For most who work in international trade, a free-trade agreement between the United States and the European Union makes sense. The EU, after all is the United States’ largest trading partner. In 2017, the United States imported $417 billion in goods from the EU, while exporting $270 billion in goods to the bloc.

The Transatlantic Trade and Investment Partnership (TTIP) has been seen as a way to further open trade between the United States and the EU. For the United States saw the partnership as a way to close the trade deficit, while European leaders hoped it would further bolster trade. On both sides of the Atlantic, TTIP proponents said the partnership could spur further economic growth and add trade and manufacturing jobs.

Amid the Brexit vote and contentious elections in Europe and the United States, TTIP negotiations came to a halt in October of last year after 10 negotiating sessions that spanned three years. With the election of Donald Trump and his outspoken, negative views on free trade, most assumed that the TTIP was a dead deal.

But suddenly, trade leaders in the United States and Europe are discussing resuming TTIP talks, and touting the benefits of a trade deal between the United States and the EU.

Trade leaders on reviving TTIP

On the U.S. side, the first indication that TTIP discussions could resume came in a Sunday morning news interview with U.S. Commerce Secretary Wilbur Ross in May.

It’s no mistake that, while we withdrew from [the Trans-Pacific Parternship trade negotiations], we did not withdraw from TTIP,

Ross stated. “The EU is one of our largest trading partners, and any negotiations legally must be conducted at the EU level and not with individual nations.

“Thus, it makes sense to continue TTIP negotiations and to work towards a solution that increases overall trade while reducing our trade deficit.”

U.S. Trade Rep. Robert Lighthizer more formally addressed resuming TTIP negotiations in June during a U.S. Senate Finance Committee hearing in June. During the hearing, Lighthizer told U.S. legislators that TTIP is currently being reviewed by members of his team, and so far, there is a positive view on moving forward with U.S.-EU trade negotiations.

Lighthizer said he had spoken with EU Trade Commissioner Cecelia Malmström about resuming talks on negotiating an EU-U.S. trade deal.

“On TTIP, we certainly agree that that’s an important negotiation,” Lighthizer said of his discussions with Malmström. “I’ve talked to her about bilateral issues and co-operative issues. I’m not here to make any announcement about it, but it is something that we certainly realize the importance of.”

There’s a lot of momentum behind [a trade deal]; there are a lot of reasons to do it. On the other hand, it wasn’t accomplished, so there are obviously problems.

Lighthizer said any discussions on resuming TTIP would likely be put off until after Germany’s elections in September.

Meanwhile, EU officials have been relatively quiet on TTIP since Trump’s election, though they have cautioned the U.S. against protectionist trade policies and expressed an eagerness to resume U.S.-EU trade talks on several occasions. At the same time, the EU has been adopting similar free trade agreements with other countries, including Canada and Japan, and has expressed a desire to strike more agreements.

What TTIP could accomplish

TTIP aims to iron out a lot of details in European-U.S. trade. The agreement would make trade more transparent and easier for businesses in both countries, according to U.S. Trade Rep. Lighthizer’s office. It also would better lay out environmental, health and safety protections. Previously, one of the sticking points of TTIP negotiations was language on Investor-State Dispute Settlement (ISDS). Detractors have said ISDS procedures were too secretive, but in other trade deals, the EU made steps to create a more transparent ISDS process.

Businesses trading between the EU and the United States could see a big drop in tariffs if TTIP were to pass. While the average tariff for all products traded between the two is 1.6%, there are still tariffs as high as 25%. One leaked TTIP document showed that the agreement would lower tariffs by 97.5%.

In the end, it seems that both sides realize that the strong EU-U.S. trade relationship calls for a new trade agreement. While TTIP talks look like they are likely to resume, it stands to be seen whether EU leaders can balance their desire for free trade with the current tone of U.S. trade politics.

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To some degree, that answer has to be yes; but not entirely.

Washington goes bilateral

For decades, trade policy has been led by Washington. No other capital has had a bigger influence on global commerce. Being the largest economic, military and geopolitical power certainly means that any major shift in U.S. trade policy will impact global trade policy as well.

This is seen most clearly with the Transatlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP). President Trump has already withdrawn from the TPP, though that doesn’t mean the deal is wholly dead (more on that below). If we extend his logic on the TPP to the TTIP, as investors would be wise to do, that agreement between the U.S. and the E.U. is likely at the end of its road as well.

Under President Trump, Washington has indeed gone bilateral. Trump decries multilateral trade deals as bad for America. His focus, he says, will be on establishing bilateral trade relations and negotiating from a position of strength. He thinks the U.S. can get better deals for its workers that way.

After all, the U.S. is the biggest economy in the world, and it can easily overpower many other countries in bilateral talks. The U.S. negotiators will have an enormous amount of leverage in bilateral negotiations, even with other major economies. By contrast, American bargaining power often decreases when it is negotiating with multiple countries, as was the case with the TTIP and the TPP.

NAFTA’s future is more certain than either the TTIP or the TPP, since it is an existing, entrenched trade deal. With established links and interests, it will be much harder to nix the regional pact. However, a renegotiation is almost certainly going to occur. Donald Trump’s re-election depends on it—he won office because of votes in the Rust Belt, and those voters feel passionately that NAFTA should be scrapped or renegotiated.

NAFTA renegotiations will be an historic challenge for Ottawa. While America’s sights are largely set on trade with Mexico, Canada needs to brace itself for what could be a rough ride as well. Though trade with Canada almost never made its way into a Trump campaign speech, complacency will not serve our policymakers.

