Yet, all hope for fair and free trade is not lost. The OECD’s 2017 Employment Outlook Report, released on June 13, 2017, shows support and evidence for steady improvements in employment numbers even in the context of trade. Extended to the long-term view of ten years after the recession, unemployment rates are projected to match pre-recession rates, while the employed share of the working population is said to exceed that of the pre-recession era. Trade does not just destroy jobs. It also creates jobs. Trade works best though when national governments have complimentary policies in place to help support workers. This may include labor market institutions that protect workers’ welfare and builds skills to help them adapt to changing demands. Workers can find better employment opportunities in a competitive landscape coming from the dynamic global economy.
RCEP: Nineteen Rounds and Counting…
While RCEP is not the TPP, as a Talking Trade post from last year detailed, these are still extremely complicated negotiations. The 16 countries involved have very diverse interests and objectives. All were drafted into this exercise by way of their involvement with ASEAN and each has varying levels of enthusiasm for the integration project. The negotiation agenda is also complicated. This round saw the continuing expansion of the issues under discussion with the movement of both trade remedies and government procurement from “expert group meetings” to the creation of formal working groups tasked with negotiating potential chapter outcomes. RCEP now includes roughly 15 substantive topics that have to be concluded simultaneously with 16 different and diverse parties. Getting to “yes” is going to be tough.
India’s Agriculture and RCEP
This was the case with AIFTA, in which despite the elimination of tariffs for about four thousand products, sensitive and high growth industries were included under the Sensitive—tariffs to be reduced to 5%--and Exclusion—no elimination of tariffs—lists; both of which largely cover agricultural products. More specifically, at the time of implementation the number of products under the Exclusion/Sensitive lists was higher than the number of tariff lines for ASEAN and world imports into India. These duty concessions signalled an implicit protection against the future engagement or the expansion of agricultural imports. In other words, India essentially put nearly all agricultural items that might have been imported from ASEAN countries into categories that did not receive tariff reductions. Hence, whatever increased import competition Indian agricultural producers have faced from ASEAN competitors in the wake of AIFTA cannot have been the result of duty reductions produced by the FTA itself.
The Pacific Alliance at Year 6
The Pacific Alliance, a regional integration initiative which brought together the economics of Mexico, Colombia, Peru and Chile, has garnered a surprising amount of attention from around the world after only six years since its creation; more than 50 countries have flocked to become observers. To understand the sudden interest one has to look at the member’s ability to establish themselves as a credible and ambitious body with incredible potential to increase investment and trade opportunities in the region. Nevertheless and despite the relative success that the PA has had to date, there remain large obstacles it must overcome to achieve its ambitious goals.
Whither Now Brexit?
Without a House of Commons majority, parliamentary mathematics suggests that Brexit can only be agreed and delivered if the Conservative minority government forges a cross-party approach to Brexit. This would likely mean that May will have to compromise on her hard Brexit plan in order to create a new national consensus. BUT here, we must caution against overestimating the role of Britain on the Brexit process. An equal if not greater share of the decision will depend on the EU. The degree of hardness or softness is NOT a unilateral choice to be made by the UK.