tag:theconversation.com,2011:/us/topics/free-trade-deal-60441/articlesFree trade deal – The Conversation2024-01-12T21:43:06Ztag:theconversation.com,2011:article/2210072024-01-12T21:43:06Z2024-01-12T21:43:06ZA ‘giant’ of Canadian politics: Ed Broadbent’s mixed legacy on social democracy and free trade<iframe style="width: 100%; height: 100px; border: none; position: relative; z-index: 1;" allowtransparency="" allow="clipboard-read; clipboard-write" src="https://narrations.ad-auris.com/widget/the-conversation-canada/a-giant-of-canadian-politics-ed-broadbents-mixed-legacy-on-social-democracy-and-free-trade" width="100%" height="400"></iframe>
<p>Former federal NDP leader Ed Broadbent was one of the good ones.</p>
<p>News of his death at age 87, <a href="https://www.cbc.ca/news/politics/ed-broadbent-dies-1.7080936">announced on Jan. 11</a>, has <a href="https://www.politico.com/newsletters/ottawa-playbook/2024/01/12/canada-loses-a-giant-remembering-ed-broadbent-00135268">inspired a wave of tributes</a>, including from former political opponents. <a href="https://www.cbc.ca/news/politics/ed-broadbent-passes-away-remembered-fondly-1.7081090">Brian Mulroney called Broadbent</a> a “giant in the Canadian political scene” and rightly said he would have been prime minister had he led any other party. </p>
<p>I still smile thinking about a photograph taken during the 1988 election when Broadbent gamely had the <a href="https://www.ledroit.com/2013/11/21/maurice-mad-dog-vachon-rend-lame-d60a79613ee313cbc0a5518ad434249a/">Vachon brothers</a>, beloved wrestlers from Québec who were NDP candidates, in a double headlock. It was silly, and great political theatre. </p>
<p>However, Broadbent’s political legacy was a mixed one. </p>
<h2>Turning point in history</h2>
<p><a href="https://www.researchgate.net/figure/Party-positions-in-the-1988-polls_fig1_252539415">Riding high in the polls</a>, the NDP decided to play it safe in the 1988 election and play down the divisive free trade issue. It was a monumental mistake — for the NDP, certainly, which saw the John Turner Liberals capture the issue, but also for the country. </p>
<p><a href="https://canadianelectionsdatabase.ca/PHASE5/?p=0&type=election&ID=610">Brian Mulroney’s Tories won</a> in what was a de facto referendum on the Canada-United States Free Trade Agreement and, as it turned out, a turning point in 20th century Canadian political history. </p>
<p>The free trade election rocked the federal NDP to its very foundations. <a href="https://www.thecanadianencyclopedia.ca/en/article/robert-white">Bob White</a>, president of the Canadian Auto Workers, and a vice president of the federal party, was livid. He drafted an angry seven-page letter to the NDP executive a few days later, as he “watched the disintegration of what should have been the New Democratic Party’s finest hour.” </p>
<p>For White, the election strategy and result were nothing short of disastrous and warranted a full debate within the party. The executive of the Canadian Labour Congress met two days after the election. In his letter he said, “their level of anger, frustration and concern about the campaign, was the most emotional I have ever seen.”</p>
<p>Somehow, the NDP — the party of labour — did not grasp the central importance of free trade for working class Canadians. </p>
<p>White reminded the party leadership that, for the past three years, the labour movement had mobilized on this issue across the country: </p>
<blockquote>
<p>“While a lot of our concern was expressed about jobs, even more dealt with social programs, environment, regional assistance, energy, privatization, deregulation, etc. In other words, not a narrow self-interest approach.” </p>
</blockquote>
<p>With business organizations lining up on the other side of the debate, why didn’t the party of working people understand what was at stake? </p>
<p>In answering this question, White declared that: “we didn’t fail by accident — but rather, we failed by design.” Indeed, “if ever there is an issue the social democratic movement in Canada should oppose with total emotion and strength, it is this deal.”</p>
<h2>The Free Trade Agreement’s legacy</h2>
<p>Broadbent <a href="https://www.cbc.ca/archives/when-ed-broadbent-stepped-down-as-ndp-leader-1.5028383">resigned as NDP leader soon after the election</a> after 14 years of leading the party.</p>