Is the TPP dead?

There were two major players in the TPP negotiations—the U.S. and Japan. It was commonly believed during the negotiations that if either of those two countries failed to ratify it, the deal was dead. While Japan ratified the pact, the U.S. will not.

However, that doesn’t mean the TPP is dead per se. Australia is pushing for the deal to continue without the U.S., though this is unlikely. Even if the deal doesn’t get ratified and the TPP is gone in name and country make-up, many of the innovations that came from it may find their way into future trade deals. The TPP was often heralded as the new gold standard for trade—these ideas don’t go away with the end of the pact. Expect to see some of those processes replicated in future deals.

Is the world following the U.S. to bilateral trade?

As Washington pivots away from decades of multilateral trade policy, will the rest of the world follow? To some degree, they will be forced to. Countries that want a trade deal with the world’s largest market will be forced to negotiate bilaterally with the U.S. This includes Japan and the U.K.

However, there is no evidence yet that the rest of the world will only negotiate bilateral deals with other countries.

In Asia, China is still pushing the Regional Comprehensive Economic Partnership (RCEP), which consists of 16 Asia-Pacific countries. Furthermore, ASEAN countries are continuing their economic integration.

Multilateral trade isn’t dead in Europe either. After Trump’s election, Canada and the E.U. ratified the Comprehensive Economic and Trade Agreement (CETA). The United Kingdom, too, is keeping a multilateral E.U. trade deal on the table in its Brexit negotiations.

Nevertheless, there are still storm clouds for multilateral trade in Europe. While the TTIP has not been officially abandoned, anyone who took in Trump’s rhetoric on the TPP cannot imagine he supports the E.U. deal.

The TTIP is further complicated by an E.U. election calendar which is not favourable to the agreement. Over the coming years, France and Germany (the major E.U. players) will both have elections in which populist candidates are either leading in the polls or rising in popularity. The result is that French and German mainstream leaders will be forced to make concessions. While they are unlikely to abandon the TTIP altogether, they may have to tamp down enthusiasm and make some changes. Of course, the victory of right-wing populists in either country could kill the deal as well.

There is no doubt that Donald Trump’s election will change world trade, marking a break from the multilateralism that has become popular in recent decades. However, there is currently no evidence that the rest of the world will shift its policy framework just yet, placing the U.S. at odds with many other countries over the future of international free trade.

The post Does the Donald Trump era mark the end of multilateral trade? appeared first on Trade Ready.

A new year means three things: lots of people are going to sign up for gym memberships they won’t use in three months, others will keep writing the wrong year on all their correspondence, and of course there are a plethora of new trends and predictions to look out for in the year ahead.

We’re going to focus on the last of the three.

What should you look out for or expect in the international business world in 2017? Let’s take a look and see what could be dominating the headlines you read over the next twelve months.

1. The future of the EU

The outlook for the EU is grim for 2017. UK Prime Minister Theresa May is expected to trigger Article 50 to begin the formal process to leave the EU, and Italy’s recent referendum has brought the country’s support for the union into question.

France and Germany also both face elections in 2017, which could result in new anti-EU governments who may want to follow the UK’s example.

If the UK, Italy, France and Germany are all led by Euro-skeptics by the end of 2017, the entire future of the EU will come into question.

2. U.S. trade under Trump

During the 2016 election, Donald Trump’s claims for his presidency ranged from refusing to sign the TPP and leaving NAFTA, to setting prohibitive tariffs on imports from China and Mexico.

While many have speculated that some of his proposals, most notably the sizable tariffs on China and Mexico, would be illegal according to WTO rules, it remains to be seen how closely his rhetoric will match his actions on trade.

Whatever he does, positive or negative, will affect countless American and international businesses.

3. Technical innovations in agile manufacturing and last-mile delivery

The ability to create manufacturing parts or entire products with nothing more than a computer and a 3D printer gives companies far greater agility in their manufacturing efforts, and offers opportunities for rapid innovation.

Drones are offering the possibility of rapid delivery to customers. While most tests have been focused on home delivery, some have even experimented with using GPS tracking to deliver directly to people based on their phone location, wherever they may be at the time.

Both technologies, as well as several others, are still in their infancy, so 2017 could be a year of major breakthroughs.

4. Big mergers between major trade companies

While 2016 did not match 2015’s extraordinary number of massive mergers and acquisitions (three mergers and acquisitions deals worth over $100 billion USD were completed in 2015), there were still several notable deals. These included chemical company Bayer’s purchase of Monsanto for $66 billion USD, pharmaceutical specialists Shire buying Baxalta, and Microsoft’s recent $28B purchase of LinkedIn.

2017 is expected to match 2016’s rate of M&As, with pharmaceutical/healthcare, telecoms and finance among the industries that are most likely to see big deals. Will any of them affect your business or your industry competitors?

5. Blockchain in trade finance

Blockchain could be a true game changer in the world of international trade, allowing buyers and suppliers to make online transactions accurately and securely without involving middlemen.

While it has so far been used mainly for Bitcoin transactions, it has the potential to transform supply chains, and revolutionize trade finance.

If corporations begin to use the technology more frequently throughout 2017, it could be the beginning of a new era of global trade transactions.

6. Thinking smaller

Micro-targeting in marketing efforts, product adaptation, and market entry has been an increasingly hot trend over the past couple of years, empowered by the collection, analysis and optimization of oodles of data.

