Economic downturn brings efforts to liberalize, restrict trade
June 19, 2009
World Trade\Interactive
The ongoing global economic downturn continues to have varying effects on international trade. While some countries have chosen to intensify market-opening efforts, others are pursuing measures to limit foreign access or boost domestic businesses. Following is a sampling of recent actions in both these areas.
Liberalization
New Zealand-Malaysia FTA. AFP reports that New Zealand and Malaysia have concluded negotiations on a bilateral free trade agreement and expect to sign it by the end of the year. New Zealand Trade Minister Tim Groser said the agreement will provide more benefits than an existing FTA among Australia, New Zealand and the ten-member Association of Southeast Asian Nations, including improved market access and greater certainty for goods and services exporters and investors.
Serbia-Turkey FTA. Serbia and Turkey have signed a bilateral FTA, according to Balkans.com Business News. The deal provides for “asymmetric trade liberalization,” Serbian Deputy Prime Minister Mladjan Dinkic said, meaning that Turkey will eliminate duties on Serbian exports beginning in January 2010 but Serbia will be allowed to phase-in greater market access for Turkish goods through 2015.
South Korea-New Zealand FTA. South Korea and New Zealand recently launched talks on a bilateral FTA, AFP reports. Two-way trade totaled about $1.95 billion in 2008, with South Korea importing primarily beef and dairy goods from New Zealand and exporting mostly petroleum products and cars. The article notes that South Korea has been particularly active in pursuing FTAs given its “export-dominated economy,” having already concluded agreements with Chile, Singapore, the U.S., the European Free Trade Association and ASEAN and currently negotiating with the European Union, Australia, Canada, India and Mexico.
China-Costa Rica FTA. China and Costa Rica recently held a third round of talks on a bilateral FTA and hope to conclude negotiations by the end of this year, an AFP article reports. China is pushing for Costa Rica to eliminate tariffs on 70% of Chinese exports within 10 years and in return is offering duty-free treatment for 94.5% of Costa Rican products, excluding sugar, meat and coffee.
ASEAN Customs Harmonization. According to Malaysia’s Bernama news service, ASEAN member country customs officials are examining ways they can harmonize customs processes and procedures in the region, such as “enhancing transport connectivity and eliminating non-tariff barriers.” An ASEAN official said the primary challenge is how to do this within a group whose members are at widely varying levels of economic development and customs administration capability. The official noted that ASEAN is not currently planning to establish a customs union.
COMESA Customs Union. The Common Market for Eastern and Southern Africa launched a customs union June 7. According to an AFP article, the move will require all 19 COMESA member countries to “impose the same tariffs on goods from outside the region, with a range of tariffs from zero to 25 percent applying to different categories of goods and services.” In 2008, COMESA agreed to form a common free trade area and work toward a single customs union with two other African trade blocs, the East African Community and the South African Development Community.
Limitation
“Buy China” Policy. Nine Chinese ministries and government agencies have reportedly issued a directive stating that domestic products and services should be purchased for projects funded by China’s $586 billion economic stimulus plan unless they cannot be obtained under reasonable business conditions within China. In addition, imports purchased for government stimulus projects must be approved by the relevant government agencies in advance. An Associated Press article notes that the order “does not make clear whether domestically made products includes those of China-based operations of foreign companies.”
“Buy Local” in Australian State. The Australian state of New South Wales has moved to adopt a policy favoring Australian firms for $3.2 billion worth of state government goods and services procurement contracts. Australian Trade Minister Simon Crean has criticized the policy as “misguided” and warned that it “will invite retaliatory action by our trading partners,” but NSW Premier Nathan Rees argued that his state is merely following the lead of other Australian states.
Ecuador Import Restrictions. Reuters reports that the World Trade Organization has authorized Ecuador to maintain temporary import restrictions on 8.7% of imported goods that were first imposed in January to counter a rapidly increasing trade deficit. The approval came only after Ecuador agreed to replace most import quotas with tariffs by Sept. 1 and to remove all restrictions by Jan. 22, 2010.
Brazil Steel Tariffs. Brazil has agreed to reimpose tariffs ranging from 12% to 14% on seven steel products, according to an International Trade Daily article. These goods, including sheet steel, carbon steel plates, steel coils and connected steel bars, had been duty-free since 2005. The article states that the move came in response to “a surge in steel imports from China,” which “jumped by over 100 percent in the first four months of the year compared with the same period in 2008.”
China Export Tax Rebates. Effective June 1, China has increased export tax rebates on 2,600 items, the seventh such move in the last 10 months. Products affected include TV transmitters and sewing machines (to 17%), canned food, juice, shoes, hats, furniture and toys (to 15%), plastic, porcelain, glass and aquatic products (to 13%), and steel products, including scissors (to 9%).
China VAT Rebate. As of April 1, China began offering exporters of soda ash a 9% rebate on the 17% value-added tax. A handful of U.S. lawmakers called the move “irresponsible” and said it would harm U.S. exports to Asia, and the U.S. will reportedly raise the issue during the next meeting of the Joint Commission on Commerce and Trade this fall.
China Software Requirement. China’s Ministry of Industry and Information Technology has ordered that a specific Internet filtering software be pre-installed on all computers produced and sold in China as of July 1. A broad coalition of technology and trade associations from around the world has asked Chinese authorities to reconsider this decision, which they said “raises significant questions of security, privacy, system reliability, the free flow of information and user choice.”
Venezuela Cargo Ports. According to Reuters, Venezuela is moving to nationalize the companies that operate some of its largest cargo ports.
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