Alicia Nicholls

As is customary at this time of the year, here is where we at the CTLD Blog do our review of the top trade policy developments over the past twelve months.

It has indeed been another mixed year for global trade. In this article, we will first outline some of the major trade policy news globally for 2019, and then hone in on those significant trade policy developments for 2019 particularly affecting the Caribbean region.

GLOBALLY

Globally, some of the major trade policy developments for 2019 were as follows:

  1. Paralysis of the WTO’s Appellate Body

Perhaps the saddest trade policy development for 2019 was the WTO’s loss of its final arbiter – the Appellate Body – as of December 11, 2019 – the day after the terms of two of its three remaining Members expired without replacement. It is the sad culmination of two years of US blockage of appointments to the Appellate Body in protest of so-called ‘failure’ of WTO Members to address US concerns with substantive and procedural issues pertaining to the Appellate Body’s operation.

The loss of the world’s final arbiter of trade disputes comes at a time of escalating trade tensions and increased resort to unilateral measures. One possible outcome of the indefinite suspension of the Appellate Body may be increased resort to unilateral measures.

The two outgoing Appellate Body members have reportedly stayed on temporarily to hear several on-going appeals. In anticipation of the WTO Appellate Body’s collapse, the EU had come up with an interim arbitration arrangement premised on Article 25 of the Dispute Settlement Understanding. However, only Norway and Canada have signed on to such an arrangement.

With no immediate solution to the WTO Appellate Body’s paralysis to be found, this will be one of the main trade policy developments to watch in 2020. Read more

2. Global Trade Growth slows and unilateral action increases

Trade tensions have continued to have a negative impact on global trade growth. In its October report, the WTO revised downward its global merchandise trade growth forecasts for 2019 and 2020. According to the WTO, world merchandise trade volumes are now forecast to rise by only 1.2% in 2019. This markedly slower than the 2.6% growth forecast in April. The projected increase in 2020 is now 2.7%, down from 3.0% previously.

Unilateral trade action is also increasing. The WTO Director-General’s annual report to the TPRB of trade-related developments shows that between mid-October 2018 and mid-October 2019, the trade coverage of import-restrictive measures implemented by members was estimated at USD 747 billion – the highest trade coverage recorded since October 2012.

3. US-China Phase One Deal Announced

In December, the US and China have announced completion of a ‘phase one’ trade deal. As such, the anticipated December 15 US tariffs on Chinese goods have not been implemented. The text of the Agreement has not yet been released and it remains to be seen whether this is just a temporary ceasefire or an actual armistice. See USTR factsheet on the phase one agreement here.

4. US-EU trade tensions simmering

Tensions between the US and France over the latter’s Digital Services Tax may mean trade tensions between the US and EU may again reach a boiling point. The US has proposed additional duties of up to 100% on French goods and additional fees and restrictions on French services. This is based on an investigation under Section 301 of the US Trade Act which found that the French DST is “unreasonable or discriminatory and burdens or restricts U.S. commerce”.

5. AfCFTA comes into force

The African Continental Free Trade Agreement (AfCFTA) is now in force. The continent-wide agreement, which was opened for signature in March 2018, entered into force on 30 May 2019. The operational phase was launched after a summit of Heads of State and Government of the African Union (AU) in Abuja, Nigeria. It is an exciting development as the agreement will not only transform the African continent into a single market, but is expected to be a major economic boost. Phase II of the AfCFTA will be a key development to watch in 2020.

6. TPRM celebrated 30 years in existence

The WTO’s Trade Policy Review Mechanism (TPRM) celebrated its 30th year in existence in April this year. The WTO Secretariat marked the occasion with a conference later in the year. The TPRM is the main WTO body used to promote accountability, predictability and transparency in the rules-based multilateral trading system. This year Trinidad & Tobago and Suriname were among the WTO Members reviewed under the TPRM. Read more

7. US-Mexico-Canada Agreement (USMCA)

The Trump Administration finally struck a deal with congressional Democrats on changes to the USMCA – the agreement to replace NAFTA. This should hopefully clear the path for US domestic ratification of the deal which was originally signed in November 2018 and whose amended version was signed by the three countries this week. Read the Protocol of Amendment here.

8. Conservatives win decisive majority – a clear path for Brexit?

United Kingdom (UK) Prime Minister Boris Johnson and his Conservative Party won the December 12 snap General Election. Conventional wisdom says that with a clear majority now, it should be easier for Prime Minister Johnson – a Pro-Brexiteer – to get the House of Commons’ backing he needs to get his Brexit deal with the EU passed in time for the revised exit date of January 31, 2020. However, the departure might not be guaranteed as Scotland remains committed to staying within the EU, which might trigger a constitutional crisis and have implications for the continued unity of the UK. This will be another key development to watch in 2020. Read more

9. India pulls out of RCEP negotiations

India withdrew from the negotiations on the Regional Comprehensive Economic Partnership (RCEP). Read more

REGIONALLY

Regionally, the main trade policy news affecting the Caribbean were:

  1. UK-CARIFORUM EPA signed

On March 22, 2019, the United Kingdom of Great Britain and Northern Ireland (UK) and nine of the fifteen States comprising the Caribbean Forum (CARIFORUM), a subgroup of the African, Caribbean and Pacific (ACP) countries, signed the CARIFORUM-UK Economic Partnership Agreement (CARIFORUM-UK EPA) which seeks to ensure that the current trade preferences between the UK and CARIFORUM remain after the UK’s departure from the European Union (EU). Read more

2. Second 5-year review of EU-CARIFORUM EPA begins

The European Commission on April 17, 2019 launched an evaluation of the CARIFORUM-EU Economic Partnership Agreement (CARIFORUM-EU EPA) which governs trade between the current EU-28 and CARIFORUM countries. The CARIFORUM-EU EPA has been provisionally applied since 2008. Read more

3. Barbados to host UNCTAD XV in October 2020

Barbados made history when it was chosen as the first Caribbean country and small State to be a host to events as part of UNCTAD’s quadrennial. Barbados and the United Arab Emirates will co-host the UNCTAD XV in October 2020. Read more.

4. Caribbean countries deepening ties with Africa

CARICOM countries will establish a joint diplomatic mission in Kenya – which for many CARICOM governments, like Barbados, will be their first diplomatic mission on the African continent.  In August 2019, it was also announced that CARICOM and the African Union “will shortly sign a Memorandum of Understanding establishing a framework for engagement and cooperation”. Read more

5. Renewal of CBERA waiver at WTO

The WTO’s General Council on October 16, 2019 approved the request by the US for a further extension of the waiver for the trade preferences it extends to certain Caribbean countries pursuant to the Caribbean Basin Economic Recovery Act (CBERA) of 1983 and its subsequent amendments. Read more

6. ACP Renamed and Post Cotonou Negotiations continue

The ACP has been renamed the Organisation of Africa, Caribbean and Pacific (OACP) at the 9th Summit of ACP Heads of State and Heads of Government.

ACP countries and the European Union (EU) are currently negotiating an agreement to replace the Cotonou Agreement which was signed in 2000 and expires in 2020. Public details on the negotiations have been limited, but it has been revealed that the negotiations will take place in two phases: a foundation agreement and the negotiation of bespoke protocols with each of the three regions.

We hope you enjoyed this review! Is there any major development we missed? Let us know!

NOTE: This Article has been updated.

Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

DISCLAIMER: All views expressed herein are her personal views and do not necessarily reflect the views of any institution or entity with which she may be affiliated from time to time.