Canada-EU Comprehensive Economic and Trade Agreement (CETA) Now Moving Quickly Towards Implementation›
After almost ten years of preparatory work and negotiations, Canada and the European Union are now quickly moving towards implementation of the Comprehensive Economic and Trade Agreement (CETA). CETA is the most intensive and wide-ranging international trade and investment agreement completed by either party. It is often touted as the first in a “new generation” of trade agreements designed to address perceived weaknesses of past deals, including those relating to sustainable development, labour and environmental standards. The successful implementation of CETA will be a significant accomplishment in the face of growing populist and anti-globalization movements that have caused the collapse of the Trans-Pacific Partnership Agreement (TPP) and are threatening progress on other ambitious trade initiatives such as the US-EU Transatlantic Trade and Investment Partnership (TTIP).
On February 15, 2017, the European Parliament voted to ratify CETA. Simultaneously, Bill C-30 – An Act to implement the Comprehensive Economic and Trade Agreement between Canada and the European Union and its Member States and to provide for certain other measures – passed third reading in Canada’s House of Commons and is on track to quickly pass through the Senate. It is anticipated that CETA could come into force provisionally as early as May of this year.MORE
US-China Watchers Should Keep Their Eye on Semiconductors›By Stephen Olson // Friday, February 24, 2017
China’s ambitions for its semiconductor industry will provide a telling bellwether for the future of US-China trade relations. China’s objectives – and more precisely, the manner in which they intend to achieve them – will raise vexing issues for US policy makers. And since similar issues are arising across a number of other key sectors, the manner in which the semiconductor issue is dealt with will tell us a lot about whether the two countries will be able to work out a broader modus vivendi for their trading relationship moving forward.
Here’s the background: Semiconductors have become a fundamental building block of today’s high-technology knowledge economy, powering everything from cell phones to sophisticated medical diagnostic equipment and solar panels. Forward-looking technologies like driverless cars will depend on semiconductors, as will advances in cyber security. And of course, the most formidable military weaponry in the world also relies on semiconductor technology. Possessing – and maintaining – a lead position in this critical industry is one of the hallmarks that separate advanced economies such as the US, Japan, Taiwan, Korea, and the EU from the rest of the pack.MORE
Syed Kamall’s pocket guide to ‘Brexit’›By Syed Kamall MEP // Friday, February 24, 2017
What are the ‘blueprints’ for a future UK-EU Relationship?There are a number of so-called ‘blueprints’ that could be used to determine the UK’s future relationship with the EU.The European Economic Area (EEA) option: The UK would retain access to the single market, but follow EU rules while not having a vote, and would have to contribute to the EU’s budget. The UK could restrict freedom of movement (immigration from the EU) in the event of “serious economic, societal or environmental difficulties.”The Swiss Option: The UK-EU relationship would be governed by a framework of interlocking bilateral agreements. UK companies would enjoy tariff and duty free access to the EU’s Single Market in only those areas covered by these agreements, with no guarantee that that all sectors would be covered. The UK would have to contribute to the EU’s budget and accept free movement of people.Turkey or Customs Union Option: UK companies would enjoy tariff-free access to most of the single market, but would have to accept EU tariffs and non-tariff barriers for trade with countries outside the EU. There is no guarantee that this would cover all sectors. The customs union with Turkey was originally signed as a stepping stone to EU membership and might not be appropriate for a country leaving the EU.MORE
NAFTA in Play: How President Trump could impact trade in North America›By Uri Dadush // Friday, February 24, 2017
During his run for President of the United States, Mr. Trump called the North American Free Trade Agreement (NAFTA), “the worst trade deal ever approved by this country.” His target is Mexico, which runs a $50 billion surplus of trade in goods and services with the United States. Trade with Canada, the third NAFTA party, is essentially balanced.
There are many possible scenarios that describe how the new chapter of the NAFTA story will unfold. This report focuses on three plausible scenarios for a new NAFTA.MORE
Are Global Supply Chains Still the Future of Trade?›By Kimberly Ann Elliott // Friday, February 17, 2017
After the initial rapid recovery from the Great Recession, global trade growth has slowed dramatically. There is as yet no consensus on the causes of the slowdown, or on its ultimate consequences. The maturing of global supply chains is one compelling explanation. Technological innovations are also facilitating the consolidation of some supply chains and the “reshoring” of some manufacturing activities. Though it is not yet clear how widely technologies such as 3D printing will spread, it may well be that highly fragmented production processes and lengthy supply chains are not where the future of trade will be. But how any shift away from global supply chains occurs, if it does, matters greatly for economic well-being in the United States and elsewhere.MORE
NAFTA 2.0 or 0.9?›By Eric Kulisch // Friday, February 17, 2017This piece was written in response to WITA’s “NAFTA 2.0?” event on February 9. It originally appeared in the Adam Smith Project, the newest title from the publisher of American Shipper focused on international trade and the regulations coming out of Washington D.C.. Information on subscribing to the Adam Smith Project may be found at the end of this post.