<p>The timing of the <a href="https://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/united_states-etats_unis/fta-ale/background-contexte.aspx?lang=eng">Free Trade Agreement</a> could not have been worse for Canada’s manufacturing sector, given the high Canadian dollar, which had risen from <a href="https://globalnews.ca/news/66674/timeline-the-rise-and-fall-of-the-canadian-loonie/">70 cents to the U.S. dollar in 1986 to 89 cents in 1991</a>. </p>
<p>There were other factors at play, such as higher interest rates and the imposition of the <a href="https://www.cbc.ca/news/business/no-regrets-as-gst-turns-20-mulroney-1.905501">goods and services tax (GST)</a> by the Mulroney government.</p>
<p>In short order, Canada’s branch plant economy was made largely redundant as multinational corporations restructured their operations in favour of global supply chains, rather than branch plants serving national markets. </p>
<p>Employment in Ontario’s manufacturing industries as a percentage of the workforce, dropped like a stone <a href="https://www.researchgate.net/publication/253986997_Community_Participation_and_Multilevel_Governance_in_Economic_Development_Policy">from 30.2 per cent in 1981 to just 18 per cent in 1991</a>. </p>
<p>In an interview with Bob Rae, NDP premier of Ontario from 1990 to 1995, in April 2023 for a book I’m writing about his government, he told me the “initial impact of free trade in Ontario in 1990 was terrible. It was a disaster. Because you had all of these companies that were closing down branch plants left and right.” </p>
<h2>Lessons from the past</h2>
<p>There is a lot of talk these days about “<a href="https://www.ilo.org/global/topics/green-jobs/WCMS_824102/lang--en/index.htm">just transitions</a>,” especially in the context of climate change. We can learn a lot from the profoundly unjust transition after free trade. </p>
<p>There were no special adjustment measures. Instead, the Mulroney government <a href="https://canadianlabour.ca/passage-of-the-unemployment-insurance-act/">restricted eligibility for unemployment insurance</a>, pushing many directly onto provincial welfare rolls. Even severance pay was clawed back.</p>
<p>The 1988 election was a watershed in Canadian politics, sweeping aside the economic nationalism that had been a bulwark against neoliberal globalization. Thereafter, protectionists were to the new global order what the <a href="https://www.nationalarchives.gov.uk/education/resources/why-did-the-luddites-protest/">Luddites had been to the industrial revolution</a>: objects of ridicule and scorn. </p>
<p>The extreme <a href="https://globalnews.ca/news/9809757/wealth-gap-canada-first-quarter-2023/">income disparity</a> and <a href="https://theconversation.com/how-to-function-in-an-increasingly-polarized-society-171081">political polarization</a> we see today, at least in part, is the direct result of the path we took in 1988. We will never know if Broadbent’s election would have made a difference, and this makes me sad with his passing.</p><img src="https://counter.theconversation.com/content/221007/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Steven High receives funding from the Social Sciences and Humanities Research Council.</span></em></p>Former federal NDP leader and founder of the Broadbent Institute, Ed Broadbent, has died at the age of 87. His political legacy is a mixed one.Steven High, Professor of History, Centre for Oral History and Digital Storytelling (COHDS), Concordia UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2063942023-05-30T20:08:31Z2023-05-30T20:08:31ZA new trade deal delivers cheaper Australian beef and British sweets – but does little to avert dangerous global warming<figure><img src="https://images.theconversation.com/files/528741/original/file-20230529-15-43a10a.jpg?ixlib=rb-1.1.0&rect=7%2C0%2C4985%2C2492&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock </span></span></figcaption></figure><p>A free trade agreement between Australia and the United Kingdom begins on Wednesday. When it was announced in 2021, then-prime ministers Boris Johnson and Scott Morrison cheerily <a href="https://www.dailymail.co.uk/news/article-9687561/UK-farmers-blast-trade-deal-Australia-cheap-import-fears.html">exchanged</a> packets of chocolate biscuits. Meanwhile, one British newspaper celebrated the prospect of <a href="https://www.thesun.co.uk/news/politics/15278020/boris-johnson-signs-trade-deal-with-australia-for-cheap/">cheaper steaks</a>.</p>
<p>The <a href="https://www.dfat.gov.au/trade/agreements/not-yet-in-force/aukfta/official-text">agreement</a> eliminates tariffs on a range of Australian exports, including beef and lamb, and makes it easier for Australians to work in the UK. British exporters of cars, whisky and confectionery <a href="https://www.gov.uk/government/news/uk-agrees-historic-trade-deal-with-australia">will also benefit</a>. But the deal is notable for another reason.</p>