Thinking small comes from a customer-centric approach to business, focusing on building experiences for customers that are as personalized and responsive as possible. These efforts can really pay off in client satisfaction, leading to repeat business and brand loyalty, and can increase purchasing frequency.

As analytics, customer management software and automation get more sophisticated, we will see this trend grow into 2017.

7. The future (or lack thereof) of free trade agreements

2016 was a big year for free trade agreements, with major developments in deals that have been in negotiations for years.

The Trans Pacific Partnership (TPP): The 12 member deal, officially signed by all parties on February 4, 2016 will go into force once ratified by all signatories by February 2018. However, incoming U.S. President Donald Trump has said he will not ratify the TPP and has also threatened to tear up or renegotiate NAFTA, throwing the future of both FTAs into question in 2017.

The Transatlantic Trade and Investment Partnership (TTIP): In negotiations for almost a decade, this FTA between the U.S. and EU has met fierce opposition from American and European citizens. The U.S. considers the deal a companion to the TPP, and with President-Elect Trump coming into power early in the new year, and the EU going through some major upheaval, this deal is also being thrown into question.

Comprehensive Economic and Trade Agreement (CETA): Canada’s Minister for International Trade, Chrystia Freeland made headlines in October 2016 after she arrived in Belgium to sign the Canada-EU treaty, only to be informed that the EU could not sign due to opposition from the region of Wallonia. The intra-Belgian disagreement was quickly resolved and the agreement was signed on October 20, 2016. CETA is now awaiting ratification from all parties over and could begin to be implemented early in the new year.

WTO Trade Facilitation Agreement: The TFA contains provisions for expediting the movement, release and clearance of goods, sets out measures for effective cooperation between customs and other authorities on trade facilitation compliance issues and contains provisions for technical assistance and capacity building among signatory nations. Negotiations concluded on the WTO TFA in 2013 and 103 nations have now signed on to the agreement, most recently Canada on December 16, 2016. With only seven more nations needed to ratify the agreement before it is officially implemented, we could see some new developments in 2017.

8. The growing world of e-commerce and drop shipping

According to analysts, online sales will increase from $335 billion in 2015 to over $523 billion in 2020, a rise of almost 10% per year, though the current annual growth rate is actually closer to 14%.

Brick and mortar retailers’ worlds have been rocked by the skyrocketing success of online shopping. E-commerce leaders are making strides in optimizing their strategies and will continue to do so into 2017. Many are predicting the end of frenzied buying on traditional shopping holidays such as Black Friday and Cyber Monday, as an increased focus on real-time customization takes over.

We’ll have our eye on the blossoming arts of predictive data analysis, the Uber-ization of shipping and an increase in the use of artificial intelligence in this area into 2017.

9. Future of ocean shipping

More than 90% of internationally traded commodities are transported over an ocean. In 2017, we expect to see strides being made in the use of automated “smart ship” technology, major increases in port capacity and changes to global shipping routes.

2016 has been a year of turmoil and challenges for the shipping world, with mergers, bankruptcies (Hanjin is still fresh in of our memories), port strikes and trouble filling ships to capacity. But into next year opportunities abound for innovative shipping companies.

10. The importance of professional certification

The trend of increasingly competitive job markets is one that won’t be going away in the year ahead. It will continue to be important to stand out from the crowd of applicants seeking work in 2017. According to Credforce, studies show that 94% of HR professionals will make some form of professional certification for specialized personnel, making skills validation through designations more than just an asset next year.

In the past year we have seen an increase in employers and government departments increasing funding available for employees to gain certification and this is a trend we see sticking around.

The post 10 global trade trends we’ll be watching in 2017 appeared first on Trade Ready.

In its report card, The Council of Councils, a global initiative to connect leading foreign policy institutes, has identified ten global challenges that every nation should consider in order to build a better world. These challenges range from mitigating climate change and combating transnational terrorism, to promoting global health and expanding global trade.

Although each of these ten challenges deserves special attention, expanding global trade is particularly important because it represents a unique opportunity to contribute to local wellbeing and economic development.

To date, there are 277 regional trade agreements (RTAs) registered with the World Trade Organization (WTO) which might seem like enough. However, there is still room for greater socioeconomic improvement by promoting and implementing more RTAs and other initiatives to facilitate and expand trade among nations.

Rohinton P. Medhora, President of the Center for International Governance Innovation (CIGI) in Canada, said that “Global trade is sputtering, but has not degenerated into damaging protectionism.”

Likewise, Jaime Zabludovsky, President of the Mexican Council on Foreign Relations, pointed out that expanding and liberalizing global trade are key elements “to provide better access to globally significant markets, diversify the investment relationships between states, and promote the growth of regional supply chains.”

Everyone can participate and benefit from global trade

Despite the benefits of international trade, there are misconceptions that promoting global commerce is against the principles of sovereignty, or that it is an activity accessible only to countries at an advanced stage of economic development.

However, international trade is an inclusive activity that allows any nation or business potentiates to expand its growth, regardless of economic size, and link its domestic economy to global opportunities. Promoting the effective use of global trade should be a priority, not only for governments or economic development agencies, but also for educational institutions and business associations.

We need to create more awareness about international trade in society as an essential component to achieving economic development and welfare locally. Countries resistant to promoting global trade are losing opportunities to boost their economies and businesses.

Thus, the challenge of expanding global trade should be embraced by everybody, keeping in mind that this is an activity that demands having a global vision, a lot of planning and strategic execution.