Many trade experts and business leaders are optimistic the Trump Administration will ultimately pull back from its hardline position that the North American Free Trade Agreement has been a disaster for middle-class workers and needs to be completely overhauled, or scraped.
President Trump, they contend, will soon realize withdrawal from NAFTA is counterproductive because it is ingrained in the economic fabric of all three partners, too difficult to undo and has too many stakeholders that would be negatively affected by a seismic shift in trade policy.
But that is wishful thinking, says Nelson Cunningham, president and co-founder of McLarty Associates, an international global strategy firm with many FORTUNE 200 clients.
It is becoming increasingly clear that Trump intends to pursue a “two-speed” approach to North American trade that treats Canada and Mexico very differently, the former aide to President Bill Clinton said.MORE
Growth in U.S.–China trade deficit between 2001 and 2015 cost 3.4 million jobs: Here’s how to rebalance trade and rebuild American manufacturing›By Robert E. Scott // Thursday, February 9, 2017
Mr. Scott will be appearing at WITA’s February 16 event on China. Tickets can be purchased by clicking here.
The United States has a massive trade deficit with China. It has grown since the end of the Great Recession. The growth of that deficit almost entirely explains the failure of manufacturing employment to fully recover along with the rest of the economy. And as other studies have suggested, the trade deficit has cost us millions of jobs since China entered the World Trade Organization (WTO) in 2001.
The growth of the trade deficit means that the United States is both losing jobs in manufacturing (in electronics and high tech, apparel, textiles, and a range of heavier durable goods industries) and missing opportunities to add jobs in manufacturing (in exporting industries such as transport equipment, agricultural products, computer and electronic parts, chemicals, machinery, and food and beverages) because imports from China have soared, and exports have increased much less. The trade deficit with China affects different regions in different ways. Some regions are devastated by layoffs and factory closings while others are surviving but not growing the way they could be if new factories were opening and existing plants were hiring more workers. This slowdown in manufacturing job generation is also contributing to stagnating wages and incomes of typical workers and widening inequality.MORE
Will America Trigger a Global Trade War?›
The new Trump administration is openly protectionist. The President called for “America First” and for “Buy American, Hire American” in his inaugural speech and his subsequent actions dispelled any remaining doubt that he meant what he said during the election campaign. As promised, he has withdrawn from the Trans-Pacific Partnership, an agreement among twelve countries across three continents that took nearly 10 years to negotiate. He has threatened American companies that invest abroad with punitive taxes and tariffs. He has signed an executive order to build a wall along the Mexican border, and he has threatened Mexico to impose a tax on its exports to the United States to pay for it. At the same time, he has ordered his team to initiate renegotiation of NAFTA, which he considers “a very bad deal”. Mr. Trump’s protectionist sentiments are not new: his many calls to refute “bad trade deals” date back to the 1980s.MORE
The border adjustment tax: a dangerous proposal›
The border adjustment tax (BAT) is a proposal first put forward in June of last year by Republicans in the United States House of Representatives as part of a far-reaching tax reform. Republicans are now in a much stronger position to implement their tax reform agenda than they were then, and there is a considerable likelihood that the BAT will be enacted in some form as part of a new tax code.
The precise provisions of BAT are being debated, but they are widely understood to entail changing the way corporate income tax is calculated in the following way: for the purpose of calculating a company’s income tax, the cost of imported inputs will no longer be deducted from a company’s revenue; and the revenue accrued from exports will no longer be included in a company’s total revenue. This means, for example, that Wal-Mart, a large net importer, will pay a lot more tax than under the current system while Boeing, a large net exporter, would pay a lot less tax. American consumers shopping at Wal-Mart would face higher prices to offset the retailing giant’s increased tax bill and Wal Mart would have a strong incentive to buy Yogurt made in Wyoming rather than Yogurt made in Greece. Boeing, in contrast, could reduce the price of its aircraft to reflect its smaller tax bill, encouraging foreigners to buy from Boeing instead of from Airbus. The burden of the tax will fall in very large part on consumers.MORE
Three Recommendations for Renegotiating NAFTA›By Bryan Riley // Monday, February 6, 2017
One of President Trump’s first actions was to announce plans to fulfill his campaign promise to renegotiate the North American Free Trade Agreement (NAFTA). Three recommendations to improve NAFTA include:
- Modernizing the agreement to take advantage of technological advances since NAFTA took effect in 1994;
- Expanding the agreement to include areas that were excluded from the original agreement; and
- Eliminating counterproductive areas of the agreement that are detrimental to U.S. interests.
Modernization of NAFTA
When NAFTA took effect in 1994, Google and Netflix did not exist and Steve Jobs was more than a decade away from creating the first iPhone. Ninety percent of Americans did not even own a cell phone.
Much has changed since then. According to a McKinsey Global Institute (MGI) report: “Remarkably, digital flows—which were practically nonexistent just 15 years ago—now exert a larger impact on GDP [gross domestic product] growth than the centuries-old trade in goods.”MORE
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