<p>As our <a href="https://www.cambridge.org/core/journals/international-and-comparative-law-quarterly/article/net-zero-emissions-and-free-trade-agreements-efforts-at-integrating-climate-goals-by-the-united-kingdom-and-australia/52C6936B90441584486FFEFEEE4DBF13">research has found</a>, it does relatively little to tackle climate change. In the context of growing damage from climate change – <a href="https://www.ipcc.ch/ar6-syr/">internationally</a>, <a href="http://www.bom.gov.au/state-of-the-climate/">in Australia</a> and <a href="https://www.metoffice.gov.uk/research/climate/maps-and-data/about/state-of-climate">in the UK</a> – this is a missed opportunity. </p>
<p>The Albanese government inherited this free trade agreement, and describes it as “<a href="https://www.trademinister.gov.au/minister/don-farrell/media-release/historic-trade-deal-united-kingdom">gold standard</a>”. It is not, however, gold standard on climate action. Both the Australian and UK governments must now ensure the deal does not damage efforts to keep global warming at safe limits.</p>
<h2>Hopes were high</h2>
<p>Trade is vital to the global economy. It is also <a href="https://www.wto.org/english/tratop_e/envir_e/climate_intro_e.htm">inextricably linked</a> to climate change. </p>
<p>Trade increases greenhouse gas emissions. And climate change can damage trade when severe weather disrupts supply and distribution networks.</p>
<p>Free trade agreements can be used to tackle climate change. For example, they can lower the cost of goods needed in the low-carbon transition, such as solar panels and bicycle parts. And trade partners can provide leadership on emissions reduction.</p>
<p>When the UK hosted the <a href="https://unfccc.int/conference/glasgow-climate-change-conference-october-november-2021">COP26</a> climate conference in 2021, it sought to establish a reputation as a global leader on climate action. The nation seemed <a href="https://www.theccc.org.uk/publication/2022-progress-report-to-parliament/">well-placed</a> to ensure emissions reduction was on the agenda when it negotiated a post-Brexit trade deal with Australia.</p>
<p>But the free trade agreement with Australia failed to put climate change at the forefront.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/global-warming-to-bring-record-hot-year-by-2028-probably-our-first-above-1-5-c-limit-205758">Global warming to bring record hot year by 2028 – probably our first above 1.5°C limit</a>
</strong>
</em>
</p>
<hr>
<h2>‘Regrettable’: the deal lacks climate ambition</h2>
<p>The <a href="https://www.dfat.gov.au/trade/agreements/not-yet-in-force/aukfta/official-text/australia-uk-fta-chapter-22-environment">final text</a> of the deal acknowledges each nations’ commitment to addressing climate change and notes “the role of global trade and investment in these efforts”. It also recognises the <a href="https://unfccc.int/sites/default/files/english_paris_agreement.pdf">Paris Agreement</a>.</p>
<p>However, <a href="https://committees.parliament.uk/publications/22756/documents/167289/default/">a report</a> last year by a British parliamentary committee noted the agreement’s lack of climate ambition, saying:</p>
<blockquote>
<p>Given the UK’s generous tariff offer, it could have pressed [Australia] for more ambitious commitments on climate change, stronger enforcement provisions, and for an explicit reference to the Paris temperature goals. </p>
</blockquote>
<p>The report also noted:</p>
<blockquote>
<p>it is regrettable that the agreement did not include any references to reducing or reviewing Australia’s reliance on coal.</p>
</blockquote>
<p>There was <a href="https://committees.parliament.uk/publications/22756/documents/167289/default/">speculation</a> that the UK government prioritised securing the agreement over holding Australia to account on climate action.</p>
<p>In Australia, the Department of Foreign Affairs and Trade <a href="https://www.aph.gov.au/-/media/02_Parliamentary_Business/24_Committees/244_Joint_Committees/JSCT/2022/Free_Trade_Agreement_-_UK/i_NIA_Attachment_II_RIS.pdf?la=en&hash=6EDB704CD2577DD02B22F4926EE5ABE16E3DAABC">analysed</a> the impact of the free trade agreement with the United Kingdom and did not raise concerns over its climate ambition.</p>
<h2>What the deal should have done</h2>
