Members and Friends:
First, Happy New Year. We hope to be able to move forward as a country and individually both healthwise and economically this year. In the meantime we will continue to bring you news on the trade and investment front – with Mexico, yes, but also with other countries that we have been covering all of 2020.
On the US trade agenda front, Inside U.S. Trade just released a listing of key dates and events for the new year by month. It is very thorough and covers many activities that are required by law. One item of importance to be submitted in early March would be the report to Congress by the Biden Administration and USTR on its “2021 Trade Policy Agenda.” Also due for renewal consideration on June 30 would be Trade Promotion Authority. The “2021 National Trade Estimate Report on Foreign Trade Barriers” may be released on March 31.
Looking at the Biden Administration’s agenda for working on the key serious issues facing the country, it is doubtful that there will be any early activity on new trade agreements such as one between the US and the UK, or even rejoining the CPTPP – at least for a while. USTR designate Katherine Tai is still to be confirmed by Congress.
Looking at a global trade agenda, John Murphy of the US Chamber of Commerce brought out a list of upcoming events and issues including summits in a number of regions for this year in a webinar last week (here).
On relations with Canada, our good colleague Colin Robertson has just released a report on “What Canadians Need to Know About the Biden Inauguration” including how Canada has to position itself with our new government. A candidate for US Ambassador to Canada still needs to be announced and confirmed. This likely will not be done until this summer but, in the meantime, several issues are “on the plate” including the Keystone XL pipeline – and President Biden already has rescinded the permit for that as one of his first executive orders. Of note is that President Biden and Premier Trudeau spoke last Friday for 30 minutes, with reports that the tone was very positive.
The last item in our last update was the Brexit Agreement – which happened at the very last moment before the year closed. With a week to go until the end of the Brexit transition period, the UK and EU announced the UK-EU Trade and Cooperation Agreement (TCA) on December 24. The deal will cover the future UK-EU relationship. Alongside the TCA, the UK and EU also signed off on the Nuclear Cooperation Agreement (NCA) and the Security of Classified Information Agreement (SCIA). A summary of the agreements is available, while those who want all the details can read the 1,449-page full document.
Our friends at the Albright Stonebridge Group (ASG) provide their thoughts on the the post-Brexit future of the UK going forward once all of the EU Ambassadors ratify the agreement, which could take several months. Although chaos has been avoided, a lot more work has to be done by the Johnson government in reasserting itself on the international stage to fully deliver on the promise of “Global Britain.” As mentioned above, negotiations between the US and the UK on a trade agreement were not completed. Some sections related to SMEs, investment, and digital services were close to completion, but substantial differences remain on pharmaceutical regulation, textiles, goods standards, and intellectual property. Also, agriculture, including food safety and animal welfare regulations, is expected to be a highly contentious issue.
Seven years in the making, ASG also reports on the new EU-China Comprehensive Agreement on Investment (CAI), which was signed on December 30. The proposed EU-China agreement is an opening salvo in discussions between the incoming Biden administration and its European allies about how to approach China. In addition to commitments to discipline the poor behavior of Chinese state-owned enterprises, the EU secured Chinese pledges on environmental policies, climate change initiatives, and labor standards. Several EU members, however, have lamented that these commitments are not legally binding and noted the continued repression of pro-democracy activists in Hong Kong.
The European Union is poised to make significant economic gains under the CAI. If ratified, the agreement would provide European investors greater market access to 1.4 billion Chinese consumers and a more level playing field in China. China has committed to opening to foreign investment in automotive, financial, health, cloud, computer, maritime transport, air transport, business, environmental, and construction services under the agreement. It also seeks to make investment fairer by disciplining the behavior of Chinese state-owned enterprises (SOEs) and imposing transparency obligations on subsidies in the services sectors, filling an important gap in the World Trade Organization (WTO) rulebook. The agreement also clearly outlines rules against the forced transfer of technology and for equal access to standard setting.
On the Biden Administration policy toward China, the consensus appears to be that the Administration should take a gradual approach to restoring dialogue with Beijing, both to give allies and partners confidence that Washington prioritizes restoration of bilateral relations with them and to make clear to Beijing that the United States will be focused foremost in the US-China relationship on advancing clear objectives, not on laundering an appearance of “back to normal” for a relationship that is the opposite at the current moment. Also, following on the above, the United States would have much greater leverage in addressing China by “working with our allies” rather than acting unilaterally as the Trump administration has so often done. In the meantime, existing tariffs by both sides will stay where they are. It’s still very early – let’s see what happens!
Back to our hemisphere, we have a number of reports. This past week Fitch Solutions presented a Latin America Macroeconomic Update with key themes for 2021. Included was a look at several economies including Argentina, Brazil, Colombia, Mexico, Chile, and Peru. Mexico is seen to lag the other emerging market economies with midterm elections coming up in June.
We also have our quarterly Mexico Investment, Economy and Politics Brief for December and also Fitch’s Global Monthly Outlook showing a “strong, but uneven recovery In 2021.”
Following our last, highly successful webinar on the Mexican Auto Industry, we are planning three over the next quarter on Technology, the Aerospace industry, and the Medical Device industry. Announcements will be coming out shortly. Please plan to join us.
Finally, all of the documents referred to in our frequent updates can be found on our website at www.usmcocma.org/resources.
Stay well and safe.