One of the most important recent RTAs is undoubtedly the Trans-Pacific Partnership (TPP), signed on February 4, 2016, by 12 Pacific Rim countries after seven years of negotiations.

According to the World Bank, the TPP is a mega-regional trade agreement (MRTA) with the potential to have such a significant impact on global trade that it will change the path that international trade has been following. In its final text, the TPP has upgraded and integrated issues and opportunities that had never been discussed before. The cutting-edge approach of the TPP addresses topics such as intellectual property, the environment, transparency and anti-corruption, small and medium enterprises (SMEs), government procurement, state-owned enterprises (SOEs), cooperation and capacity building, and e-commerce, among others.

To understand the relevance of having these themes integrated within the TPP, consider the data provided by the World Economic Forum (WEF) stating that “bringing the internet to the four billion people not currently online would add $6.7 trillion to the global economy and lift 500 million people out of poverty.” Thus, integrating rules for e-commerce within TPP nations has been a very important step of this new agreement.

As for traditional themes, the TPP has eliminated close to 18,000 tariffs on goods, ranging from agricultural to manufactured products. This will benefit both producers who might export their products to new markets, and consumers who will have access to a broader range of products.

The TPP brings new opportunities to bolster collaborative relationships

Some people believe that the TPP is just another RTA, or that it won´t add any value because several of those countries already had an existing trade relationship. However, even the closest trading partners in the TPP will benefit from expanded economic benefits, thanks to the depth of the agreement in different areas.

Particular attention has been given to the participation of NAFTA partners in the TPP: Canada, Mexico and United States. These three nations will not only be preserving their common interests through their participation in this new trade pact, but also increasing their trade relationship.

The TPP will allow them to strengthen their integration and collaboration to the benefit of several industries that share capacities such as aerospace, automotive, mining, agriculture, advanced technologies, financial services and more. The agreement will allow NAFTA partners to expand their markets and work together throughout the Asia-Pacific region.

According to the report “The Road to a Reinvigorated North American Partnership,” these three countries have the opportunity to increase their productivity. This productivity has been estimated to represent as much as $7.3 trillion USD to North America’s region.

To achieve this, they should solve common issues enabling them to compete together in international trade. These issues include harmonized cross-border standards for trucking, harmonizing regulations in a tripartite manner, improving rail, road, port and airport infrastructure, and solving migration issues.

Trade deals can help business, but you must make your own destiny

It’s important to underline that the TPP, or any current or future RTA, will not create these benefits by themselves. Every single nation and company needs to plan, research and “plant the seeds to harvest their crops.” The mistake that some have made in the past has been believing that RTAs will ensure success and that they just have to wait to reap the benefits.

RTAs set frameworks, rules and parameters, but it’s the responsibility of governments, businesses and stakeholders to prepare to compete in these new conditions. Sometimes people blame free trade agreements for their losses, but they don´t realize that the cause of their losses was their lack of planning and execution.

A key factor to succeed in international trade is building partnerships, in combination with finding new clients or purchasers. Partnerships are long term relationships where you and your partner can support each other in an infinite number of ways. The governments of Mexico, Canada and the United States have the opportunity to strengthen their partnership and growth capacities together within the TPP; I would suggest companies do the same for this new trade pact.

Finding partners abroad helps businesses overcome the main challenges that companies face in global trade such as product quality, customs, delivery, logistics, risk management, costs, foreign exchange fluctuations, and social, cultural and political issues. International trade practitioners must adapt their global thinking in terms of local actions. As an entrepreneur running my own international trade company and promoting partnerships, I can testify that free trade agreements offer tremendous advantages to compete and obtain positive results even if you are a small or medium enterprise.

Arriba Mexico Food Company and CMX Partnerships work hard every day to build bridges between Canadians and Mexicans in business making use of NAFTA and other initiatives.

Working with these companies, I have seen the power of bilateral collaboration when you build alliances with institutions from private and/or public sectors. These types of collaborations, often made possible by RTA’s, produce joint initiatives and can ultimately benefit society. International trade, supported with global partnerships, offer endless opportunities to promote economic growth.

The Council of Councils is positive about the global progress that international trade can achieve worldwide in 2016.They have ranked this challenge second in terms of opportunities for breakthrough because “the momentum of the TPP may propel progress for other regional and interregional trade.”

There are currently discussions happening about new agreements such as the Transatlantic Trade and Investment Partnership (TTIP), the Regional Comprehensive Economic Partnership (RCEP), and hundreds of other bilateral agreements between trade blocs and nations. These agreements can offer a promising future and the opportunity to create economic prosperity in regions and communities around the globe.

Promoting international trade as a tool to create wellbeing in society is the responsibility of all of us. Nations, provinces and companies should create their own strategies to participate and succeed in global markets. Finding your own niche and the right partnerships are fundamental in your strategies to participate in international trade. Finally, I recommend you consider the savvy words of Steve Jobs: “Think Big, Start Small and Move Fast.”

The post International trade is a tool at our fingertips to promote local prosperity appeared first on Trade Ready.

Great Britain has stirred up a host of global economic debate as the country prepares to hold a referendum election on June 23 to determine whether or not it will split from the European Union.

Supporters of the so-called “Brexit” say that continental Europe’s economic upheavals are holding back the British economy, while opponents contend that abandoning the EU could discourage investment in the UK market and lead to a recession.

In Canada and the United States, leaders are warning that a Brexit would have a profound economic impact on this side of the Atlantic Ocean.

