Trade Policy – legislative and negotiation update

Some are still in the negotiation stage (Mexico, Mercosur, with negotiators on both sides trying to bring the parties together in negotiations), whilst others are in agreed form but have yet to be fully translated (Vietnam) or ratified by both parties (Singapore).

This update provides an inside look at stages of negotiations and different negotiating priorities of parties in overarching trade negotiations, while also giving an insight into a monumental completed negotiation for the EU (with Japan) and the fate of a group third countries in creating their own form on union (CPTPP).

NEGOTIATION

EU-Mexico

Negotiations which ran over the designated 12-16 February 2018 period did not come to a successful conclusion on modernisation of an FTA between the EU and Mexico. The negotiators are not likely to meet in person again for some time.

Problems remain in:

-        Rules of origin (EU required to be more flexible);

-        Automobiles and textiles industries – EU requires regulation to be closer to those in the EU;

-        Market access to agriculture market.

Progress was made in:

-        Public procurement;

-        Market access in goods;

-        Investment.

It has been reported that NAFTA is taking up Mexican negotiation time and that Mexico would try to conclude the negotiations before president Enrique Peña Nieto leaves office. Mexico’s presidential election will take place on 1 July 2018, and the new president will take office in December 2018.

EU-Mercosur

This FTA is still under negotiation and it was confirmed that concessions by the EU on maritime transport will need to be made to make further progress.

EU-NZ/Australia

A press release has stated with confidence that negotiating guidelines will be given to the Commission by the Foreign Affairs Council (FAC/Trade) on 19th May 2018.

EU-Indonesia

EU negotiators were in Surakarta from 19 to 23 February 2018 for the 4th round of trade and investment negotiations with Indonesia.

Over the course of the round the negotiating teams covered the full range of issues in the FTA, including:

-        trade in goods;

-        technical barriers to trade;

-        services;

-        investments (including the investment court system);

-        rules of origin;

-        trade and sustainable development;

-        intellectual property rights; and

-        government procurement.

Confirmation was received that the teams made progress on investment and services.  The fifth round of negotiations will be held before the summer in Brussels.

RATIFICATION

EU-Vietnam

There is a continued delay in the ratification of the EU-Vietnam FTA (concluded in 2015). Legal scrubbing has taken over two years following the EU’s insertion of the investment court system from the CETA agreement. This will match that agreed with EU-Singapore (update below).

EU prioritisation of the EU-Japan FTA and their call for Vietnam to elevate their record on human rights are amongst the political reasons for the delay. Additionally, the EU’s push for Vietnam to sign 3 ILO conventions (freedom of association, organisation and collective bargaining) whilst ultimately successful, added extra time to negotiations. Finalisation is expected by the end of the current Parliament’s term (March 2019).

The final text still requires translation and signing.

EU-Singapore

DG Trade confirmed the willingness of the Commission to ensure ratification of EU-Singapore FTA (and EU-Japan EPA) by end of 2018. There should be a formal proposal by the Council shortly.

Once the member states adopt their decision, the texts will be signed and sent to the parliament for consent. In early March Commissioner Malmström was in Singapore to strengthen the EU-ASEAN trade and investment relations and she stated that the European Commission hoped to submit the agreement for final approval in mid-April, and see it enter into force by the end of 2018.

On the EU-ASEAN FTA she said that although there is a lack of progress in EU-ASEAN negotiations, the EU remains committed to a region-to-region free trade agreement.

EU-Japan EPA

It was confirmed by the respective negotiators that the English text is now ready, and the Commission will send it to member states in the coming weeks (March 2018). The text is expected to be signed by the Council before the summer, and then sent to the European Parliament in the course of autumn for ratification end 2018, early 2019. The objective is for the EU-Japan to be ratified before Brexit (29/03/2018).

The Japanese Ambassador has commented on Brexit, stating that Japan wishes to roll-over the EU-Japan EPA, so that it would apply to the UK after Brexit as untouched as possible. The Japanese negotiators also hoped that the UK would remain in a customs union with the EU for Japanese goods and services (heavily reliant on cross-border flows between the UK and the continent).

A large part of the contribution about the benefit of the EU-Japan EPA has been on the agreements on the regulatory cooperation system. Repetitive duties on goods that cross any UK-EU border several times has been deemed unacceptable by Japan, setting a warning and marker from the government that it will relocate a part of its activity in the absence of a custom union.

Third Country Negotiations

Comprehensive and Progressive Agreement for Trans-Pacific Parliament (CPTPP)

The CPTPP incorporates by reference the provisions of the Trans-Pacific Partnership (“TPP”) Agreement, excepting some technical articles and suspending others in the Annex to the CPTPP

The text has been published by New Zealand and involves 11 countries (to be signed on 8 March 2018). Agreement was made following the withdrawal of the USA. In short, CPTPP market access commitments in services sectors are drafted to provide greater openness and certainty over the conditions under which NZ businesses can provide services overseas. Access to CPTPP markets has been locked in for NZ service providers across a range of sectors, including providers of professional, business, education, environmental, transportation and distribution services. Annex 10-A provides for professional services, establishing a professional services working group and paragraphs 9-11 highlights guidelines for legal services, the following modes being specifically accommodated (subject to country by country opt outs):

(a)    on a temporary fly-in, fly-out basis;

(b)    through the use of web-based or telecommunications technology;

(c)     by establishing a commercial presence; and

(d)    through a combination of fly-in, fly-out and one or both of the other modes listed in subparagraphs (b) and (c).

It is worth noting that foreign lawyers and domestic (host country) lawyers may work together in the delivery of fully integrated transnational legal services.

This will come into force after 6 (or 50%) of countries fully ratify. If this is unlikely, parties agree to amend it until it is possible. The NZ government has created a page to highlight differences between the CPTPP and the TPP (including  suspensions or suspended provisions), which can be found here (along with the full text of the agreement: https://www.mfat.govt.nz/en/trade/free-trade-agreements/free-trade-agreements-concluded-but-not-in-force/cptpp/tpp-and-cptpp-the-differences-explained/),