- International Trade Committee explores impact of Australia deal on UK manufacturers and services
The Committee was established in 2016 to examine spending, administration, and policy of the Government’s Department for International Trade & public bodies. Currently Chaired by Angus Brendan MacNeil MP of the Scottish National Party, there are 10 other open items being examined by the Committee at the moment.
The Australia free trade deal signed on 17 December 2021 is a gold standard agreement that would eliminate tariffs on 99% of Australian goods exported to the UK.
The International Trade Commons Select Committee has started scrutinising the Australia free trade deal. Firstly, the Committee will examine manufacturing and probably conclude that goods need to be British-made for the UK to benefit due to tariff removal.
It will then inspect the services aspect of the deal for example free movement of people between the 2 nations and how that might affect the United Kingdom’s strong financial services sector. This section focused on rules and the requirement for them to be clear, and commitments. The Committee concluded that Australia and the UK already have a high level of rules for services.
Stakeholders could submit evidence until 16 January – a short window to allow time for the Committee to consider the responses.
Parliament will now consider the agreement for three months before ratification.
2. China Overseas Warehouse Binge
According to the Chinese media, in 2021 China has doubled its inventory of overseas warehouses from 1,000 to 2,000 with ambitions to continue the trend. Last year’s 5-year plan stated that China should “rely on overseas warehouses to establish a new foreign trade logistics network.”
Overseas warehouses allow China to ship goods faster and cheaper, the ability to store stock in a country will speed up the process. A downfall of Chinese consumer goods at the moment for example is the amount of time it takes to ship to European & US hubs.
China competes with US giants such as Amazon, Walmart and eBay with the pandemic affecting China worst with supply chain disruptions and reduced reliance on China. Policymakers see overseas warehouses as crucial to China’s foreign trade development to stabilise supply chains.
3. 2022 America Competes Act Passed in Congress
On 4 February 2022 the House Committee on Science, Space, and Technology voted to advance the America Competes Act of 2022. So, what does this mean for international trade? The Act focuses on strengthening America’s scientific and technological advances so it can compete more strongly with China. Amongst other priorities the Act prioritises domestic semiconductor manufacturing, increase science R&D funding, renew trade bilateral agreements, and reposition the US as a global trading power in front of China.
Originally passed under George Bush in 2010, the new version shows a renewed commitment to scientific products and a focus on China as a clear target.
The Act provides $52 billion for the fabrication of US semiconductors, $45 billion to improve America’s supply chain and $2 billion for auto, consumer electronics & defence products.
4. Customs Valuation Webinar
Global Compliance News is hosting a free webinar on Hot Topics on Customs Valuation at 10am Central Time on Tuesday, March 29. Register here
5. Supply Chain Problems to Disappear
The World Trade Organisation says that supply chain issues caused by the pandemic-induced shift toward services over goods when people could no longer go out to dinner or take part in activities / experiences, should ease in months. The Omicron variant exacerbated the problems, but the WTO says that the issues are ‘demand spikes’ rather than ‘snags’ and that the bottlenecks are about to clear.
WTO Director-General Ngozi Okonjo-Iweala said that higher transaction costs severely affected developing countries and smaller companies who are being squeezed out of the supply chain. She said that freight delays should ease this year and has organised a summit in March with shipping, logistics and trading companies to workshop improvements in the global supply chain.
6. Global Trading Partners Visualised
The IMF export import data visualisations here show how countries are connected to their trading partner over time. They show a shift in trade over the past 60 years from 1960 pre-containers when the US dominated to 2020 when China has overtaken the US as the globe’s largest trading partner. Today a quarter of global production is exported.
This interesting graph on total value of imports shows why the EU calls UK ‘Treasure Island’ with the value of imported goods as share of GDP UK ahead of China and the US – another reason the UK makes a great market to enter or export to.
Image source above Visual Capitalist
Image source below Our World in Data
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