<p>So how might the trade pact have properly addressed climate change? There are many options.</p>
<p>A UK-New Zealand <a href="https://www.gov.uk/government/collections/uk-new-zealand-free-trade-agreement">trade deal</a>, for example, signals that in some circumstances, it may be justifiable for climate action to affect trade. The European Union has <a href="https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en">proposed</a> such action, in its plan to impose reporting - and potentially, a financial charge – on emissions-intensive imports.</p>
<p>The UK-NZ agreement also takes steps to eliminate fossil fuel subsidies, in recognition that government support for the coal, oil and gas industries <a href="https://cdn.odi.org/media/documents/Full_report.pdf">distorts prices</a> and discourages climate action. </p>
<p>And the <a href="https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/canada/eu-canada-agreement_en">pact</a> between the European Union and Canada requires the development of climate-friendly labelling and certification standards on products. </p>
<p>The Australia-UK deal seeks to ensure that each nation encourages high levels of environmental protection. These provisions could be strengthened with respect to climate change – for example, by <a href="https://www.cisdl.org/wp-content/uploads/2022/11/EU-Latin-America-FTAs-Progress-Nov-2022.pdf">tying them</a> to each party’s emissions-reduction commitment under the Paris Agreement. </p>
<p>The agreement requires Australia and the UK to promote trade and investment in environmental goods and services, such as low-emissions technologies and renewable energy infrastructure. Yet the UK-NZ deal goes further. It eliminates customs duties on listed environmental goods, such as bicycle parts and plants.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/to-reach-net-zero-we-must-decarbonise-shipping-but-two-big-problems-are-getting-in-the-way-170464">To reach net zero, we must decarbonise shipping. But two big problems are getting in the way</a>
</strong>
</em>
</p>
<hr>
<figure class="align-center ">
<img alt="containers being loaded onto ship" src="https://images.theconversation.com/files/528740/original/file-20230529-203022-b8g13q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/528740/original/file-20230529-203022-b8g13q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=364&fit=crop&dpr=1 600w, https://images.theconversation.com/files/528740/original/file-20230529-203022-b8g13q.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=364&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/528740/original/file-20230529-203022-b8g13q.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=364&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/528740/original/file-20230529-203022-b8g13q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=458&fit=crop&dpr=1 754w, https://images.theconversation.com/files/528740/original/file-20230529-203022-b8g13q.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=458&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/528740/original/file-20230529-203022-b8g13q.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=458&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">An export ship near Christchurch, New Zealand. The UK-NZ free trade deal contains strong climate provisions.</span>
<span class="attribution"><span class="source">Mark Baker/AP</span></span>
</figcaption>
</figure>
<p>The Australia-UK deal might have had stronger climate provisions if it incorporated a wider range of public views.</p>
<p>Public participation is <a href="https://www.unep.org/civil-society-engagement/partnerships/principle-10">key</a> to good environmental decision-making. But the Australia-UK trade deal has been <a href="https://unece.org/env/pp/cc/accc.c.2022.194_uk">criticised</a> by non-government organisations for its lack of public input.</p>
<p>In Australia, a parliamentary committee last year examined the deal. It <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Treaties/AUKFTA/Report">said</a> while peak business groups were often satisfied with the level of consultation on free trade agreements, others – including civil society groups and unions – were frequently not.</p>
<h2>Looking ahead</h2>
<p>The Albanese government was elected on a platform of enhanced climate action and has since <a href="https://www.legislation.gov.au/Details/C2022A00037">entrenched</a> temperature targets in national legislation. While the Australia-UK trade deal was finalised when it took office, opportunities exist to strengthen its climate ambition.</p>