New trade agreements will be years in the making

For both Canada and the U.S., the UK is a significant trade partner. Britain is Canada’s largest European trade partner and its third largest trade partner overall, behind the U.S. and China. For the United States, Britain is its seventh largest trade partner. Should the Brexit occur, the UK will be out of the EU trading bloc and will have to forge its own trade deals.

The need to hash out new trade agreements presents a long-term issue for the UK that could leave all countries trading with Britain, and companies dealing with trade, facing a period of uncertainty.

North American trade agreements could take some time to hash out. In speaking out against a potential Brexit, U.S. President Barack Obama said that if the UK votes to leave the European Union, the United States will not prioritize establishing a bilateral trade agreement with the UK. As such, Obama warned, it could take five to 10 years for the U.S. and the UK to reach an agreement.

In a news conference in Britain in April Obama said:

I think it’s fair to say that maybe some point down the line there might be a UK-U.S. trade agreement, but it’s not going to happen any time soon because our focus is in negotiating with a big bloc, the European Union, to get a trade agreement done.

“The UK is going to be in the back of the queue.”

A UK-Canadian trade deal could suffer the opposite fate: Britain could be the one putting the establishment of a deal with Canada on the backburner as it works on relations with larger trade partners, including the United States, China and Japan.

Unclear fate for EU trade deals

Both the United States and Canada are in the midst of establishing trade deals with the European Union that could be jeopardized if the EU loses one of its largest and most powerful members.

For the past three years, leaders in the United States and the European Union have been hashing out the details of the Transatlantic Trade and Investment Partnership (TTIP).

The TTIP has been hailed as an all-encompassing trade deal for the 21^st century, covering nearly all sectors of the economy, including, agricultural goods, textiles, telecommunications, and intellectual property. The deal, between the largest economic bloc and the largest single-market economy, is meant to ease trade by lowering tariffs and regulations.

The TTIP faces opposition on nearly all sides. With the turmoil caused by a Brexit, the TTIP negotiations could be delayed. If the deal is not approved before Obama is out of office at the end of this year, the deal could face increasing delays, warned U.S. Under Secretary of Trade and International Commerce Stefan Selig in a May 16 press conference.

I think it’s clear to both us and our European colleagues that if we miss the opportunity to conclude [TTIP] negotiations this year, it might be months and perhaps even years before we are in the position to constructively re-engage on substantive negotiations, given not only the political calendar here but also in the Atlantic.

In an even longer process, Canadian officials have been working with the EU for seven years on the Comprehensive Economic and Trade Agreement (CETA), which, like the TTIP, addresses industries across the board and is meant to make it easier for corporations to do business between Europe and Canada. Should the EU’s largest economy — the UK — exit the union, it may cause Canadian officials to rethink some terms of the deal. And while the hope is that CETA will move forward as early as next year, progress could be put in limbo as the EU copes with the Brexit.

Weathering the uncertainty

Perhaps the most profound economic impact of a potential Brexit will be on the markets, as they deal with the uncertainty of the political situation and how it could impact trade deals, currencies and corporations.

That uncertainty is likely to build, and potentially spook investors building up to the June 23 vote. Currently, it is nearly impossible to tell which way Britain’s referendum vote will go. A May 15 Financial Times poll shows Briton split 46-44% against approving a Brexit.

If the Brexit is defeated, much of that uncertainty will be squashed. If the Brexit referendum is approved, however, the economic repercussions could be profound. International Monetary Fund Managing Director Christine Lagarde and Bank of England Governor Mark Carney have both cautioned that a Brexit could trigger a recession.

Upon approval, the UK would enter into a never before tested EU exit process. During that time, the UK and the EU would have to determine how they would sever existing ties and how they would form new trade agreements and regulations. There also is a concern that if the UK votes in favor of a split with the EU, it could lead the way for other discontent EU countries could follow.

When it comes to the economic and trade repercussions of a break-up between the EU and the UK, only time will tell if the 40-year-old political and economic bloc will break, and how such a break will impact North American and global trade.

The post How a ‘Brexit’ could affect the UK’s trade with North America appeared first on Trade Ready.

Though talk of international trade these days is often dominated by trans-oceanic agreements like the TPP, TTIP, CETA and other FTAs, Canada, the United States and Mexico all continue to rely heavily on trade with one another.

Even amidst increasing global opportunities for growth, the fate of the three economies remains largely intertwined. Many agree that the North American nations’ best path towards international economic growth is through increased cooperation and trade with one another.

Gathering to talk about North American trade

During the Hill Times event “A New North American Future” on March 24, these arguments were expanded and reinforced by a group of experienced senior trade experts.

Mexican Ambassador to Canada Agustin Garcia-Lopez introduced the event and began by explaining that “When I was young, a North American trade agreement would have been considered taboo.”

Since NAFTA was put in place in 1994, trade between the three North American powerhouses has quadrupled, eclipsing the one trillion U.S. dollar mark for the first time in 2015.

There are now approximately 647,000 cross-border visits per day between NAFTA countries, and two million dollars’ worth of trade per minute.

The Ambassador explained NAFTA’s success by observing that, “there are now well-integrated global value chains in aerospace, manufacturing. In 1993, not even the most optimistic could have imagined such amazing results.”

He concluded by arguing that the TPP will only strengthen the relationship between the trilateral relationship, and stated, “desperate calls for protectionism must be dampened…We must privilege a North American future based on solidarity and mutual respect.”

