory for trying out policies and encouraging ''best practices,'' said Alan Bollard, executive director for APEC's secretariat. Unlike the TPP trade pact, whose decisions will eventually be enforced, APEC's statements are non-binding.

''We're in an easier place to try things out, to test policy sensitivities even if we don't get everybody around the table,'' Bollard said. Trump's dramatically different stances from his predecessor, Barack Obama - such as his ''America First'' trade strategy and his skepticism over climate change - were apparent in Danang. But his hosts and the other leaders took it in stride.

Trump has said he prefers country-to-country deals and is seeking to renegotiate several major trade agreements, including the North American Free Trade Agreement.

Other APEC members have stuck with their usual mantras of free trade and economic integration. Chinese President Xi Jinping drew loud applause during a speech to the same group when he urged support for the ''multilateral trading regime'' and progress toward a free-trade zone in the Asia-Pacific.

As a developing country with a fast-growing export sector, this year's host country, Vietnam, has a strong interest in open trade and access for its exports to consumers in the West. The summit is an occasion for its leaders to showcase the progress its economy has made thanks largely to foreign investment and trade. Danang, Vietnam's third largest city, is in the midst of a construction boom as dozens of resorts and smaller hotels pop up along its scenic coastline.

APEC's members are Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, Philippines, Russia, Singapore, Taiwan, Thailand, the U.S. and Vietnam.

ASEAN, Hong Kong sign free trade agreement

ASEAN and Hong Kong signed a free trade and investment agreement on Monday, hoping to strengthen economic cooperation between the two parties and stimulate development in the region. The two agreements, the ASEAN-Hong Kong, China Free Trade Agreement (AHKFTA) & the ASEAN-Hong Kong Investment Agreement (AHKIA), were signed at the the 31st ASEAN-Hong Kong summit in Manila.

"The agreements create opportunities for ASEAN because they will ensure greater access to both trade and investment," Philippine Trade and Industry Secretary Ramon Lopez said. He said the agreements also create opportunities for micro, small and medium enterprises in ASEAN countries to increase their presence in Hong Kong. AHKFTA is the sixth free trade agreement signed by ASEAN, having already signed free trade agreements with China, South Korea, Japan, India, Australia and New Zealand.

Trump open to US-PH free trade deal

The United States will consider a possible free trade agreement (FTA) with the Philippines following a bilateral meeting during the ongoing Association of Southeast Asian Nations Summit. "We were able to raise to President Trump and US delegation the growing trade between the two countries," Trade Secretary Ramon Lopez said.

With the Philippines already enjoying a "little" trade surplus and incentives under the Generalised System of Preferences (GSP) program, he said that they forwarded a "wish to elevate the trade arrangements to start exploring the FTA with the US." "President Trump welcomed the suggestion and said they will consider exploratory talks," Lopez announced.

Trade Undersecretary Ceferino Rodolfo earlier this year noted that with the US having dropped out of the proposed Trans-Pacific Partnership, the Philippines' options with regard to increased access to American consumers were limited to GSP enhancements or an FTA. Following a bilateral meeting in July, the Office of the US Trade Representative (USTR) said officials had agreed to "foster free, fair and balanced trade" under an existing Trade and Investment Framework Agreement (TIFA). Lopez in June announced that the USTR had expanded the Philippines GSP privileges to include travel goods such as bags, wallets and backpacks, which would now enjoy zero duty after previously being charged tariffs starting at 6%. Based on latest official data, the US was the country's top export market in September, accounting for 14.3% or US$ 802.6 million of total outbound shipments. It ranked fourth in terms of imports with a 7.5% share or US$ 561.27 million.

Xi, Bachelet witness upgrade of China-Chile FTA

Chinese President Xi Jinping and his Chilean counterpart, Michelle Bachelet, witnessed the signing of a bilateral deal on upgrading the Free Trade Agreement (FTA) between the two countries.

Xi underlined that this is China's first FTA upgrade completed with a Latin American country. The upgraded agreement will unleash new impetus for the practical cooperation between China and Chile and set a new benchmark for China's cooperation with other Latin American countries as well as a new role model to the world, he said. Bachelet congratulated Xi on the success of the 19th National Congress of the Communist Party of China and wished that greater achievements would be made in the implementation of the Belt and Road Initiative. Chile is the first Latin American country to sign a free trade agreement with China. Negotiations for upgrading the FTA were initiated during Xi's state visit to Chile in November 2016 and the agreement was completed a year later.

India, EU to explore way forward for free trade talks

India, EU chief trade negotiators will meet next week in New Delhi to hammer out a way forward for the long-pending free trade agreement negotiations between the two sides. Negotiations on the India-EU free trade agreement started in 2007 and 16 rounds of talks have been held since then; the last round was held in 2013.

After months of deadlock, India and the European Union (EU) chief trade negotiators will meet next week in New Delhi to hammer out a way forward for the long-pending free trade agreement negotiations between the two sides.

Discussions for the broad-based trade and investment agreement (BTIA), as the FTA is known, will be led by Anita Praveen, joint secretary in the Ministry of Commerce in charge of EU from the Indian side and EU chief trade negotiator for India Helena König. Negotiations on the India-EU free trade agreement started in 2007 and 16 rounds of talks have been held since then. The last round was held in 2013, after which negotiations were suspended. Both sides have explored restarting negotiations since May 2014, but uncertainties over Brexit and inflexibility on both sides have prevented resumption of formal talks.

