EU and Mexico are working towards strengthening trade ties. Two new rounds of trade talks (to update a 2000 EU-Mexico trade pact) between Cecilia Malmstrom, EU Trade Commissioner and Ildefonso Guajardo, Mexican Economy Minister, are expected to be held between April 3 and 7, and June 26 and 29. 
The two countries have decided to accelerate trade talks owing to uncertainties arising out of US President Donald Trump’s policies. Over the past few weeks, Mexico has been vocal about its apprehension regarding the anticipated US trade laws, changes to the NAFTA and a possible border tax that could have a negative impact on the country’s exports to US. And hence the quest to strengthen trade ties to offset any possible negative impacts from Trump’s new protectionist laws.
Expectations from the new deal are public tenders, protection of IPR and liberalised trade in a variety of products, such as “meat, dairy products, cereals and certain fruits and vegetables.” Interestingly, between CY2005 and CY2015, trade between EU and Mexico rose by 103%. Exports from EU dominated the bilateral trade and the most-traded items included mineral fuels, lubricants, live animals, etc. EU is today the third largest trading partner for Mexico, after US and China.
It’s worth noting that early this year, the Trump administration had threatened to levy a border tax on American companies importing from Mexico and has openly discussed plans to either completely scrap or at the least alter the NAFTA, factors that could severely impact trade-related revenues for Mexico.
Import Ban
While it would not be the first time that Russia has imposed a ban on imports of beef from the developed world, it is certainly a first for the island nation New Zealand. In the first week of February, Rosselkhoznadzor, Russia’s agriculture safety watchdog, released a statement outlining a plan to ban imports of beef and beef products from New Zealand. This development took place after a sample revealed the presence of feed additive ‘ractopamine’. Ractopamine, a feed additive, has been banned in many parts of Europe. Certain studies, such as one by the European Food Safety Authority, state that the drug has caused an increase in the heart rates in animals.
Back in December 2012, Russia had placed a ban on imports of beef and pork from US. The reason for the ban was given as the absence of testing for ractopamine – the US government however said the ban was a retaliation for its action against Russia on issues involving Ukraine.
In CY2015, total exports from New Zealand to Russia amounted to $87.70 million, out of which the export of bovine meat (fresh, chilled or frozen) accounted for $3.66 million. In CY2016, overall trade increased by 79.29%, while imports of bovine meat dropped by 34.66%.
What’s more? To top the beef ban, the statement from Rosselkhoznadzor also highlighted the possibility of a ban on fish imports from New Zealand due to the presence of mercury content. Another rude surprise for the Kiwis soon? Perhaps.
Free Trade Agreement
Sri Lankan Prime Minister Ranil Wickremesinghe will fly to Beijing to finalise an FTA with China in May this year. The FTA talks come amidst recent protests in Sri Lanka against investments being made by China. Nevertheless, the meeting will be held on the sidelines of China’s ‘One Belt, One Road’ (OBOR) summit.
In CY2015, the two countries had signed a trade agreement as part of the OBOR, which allows China to develop the port town of Hambantota in Sri Lanka. The project is aimed at creating a silk route-like connection between China and Sri Lanka. And not to say, the island country is an important market for China. In CY2015, China’s exports to Sri Lanka grew 13.58% y-o-y to $4.30 billion. As per reports, China has already invested around $2 million in Hambantota and a new airport is expected soon. For the uninitiated, China, which is already the 6th largest investor in Sri Lanka, has been steadily increasing its investments in the country.
Trade facilitation
After being on the anvil for a fairly long time, the Trade Facilitation Agreement (TFA) finally came into force on February 22, 2017. The TFA has been ratified by 112 members, more than two-thirds of all member nations.
The WTO website defines TFA as “a framework that sets out provisions for expediting the movement, release and clearance of goods, including goods in transit. It also sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues. It further contains provisions for technical assistance and capacity building in this area.”