Freer borders and stronger negotiating tactics

As panel members spoke, they each explained the benefits of closer North American ties from their perspective. Eric Miller, VP of Policy, Cybersecurity and North America for the Business Council of Canada, argued that the three countries needed to use digital tools to improve border security through pre-clearance procedures and shared no-fly lists.

Even if the TPP is formally adopted, he argued, trade between NAFTA countries would still hold inherent advantages because of their proximity and shared landmass. Improving border efficiency would only magnify these advantages.

Miller argues the TPP make sense for all three countries because it involves existing major trade partners.

On top of the trans-pacific agreement, the top 80 Canadian exporters also have a combined 200,000 suppliers, so the effects of increased trade can multiply exponentially down the supply chain.

Miller’s main suggestion for improvement was the concept of cross-cumulation in North American trade agreements.

While European countries can negotiate as a single block, North American countries cannot reap the same advantages, even when they have separate trade agreements with the same countries.

By finding ways to integrate the various North American trade agreements with international markets, they could improve their bargaining position and secure better terms for exporters in their countries.

Manufacturing still key to North American prosperity

Matthew Wilson, VP of National Policy for Canadian Manufacturers and Exporters (CME), added that despite the waves of outsourcing over the past 15-20 years, manufacturing is still the basis of North American trade as 80% of it has consisted of manufactured goods.

New technology has also created opportunities to build factories within North America over the past five years, particularly in the aerospace and automotive industries.

Nearly a million new manufacturing jobs in the U.S. have been created since 2010, and Mexico is now rising fast in the rankings of the world’s top 10 auto manufacturing countries.

Since the extensive North American parts trade means that the average car crosses a North American border seven times before its final sale, open borders and strong trading relationships are essential to continuing to foster this manufacturing resurgence.

Wilson also backed Miller’s call for greater cross-cumulation in North American trade agreements, and argued that ultimately, North American companies will have trouble domestically if they’re not entering new markets and succeeding there: “If we’re not competitive in North America, we won’t drive investment in manufacturing.”

Don’t fear the specter of recession

Mairead Lavery, Senior VP, Business Development at Export Development Canada (EDC), focused on how the strength of North American trade shows a future of growth, not recession.

While many based fears of recession on falling commodity prices, Lavery counterintuitively argued that the trend was actually a positive sign.

“We truly believe that when we look at this volatility, it’s actually because during the financial crisis, companies had invested money in bonds and commodities.”

“Now, they’re pulling money out of commodities, which drives prices down but the money will be used for global investment and growth…If growth can take root and sustain itself, it creates demand for Canada and Mexico to sell more to the U.S., and serves as a pillar for growth.”

She also discussed the importance of leveraging North American supply chains for companies to go global. North American countries present excellent export markets for one another.

Most Canadian companies begin their international business by exporting to the U.S. before expanding to other OECD countries, and then finally to emerging markets.

Though only 40,000 Canadian companies are direct exporters, statistics show that there are actually 100,000 Canadian companies involved in exporting once service exports and indirect exports which go through other companies are taken into account.

These companies must now continue to strengthen their North American ties to facilitate increased global growth and success.

The post The future for North American trade is actually brighter than ever appeared first on Trade Ready.

The Office of the U.S. Trade Representative released its National Trade Estimate Report on Foreign Trade Barriers earlier this month, outlining trade issues which are unresolved and deemed detrimental to U.S. companies and interests.

“The United States has observed a growing trend among our trading partners to impose localization barriers to trade – measures designed to protect, favor, or stimulate domestic industries, service providers, or intellectual property at the expense of imported goods, services, or foreign-owned or developed intellectual property,” the report said in the introduction.

These actions can distort trade, discourage foreign direct investment, and encourage other trading partners to impose similar measures, the USTR report warned.

Diary and liquor restrictions still a problem

Canada is one of the U.S.’ most important trade partner, accounting for $312.1 billion in U.S. exports. The U.S. imported $346.1 billion worth of Canadian goods in 2014.

However, agricultural barriers still remain, including restrictions on the export of U.S. seeds, as well as the Canadian regulations for cheese compositions.

Tariff-rate quotas, particularly in the dairy sector, impose high duties on U.S. goods which exceed yearly tariffs.

The U.S. also sees the Canadian liquor sale system – where each province is in charge of all liquor sold – as a problem for U.S. exporters, as this system results in cost-of-service markups and restrictions on what provinces decide they will sell.

Problems also remain with Canada’s government procurement, in that the U.S. feels American firms are not fully able to compete for government service contracts.

TTIP may take down barriers but issues remain in trade with EU

With the European Union, the U.S. is actively trying to overcome existing trade barriers through the negotiation of the Transatlantic Trade and Investment Partnership (TTIP). These trade barriers exist in several sectors, from automobiles to agriculture to pharmaceuticals.

The U.S. maintains that its transport trucks are at a commercial disadvantage because of differences in how the EU and the U.S. measure the length of their vehicles (the EU measures tractors from the front bumper to the rear, while the U.S. measures trucks on the trailer alone).

The U.S. maintains that due to EU restrictions on the length of truck-trailer combos, U.S. trucks are only able to pull shorter semi-trailers, which makes these trucks uncompetitive in the EU market.

Food labeling is another area of contention.

The EU will force food companies to display nutrition labeling on all products starting in December 2016, but have yet to finalize these requirements.

Additionally, member states have been given significant leeway to set their own requirements, which the U.S. government contends will add to the cost of selling in these markets.

