Bewildered is not the right term. But here is an example. Many different speakers addressed the issue of trade financing. They wanted to know why trade financing is still handled today like it was hundreds of years ago, with physical letters of credit demanded in a world that otherwise seems to get by with the push of a button. Instead, speakers wanted to talk about the digitization of financing or even about the use of blockchain. I’m not certain about this of course, since we had no officials in the room to ask. But based on my experience with a variety of Asian governments, I’m guessing that many (and certainly not all) would have had no idea what digitization of financing even means, let alone what a blockchain is or what it does or how it might apply to trade. None of the business speakers ever bothered to explain these concepts. Nor did anyone really address the practical obstacles that might be preventing the adoption of such concepts to trade today.
You Can Indeed Lose What You Never Had
The start of a piece in yesterday’s TheStreet summarized a common viewpoint on the US withdrawal from the Trans-Pacific Partnership (TPP) trade agreement, when it said: “You can’t lose what you never had…” In fact, you can. It is becoming increasingly obvious that American companies are losing ground. The damage is two-fold—the United States has chosen to sit out from the TPP and it is also not benefiting from the range of trade deals that crisscross Asia, giving preferences to competitors in the region in key markets. Adam Behsudi nicely showed this week in Politico how international trade agreements are directly affecting farmers from one county in Iowa.
Living with American Uncertainty
The NAFTA negotiations have implications for Canada beyond simply the talks in Washington. If the United States is no longer a reliable partner, then Canada needs to start thinking about a different approach. It needs to think about this now and it needs to do so quickly. Canadian officials appear to have adopted a similar strategy to many other countries. First, they have tried to figure out what the US is likely to want. They have dispatched various delegations to DC to have conversations with the President and others. Second, they have started discussions with other countries. For Canada, this means starting negotiations with China on a free trade agreement. These talks will likely take time to conclude, hence the urgency in beginning now.
Market Access for Goods in TPP11
The trade ministers from the 11 Trans-Pacific Partnership (TPP) countries will be gathering this weekend in Hanoi to discuss bringing the agreement into force. The Asian Trade Centre and APL Logistics have created a new booklet to highlight some of the specific market access benefits for companies. To see what the TPP with 11 parties delivers in wide range of products, we highlight seafood, wine, plastics, cosmetics and soap, shampoo, wood, furniture, iron and steel and some footwear and textile categories. The product categories were chosen to illustrate the range of different market access commitments made by TPP11 members. Many of these items show tariff cuts from as high as 40% to zero. The TPP continues to offer substantial market access benefits to participating member countries. Firms that operate in and across the TPP will face fewer tariff barriers with lower rates as quickly as the first day of the agreement.
Solving the Many Sides of RCEP
Since work is likely to continue towards solving the final row of the puzzle later, what matters is locking in progress in cracking most of the solution. Getting the final row done feels very satisfying, but more critical is working out how to get the lion’s share of the rows into place. This is true, even if it turns out that the final rows can’t be slotted into place using the existing directions for solving the puzzle. It will still push forward trade across Asia in ways that have not been tried in the region before and deliver economic benefits to companies and consumers. Getting to the end, however, remains a challenging goal. Solving a “normal” Rubik’s cube with four sides is hard enough. Completing one with 16 sides is testing the patience and negotiating skills of everyone involved.