Global Trade Policy Forum

This multi-year initiative is the focal point for Chatham House research, partnerships and events concerning global trade.

Artist Luke Jerram's 'Floating Earth' at Pennington Flash in Wigan, England, which aims to prompt discussions on what individuals and societies can do to make lifestyles more sustainable. Photo by Christopher Furlong/Getty Images.

Balancing trade and non-trade policy objectives

Marianne Schneider-Petsinger

The supply chain disruptions stemming from the COVID-19 pandemic highlight trade cannot be taken for granted, and economic interdependencies have both benefits and costs. As international commerce rebounds and trade policy is increasingly seen through the prism of enhancing resilience, the moment is ripe to redefine and reimagine trade.

The goal of trade policy has never been to increase trade for trade’s sake, so a new narrative and framework for global trade requires striking a careful balance between pursuing trade and non-trade policy objectives.

Protecting the environment, strengthening labour standards, and upholding human rights have long been goals for which trade policy is used as a lever, and the interaction of trade and national security interests as well as the links between trade and competition policy are not new issues either.…  Seguir leyendo »

Demonstrators call for a commitment to sharing vaccine formulas as part of a global waiver on patent protections with terms negotiated at the WTO. Photo by SAUL LOEB/AFP via Getty Images.

Although the UK’s G7 presidency is featuring a dedicated trade track for the first time because there are key factors which make 2021 a particularly opportune moment to develop one, this new approach must not become a one-off. Establishing the G7 trade track as a meaningful format for coordinating positions on global trade among a small group of advanced industrial economies should be a key aim for the UK’s presidency.

Germany’s upcoming G7 presidency in 2022 and Japan’s in 2023 means two major advocates of global trade are in prime position to continue the separate trade track, but currently it is not self-evident that they will.…  Seguir leyendo »

An aerial photo shows Straddle Carriers moving shipping containers at Seaforth Dock in Liverpool, north west England on 17 March 2021. Photo by PAUL ELLIS/AFP via Getty Images.

On 1 February 2021, the UK government formally applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a trade pact between 11 countries: Japan, Australia, Canada, New Zealand, Vietnam, Singapore, Malaysia, Brunei, Mexico, Chile and Peru. This was a smart decision by the UK as it will set or renew its trade terms with 11 trading partners in just one negotiation.

What is the CPTPP?

The CPTPP is a big agreement. Its members account for 13 per cent of global GDP, 15 per cent of global trade, with a population of 500 million people located in the growing and increasingly rich Asia-Pacific region.…  Seguir leyendo »

Entrepreneur Jagmohan Kanojia displays his miniature kites supporting Joe Biden's election as US president in Amritsar, India. Photo by Sameer Sehgal/Hindustan Times via Getty Images.

After four years of the Donald Trump administration’s piecemeal approach to trade with Asia-Pacific, the US now finds itself on the outside of the region’s most important trade agreements, and in a difficult position to re-engage with key players for global economic growth, security, and technological innovation.

As the US sat on the sidelines, other major players – especially the European Union (EU) and the UK – have marched forwards in negotiating free trade agreements with key partners in the region. Meanwhile, regional integration in Asia-Pacific has advanced.

The Regional Comprehensive Economic Partnership (RCEP) – a trade deal between 15 Asia-Pacific nations including China struck in late 2020 – and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – an agreement between 11 countries following the US withdrawal from the more ambitious Trans-Pacific Partnership (TPP) – are the two biggest elements of the new Asia-Pacific trade architecture, and the US is part of neither.…  Seguir leyendo »

Billboard in Berlin warns people to acknowledge all the challenges posed by global warming. Photo by JOHN MACDOUGALL/AFP via Getty Images.

Trade policy has long included reassuring references to appease environmentalists, such as including sustainable development in the preamble to the Marrakesh Declaration of the World Trade Organization (WTO) and in provisions related to domestic environmental protection and conservation, as well as largely respecting global environmental norms, national policies and processes — especially those demonstrating a consistency of intent and commitment.

But this uneasy peace is likely to be tested sharply by fast-evolving climate policies, with a growing number of jurisdictions setting target dates to become carbon-neutral, using carbon taxes and other market-based measures as well as regulations, standards, and subsidies to get there.…  Seguir leyendo »

US president Donald Trump at the World Economic Forum in Davos, Switzerland, on January 22, 2020. Photo by JIM WATSON/AFP via Getty Images.