The U.S. is also unhappy with the lack of transparency and uncertain legislation of EU member states in regards to pharmaceutical products. The USTR has further issues with lack of consideration in government procurement contracts across the trading bloc.

China remains unpredictable

Of all of the U.S.’ major trading partners, it has by far the longest laundry list of issues with China, its third-largest export market.

China still blocks exports of American beef, and has maintained restrictions on exports from several U.S. states over the export of poultry, due to prior concerns about avian flu.

The USTR is also unhappy with the Chinese government’s lengthy approval process for agricultural products derived from biotechnology, notably corn and dried distillers’ grains.

China’s excess capacity, particularly in steel, is also damaging the U.S. economy, the USTR said. China’s steel overproduction has wrought havoc on worldwide steel operations, depressing prices and making it nearly impossible for foreign and American steelmakers to recoup their costs and turn a profit on the metal.

The U.S. is also concerned by the nature of China’s agricultural regulations, which the report terms as among the least transparent and most unpredictable in the world market. The report stated:

Capricious practices by Chinese customs and quarantine agencies delay or halt shipments of agricultural products to China.

The majority of difficulties lie with China’s failure to abide by intellectual property restrictions, such as the protection of trade secrets, pirating of technological goods, and copying of manufacturing goods.

Thefts of trade secrets are “commonplace,” the report said, with both the Chinese government and military successfully hacking into computers of U.S. firms and stealing terabytes of information.

Software piracy remains a major issue, while the online piracy of movies, books, and games continues unabated.

Counterfeiting of goods – from designer handbags to medications – is also an issue that has yet to be resolved, the report stated.

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Negotiations of the EU-U.S. trade deal, known as the Transatlantic Trade and Investment Partnership, or TTIP, may have hit a snag after a leaked document appears to give the U.S. and large corporations disproportionate weight in future trade decisions.

The leak was obtained by Great Britain’s The Independent working with campaign organization Corporate Europe Observatory (CEO).

Giving the U.S. first access

The document indicates that the unelected European Commission has agreed to consult with the U.S. government prior to adopting new trade legislation, according to a new EU proposal on horizontal regulatory cooperation published March 21.

Under this process, the CEO argues that the U.S. firms and major corporations could have outsize influence on future EU trade policy. The leaked document pertains to the chapter on regulatory cooperation with the United States.

According to CEO:

The proposal provides big business groups with the tools to influence legislation that they have been demanding, including a mechanism by which transatlantic business coalitions can include their own preferences in the regulatory cooperation working program.

The new structure would also expand the role of the Commission, which is an unaccountable EU body, CEO said.

Under these suggested structures, the U.S. government could potentially question and demand changes to regulation before member states of the European Union have the opportunity to debate them.

EU Commission claims false analysis, French not amused

The organization argues that EU citizens and their governments will be sidelined in the trade process.

A spokesperson for the EU Commission flatly denied that the proposed structure for the deal would give more weight to concerns from the U.S. and big business more than those from member states.

The text on regulatory cooperation will be published soon for everyone to see that this so-called analysis is completely false, presents a biased view of the European Commission’s work, and ignores the reality of EU texts.

“Regulators – not trade negotiators – will continue to lead regulatory cooperation initiatives.”

However, a top French official is taking a quite different view of the power struggle between the two sides.  French Trade Minister Matthias Fekl said last week that the U.S. will have to concede more if the trade deal is to go through.

The deal is contingent on the U.S. relaxing some of its demands, he argued.

“If there are no concessions on access to public markets in the United States, on the protection of geographical indications and on the investment court system, then the question is why we’re even still negotiating,” Fekl said.

Talks to continue as the players change

The TTIP is aiming to coordinate regulation on a number of products in the EU and the U.S., including financial services and banking, environmental protection, and food and product safety.

Other sensitive topics include public procurement. Officials on both sides of the negotiating table met in early March to discuss the topic, and are expected to meet for two additional rounds of talks on the issue before the start of summer.

The two sides made some progress on the controversial investor-state dispute settlement (ISDS) in early March. However, it remains unlikely that the TTIP agreement will be completed before the U.S. presidential election is decided this November.

The agreement may not, in the end, apply to the United Kingdom; the UK is scheduled to hold a referendum on its EU membership on June 23.

Do you think the TTIP presents a good opportunity for all countries involved?

The post Leak in TTIP reveals upper hand for U.S., large corporations appeared first on Trade Ready.

Ongoing TTIP trade deal negotiations between Washington and Brussels may not be reached in 2015 as originally anticipated, EU officials admitted in late March.

“We have to do our best to get an agreement but we don’t want to reach an agreement just for the sake of it,” Latvian Foreign Minister Edgars Rinkevics stated on March 25. Latvia currently holds the EU presidency.

[quote type=center]We are aiming to conclude this under the Obama administration…but I cannot give you a date.[/sws_blockquote_endquote]
Obama’s term will end in January 2017.

Negotiations have been in progress since June 2013, and were originally expected to be completed in 2014. The deadline was pushed to 2015 when it became clear that issues would not be resolved before then; the European Commission froze trade talks in January 2014.

What’s holding up the deal?

The biggest obstacle to locking down a deal is investor-state dispute settlements (ISDS). This portion of the proposed deal is causing an uproar throughout the EU, as it will allow corporations to take governments to international arbitration tribunals, instead of local courts, to resolve investment disputes.

Germany – which is arguably the economic driver of the EU – has come out vociferously against the measure, followed by Austria and France.