At the 14th India-EU Summit in Delhi last month, both sides resolved to restart negotiations for BTIA. "The leaders expressed their shared commitment to strengthening the Economic Partnership between India and the EU and noted the ongoing efforts of both sides to re-engage actively towards timely relaunching negotiations for a comprehensive and mutually beneficial India-EU BTIA," the joint statement said. "We are not restarting negotiations as yet. This is just a meeting to explore possibilities. In July, we had proposed to hold such a meeting. The EU has now responded positively," a commerce ministry official said.

On the way forward before Brexit, the official said Britain only constitutes around 15% of total trade with EU, and there may not be much problem in moving ahead with negotiations even though both sides need to recalibrate their positions.

Britain, on the other hand, is keen to have an FTA with India after Brexit and has made several overtures to India. EU is India's largest trading parter with exports at US$ 47.2 billion in 2016-17 while exports to Britain stood at US$ 8.5 billion during the same period.

Gulshan Sachdeva, director of the Europe Area Studies Programme at the Jawaharlal Nehru University, said it makes sense to restart trade negotiations with EU keeping Britain out of the deal. "It is now more or less clear that Britain will not be part of any European Customs Union or European Economic Area after Brexit. We need to deal with both parties separately. But both sides need to re-evaluate offers keeping mutual interests in mind," he added.

The official said India is unlikely to change its stand on a possible Bilateral Investment Treaty (BIT) between the two sides. India had unilaterally terminated BITs with most EU members earlier this year, asking them to renegotiate the treaty based on a new model BIT passed by the Cabinet in December 2015. Rejecting a proposal by EU to suspend such termination, India proposed a toned-down version of the BTIA, which would include an investment chapter and avoid contentious issues for the time being. However, the EU didn't agree. The issue may come up for discussion again during the meeting of the two chief trade negotiators. The model BIT approved by the Cabinet excludes matters relating to taxation. Controversial clauses such as most favoured nation (MFN) have been dropped, while the scope of national treatment, and fair and equitable treatment clauses, have been considerably narrowed down in the model BIT.

India, Canada discuss ways for early conclusion of FTA talks

Trade ministers of India and Canada have directed their chief negotiators to find ways for early conclusion of the proposed free trade agreement. The proposed agreement, officially dubbed as the Comprehensive Economic Partnership Agreement (CEPA), came in for discussion during a meeting between Commerce and Industry Minister Suresh Prabhu and Canadian Minister for International Trade Francois-Philippe Champagne. Champagne was in India for the 4th India-Canada Ministerial Dialogue on Trade and Investment.

Both the ministers expressed their strong commitment for taking forward negotiations for an early conclusion.

India emphasised the importance of the services sector as a key component of the proposed pact and asked for a resolution of issues related the segment. "The Canadian side assured that they would look into the issues concerned, including movement of natural persons and what kind of provisions could be built into the CEPA," it said.

The negotiations for the agreement were launched in November 2010 to boost bilateral trade and investments. The CEPA is a comprehensive free trade agreement under which two trade partners significantly reduce or eliminate customs duties, besides liberalising trade in services and investment norms. The commerce ministry also said that India and Canada discussed the progress made under the Foreign Investment Promotion and Protection Agreement (FIPA). Both the ministers expressed hope for an early conclusion of FIPA, it added. Further, the ministers stated that the bilateral trade is "much below" the potential despite the existence of huge untapped potential. The two-way trade stood at US$ 6.13 billion in 2016-17, down 1.87% from the previous year.

Further, it said it was agreed during the deliberations to explore collaboration in the area of export credit insurance through India's Export Credit Guarantee Corporation Ltd. and Canada's Export Development Canada (EDC). Canada also proposed for possible cooperation with their Canadian Commercial Corporation. Besides, both the ministers discussed issues such as early institutionalisation of the CEO Forum mechanism and extension of derogation of pulses.

On pulses, Prabhu noted that Canada has done a lot of work on geospatial planning and Geographical Information System and both this expertise should be utilised in areas like analysing crop production systems in India, trend forecast for next 10 years, "…and accordingly work towards a predictable environment for potential pulses which could be supplied from Canada," it added.

Cuba and Caricom Reach Agreement to Boost Free Trade

Cuba and Caricom member nations have reached an official agreement to strengthen existing ties in economic trade and commerce. Cuba and the Caribbean Community (Caricom) have signed the second phase of an existing Trade and Economic Cooperation Agreement, originally initiated in 2000, to strengthen economic trade and commerce between member countries.

Caricom's Irwin LaRocque and Julio César González Marchante, along with Cuba's ambassador to Guyana, signed the binding agreement at the 45th regular session of the Council for Trade and Economic Development which took place in Georgetown, the Guyanese capital.

According to Caricom, the bilateral accord will eliminate non-tariff barriers to trade; regulate health and sanitary conditions of commerce between participating countries, and eliminate duty on more than 320 Cuba-traded items, including apparel.

The deal was confirmed just days after the United States announced fresh trade sanctions against Cuba.

Party members say the newly strengthened trade agreement represents an important step toward "regional integration" prior to the VI Caricom-Cuba Summit, due to be held in Antigua and Barbuda on December 8.

Caricom is comprised of 20 member and associate members, including Haiti, St. Lucia, Belize, Dominica, Suriname and Barbados. Member nations came to the aid of Dominica with logistics, helicopter support, first aid, and hundreds of thousands of dollars after the country was hit by Hurricane Maria in September.