The emergence of a multipolar global economy in which the US is no longer the main engine of growth has boosted the role of economic diplomacy, the setting of foreign economic policy. While the EU remains the world’s biggest economic bloc and the US is still an economic powerhouse, it is Asia – China in particular – which has created hundreds of millions of new middle-class consumers, helping to drive global economic growth.

This shift has ignited an era of competition between the US and China and, by implication, a debate about the merits of different political and legal systems. The difficulty for the rest of the world is how best to navigate this highly polarized climate – in recent history, only the Cold War comes close to having matched the adversarial dynamics of such a divided international community.…  Seguir leyendo »

Garment workers hold stickers bearing US$177 during a demonstration to demand an increase of their minimum salary in Phnom Penh, Cambodia. Photo by Omar Havana/Getty Images.

Trade policy is a blunt instrument for realizing human rights. Although many trade agreements now include commitments on human rights-related issues - particularly labour rights - not everyone agrees that linking trade to compliance with human rights norms is appropriate, let alone effective.

Sceptics point out that such provisions may become an excuse for interference or ‘disguised protectionism’ and admittedly anyone would be hard-pressed to identify many concrete improvements which can be directly attributed to social and human rights clauses in trade agreements.

This lack of discernible impact has a lot to do with weak monitoring and enforcement. A more fundamental problem is the tendency of trading partners to gloss over – both in the way that commitments are framed and in subsequent monitoring efforts – significant implementation gaps between the standards states sign up to, and the reality.…  Seguir leyendo »

Photo illustration of the seal on a jar of American peanut butter in a German supermarket. Photo by Sean Gallup/Getty Images.

The current pandemic is accelerating the geo-economic, technological, and environmental drivers behind supply chain reconfiguration. Even before coronavirus struck, global supply chains were under stress, and not just because of two years of rising tariffs and trade uncertainty in the wake of ongoing US-China tensions.

Technology developments such as automation and 3D printing which enable cheaper production closer to the final consumer, as well as an increasing preference for greener supply chains have already been spurring companies to reduce their exposure to cross-border supply chain disruptions and to shorten their supply chains.

This has understandably led to increased calls for ‘just in case’ or ‘just at home’ supply chains, but thinking that choosing between globalization and national self-sufficiency is the only way to develop greater resilience of supply chains is, in reality, a false dichotomy.…  Seguir leyendo »

Apples being picked before going into cold storage so they can be bought up until Christmas. Photo by Suzanne Kreiter/The Boston Globe via Getty Images.

The pressure of the coronavirus pandemic is adding to a widely held misconception that trade in food products is bad for the environment due to the associated ‘food miles’ – the carbon footprint of agricultural products transported over long distances.

This concept, developed by large retailers a decade ago, is often invoked as a rationale for restricting trade and choosing locally-produced food over imports. Consuming local food may seem sensible at first glance as it reduces the carbon footprint of goods and generates local employment.

However, this assumption ignores the emissions produced during the production, processing or storage stages which often dwarf transport emissions.…  Seguir leyendo »

EU Commission President Ursula von der Leyen speaks at the European Parliament in Strasbourg in February. Photo: Getty Images.

There are two well-established ideas in trade. Individually, they are correct. Combined, they can lead to a conclusion that is unfortunately wrong.

The first idea is that, across a range of economic sectors, the EU and the US have been engaged in a battle to have their model of regulation accepted as the global one, and that the EU is generally winning.

The second is that governments can use their regulatory power to extend strategic and foreign policy influence.

The conclusion would seem to be that the EU, which has for decades tried to develop a foreign policy, should be able to use its superpower status in regulation and trade to project its interests and its values abroad.…  Seguir leyendo »

Unloading at a port in Zhangjiagang. Photo: Getty Images.

Global trade policy is not going back to the consensus that prevailed over the past few decades. Even if the growing cycle of tariffs and trade threats is tamed in 2020, the economic consensus that underpinned broad support for open trade is breaking down, and escalation in trade tensions is likely.

What next for the US and China?

The US and China are currently at the centre of these tensions. The equity and bond markets started 2020 off euphorically as news of a ‘phase one’ trade deal between the two dominated headlines. Such a deal involves the US reducing some previously imposed tariffs and tabling another round of threatened ones, while China agrees to buy more US goods, including agriculture.…  Seguir leyendo »