WTO Director General Roberto Azevedo termed the trade agreement as the biggest agreement that WTO had ever reached. When fully functional, it is expected to boost global exports by $1 trillion and will provide other benefits such as a reduction in time taken for delivery of goods, simplification of the customs procedures reducing costs, etc. While its benefits for poor and developing countries are expected to be more than that for developed countries, the WTO expects the agreement to have a major impact on the overall global trade climate.
This agreement, which is based on the concept of globalisation and liberalisation of trade policies, came at a time when the concept of protectionism, courtesy the newly-elected President Trump, has become the basis of most economical and political discussions across the globe.
Interestingly, US was one of the earlier signatories to the Trade Facilitation Agreement. And as ratification from US came under the Obama regime, it will be interesting to see if the Trump administration will try to back-pedal the decision as it has been prone to do. Negotiations for the agreement were concluded in 2013, while the final text was adopted in 2014.
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trade infrastructure
Tanzania and certain other African countries, especially the landlocked nations, signed a deal worth $1.21 billion to boost trade amongst them. Under the deal, a 2,561 km standard gauge railway network will be built.
The railway line will connect eastern and southern Africa and the port of Dar es Salaam. Contracts for the construction were signed on February 3, 2017 between Tanzania Railways Corporation, Reli Assets Holdings Limited (RAHCO), Turkish firm Yapi Merkezi and Portuguese firm Mota-Engil. As per reports, this new development will convert Tanzania into a regional hub like Dubai in the Middle East. The construction of the railway line is expected to start sometime in March and will take around 30 months to complete.
Tanzania’s exports in CY2015 totalled $5.85 billion and it is reported that Dar es Salaam accounted for about 90% of the country’s total trade, making it a major African trade hub.
Trade balance
It’s boom time
It has been a boom time for Australia as its trade balance recently witnessed a spike, courtesy a healthy growth in exports. The latest report released by the Australian Bureau of Statistics, in December 2016, shows that the Australian trade surplus stood at AUD 3.51 billion, up 72.05% from AUD 2.04 billion recorded in November 2016.
As per Australia’s Department of Foreign Trade, total exports of goods and services from Australia in CY2015 were worth AUD 315.66 billion. This number increased 3.37% y-o-y to reach AUD 328.98 billion in CY2016. Meanwhile, imports saw a decline of 2.9% to AUD 342.60 billion in CY2016 from AUD 352.69 billion in CY2015.
When it comes to exports, China is Australia’s largest market followed by Japan, South Korea, US and India. As for imports, China again is the largest source followed by US, South Korea and Japan. Iron ore and concentrates contributed significantly to the country’s exports in CY2016, with exports of ores, slag and ash to China alone fetching Australia a healthy AUD 48.86 billion.
Automobile imports
While US President Donald Trump is yet to sign an executive order to impose imports tax from Mexico, automobile manufacturers in Mexico are already expressing concerns about the future..jpg)
Honda is the latest automobile manufacturer that has publicly discussed concerns and criticisms regarding this proposed tax. As per reports, the Japan-based Honda Motor Corp. is rethinking its North America strategy, especially with regards to its Mexico-based plants. US is one of Honda’s largest markets. In 2016, Honda sold an estimated 1.64 million vehicles in US, out of which 70% of the cars were manufactured in US and the rest were imported from Mexico, Canada, UK and Japan.
In an earnings briefing, Honda’s Executive Vice President Seiji Kuraishi highlighted the fact that Honda has been investing in US for over 40 years now and added that he hoped that President Trump would understand the situation automobile manufacturers face.
Donald Trump, since his victory in the US Presidential Elections, has been criticising automakers like Ford, Toyota and General Motors for their Mexico operations. And as a part of his ‘Make America Great Again’ rhetoric, the administration has threatened a 20% tax plus additional fines on companies that are manufacturing in Mexico and importing products to sell in the US market, rather than producing them locally.
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