Germany’s deputy chancellor, Social Democrat Sigmar Gabriel, stated in late March that he is resolutely against the ISDS measure, fearing its impact on the EU’s stringent regulatory laws.

[quote type =”center”]We won’t lower any social, environment, or consumer production standards,[/sws_blockquote_endquote]

Gabriel told Sueddeutsche Zeitung. “And we will not – I am completely sure of this – see any privatization of arbitration.”

Opposition to the measure has pushed the European Commission to launch a permanent court, which will oversee and decide cases between foreign corporations and governments

However, EU Commissioner for Trade Cecilia Malmström is committed to creating a court which will not only have the power to adjudicate on TTIP matters, but also future trade agreements; she argues that a multilateral court would be a better use of resources and will be more legitimate.

The biggest concern opponents have about the current ISDS clause is whether or not international corporations would be able to sue governments for altering environmental or regulatory measures post-investment.

Malmström told members of the European Parliament that she sees other alternatives for dealing with this issue,

Our idea is a clause that says investment protection rules offer no guarantee for investors that the legal regime under which they have invested will stay the same

She also suggests limiting the amount of appeals that corporations will be able to make against the findings of national courts, by either forcing them to choose to work with national courts or the ISDS framework, or to cease suits launched in national courts once ISDS arbitration begins.

Decreasing appetite for trade deal

When the EU-US trade deal idea was born in 2011, the EU was reeling from a debt crisis which led many to question whether the economic arrangement could be maintained. Trade with major players was seen as an elixir to restore the continent to economic health.

But now that economies have rebounded sufficiently, state governments are bristling at conceding too much to potential trade partners.

The overall estimation of how much the EU stands to benefit from the signing of the trade deal has also changed. German industry federation BDI initially said the EU could expect to generate 100 billion euros per year as a result of the deal.

BDI was roundly criticized for the numbers, while the Center for Economic Policy Research for the European Commission published its own, more conservative number: EU GDP is expected to grow 0.5% in 10 years as a result of the deal, or 119 billion euros by 2027.

With growing opposition and a less-rosy picture of what the EU may gain from the accord, negotiators are facing serious challenges in bringing the deal to fruition.

Should the EU create a separate court to handle ISDS cases?

The post The one big obstacle that has brought the TTIP deal negotiations to a stand-still appeared first on Trade Ready.

This may spell trouble for ongoing negotiations to secure one of the biggest trade deals in history—the free trade agreement between the European Union and the United States.

How could the TTIP help economic growth?

Global trade and economic growth have still not completely recovered since the 2009 financial crisis. The World Bank predicts that import demand will drop 19 percent below its predicted level for 2015, and that medium-term global trade growth will rise to just five percent, still short of the seven percent per year average from the thirty years before the financial crisis.

The Transatlantic Trade and Investment Partnership (TTIP), however, is forecasted to help start to reverse those trends.

If signed, it is expected to increase the EU’s economy by $152 billion, while the U.S. economy would grow by U.S.$110 billion.

In a global trading system in which high-income countries like the U.S. and EU nations account for 65 percent of total global imports, the deal holds a lot of potential for international trade to make a rebound.

Several issues holding the TTIP back

Nevertheless, in mid-January, EU Trade Commissioner Cecilia Malmstrom called for further study on one of the more contentious aspects of the deal, which may slow down the return to negotiations by as much as six months.

The controversial provision in question concerns the Investor-State Dispute Settlement, which would allow companies investing in foreign countries to sue those countries’ governments should changes in local environmental or health laws impact their profits.

The clause is tremendously unpopular in the EU. Opposition groups in the EU are also unhappy with negotiations they characterize as non-transparent, and believe that it will result in an agreement that will erode governments’ capacity to independently make policy decisions.

Meanwhile, some Americans are concerned that U.S. companies will lose their advantage in bidding for U.S. government contracts (the TTIP, when signed, would require equal opportunity for foreign and domestic firms to compete).

Why is growth through trade so important?

While the fears are based on a desire to protect their own economies or legal practices, statistics prove that trade growth is becoming more dependent on general economic growth, due to a range of elements such as the maturing of global value chains, lowered spending in investment, and an increase in government spending.

For example, global GDP is expected to grow by 3 percent (down from an earlier projection of 3.4 percent) in 2015. The World Trade Organization had similarly cut its own expectations for 2015 global trade growth in September 2014, lowering its estimate from a 5.3 percent growth rate to 4 percent. Trade is therefore expected to grow only 1 percent more than global GDP, compared to original forecasts of 1.9 percent more, nearly double the current figure.

This cut only deepens the dependency of rising trade numbers on economic growth, and further demonstrates the need for new trade agreements to increase global trade growth independent of global GDP growth. Trade growth must be nurtured through deals like the TTIP to ensure it continues to occur independently.

What lies ahead for the TTIP

There are concerns that the slowdown of the EU economy, particularly in Germany and in France, may put the trade talks on hiatus, with EU countries being less willing to open up their economies to additional competition from across the pond at the expense of domestic firms’ profits.

Trade specialists on both sides of the negotiations are trying to close the deal before this becomes a major obstacle to the creation of this massive trading bloc.

The two sides have already gone through seven rounds of negotiations since the process began in early 2013, with the next round of negotiations had been expected to begin at the start of February at EU headquarters in Brussels.

How do you think all this is going to unfold? Will protectionism hamper global trade growth?

The post Will World Bank forecasts for ‘disappointing’ global trade growth stall TTIP negotiations? appeared first on Trade Ready.