<p>The agreement establishes a working group to review and monitor environmental provisions relating to matters such as marine pollution from ships, ozone-depleting substances, illegal logging and the wildlife trade. This group could also work to better integrate the climate and trade goals of both nations. </p>
<p>This might involve monitoring land-use change caused by agricultural trade between the countries and exploring <a href="https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(18)31788-4/fulltext">prospects</a> for sustainable food systems. It could mean removing customs duties for low-emissions goods and discussing ways to constrain subsidies on fossil fuels.</p>
<p>Doing so would help ensure this agreement, and <a href="https://www.dfat.gov.au/trade/agreements/negotiations/aeufta">others to come</a>, meet the urgent need to avert dangerous global warming.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/listen-to-the-conversations-climate-podcast-fear-and-wonder-205934">Listen to The Conversation's climate podcast Fear and Wonder</a>
</strong>
</em>
</p>
<hr>
<img src="https://counter.theconversation.com/content/206394/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Margaret Young receives funding from the Australian Research Council.</span></em></p><p class="fine-print"><em><span>Georgina Clough does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A free trade agreement between Australia and the United Kingdom has begun – and it failed to put climate change at the forefront.Margaret Young, Professor, The University of MelbourneGeorgina Clough, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2038982023-04-17T20:03:47Z2023-04-17T20:03:47ZAustralia’s barley solution with China shows diplomacy does work<p>The agreement between Australia and China to resolve a dispute over Chinese tariffs on Australian barley without World Trade Organization (WTO) adjudication is evidence of a distinct improvement in relations. </p>
<p>It raises confidence Australia can maintain a constructive relationship with China even as US-China relations continue to deteriorate. </p>
<p>China imposed an 80.5% import tariff on Australian barley in May 2020, on the grounds Australian barley was sold in the Chinese market at a price lower than its price in Australia (known as “dumping”) and was subsidised, harming China’s barley growers. </p>
<p>China’s Ministry of Commerce began an anti-dumping and anti-subsidy investigation into barley in November 2018. At the time it was perceived as retaliation for more than a dozen anti-dumping actions taken by Australia <a href="https://theconversation.com/barley-is-not-a-random-choice-heres-the-real-reason-china-is-taking-on-australia-over-dumping-107271">against Chinese imports</a> over a decade.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/barley-is-not-a-random-choice-heres-the-real-reason-china-is-taking-on-australia-over-dumping-107271">Barley is not a random choice – here's the real reason China is taking on Australia over dumping</a>
</strong>
</em>
</p>
<hr>
<p>But the timing of the tariff decision, just weeks after Australia called for an international investigation into the origin of COVID-19, meant it was perceived as part of a broader campaign of Chinese economic coercion that included actions against Australian coal, beef, lobster and wine. </p>
<p>In December 2020, Australia lodged its claim against the barley tariffs <a href="https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds598_e.htm">with the WTO</a>. The breakdown in the official relationship at the time made it impossible for the dispute to be resolved via consultation. </p>
<p>Last week (on April 11) both parties requested the WTO suspend proceedings. This follows nearly a year of efforts to repair the relationship following the election of the Albanese government.</p>
<p>The agreement came in the same week that Australia <a href="https://www.dfat.gov.au/news/media-release/australia-china-senior-officials-talks">hosted China’s deputy foreign minister</a>, Ma Zhaoxu, the highest-level Chinese official to visit Canberra in more than six years. </p>
<p>Official visits by China’s Foreign Minister, Qin Gang (who met Australia’s Foreign Minister Penny Wong in March on the sidelines of a G20 meeting in New Delhi) and senior officials from other ministries like agriculture and education, are expected to follow.</p>
<h2>What the barley agreement means</h2>
<p>Digging into <a href="https://www.foreignminister.gov.au/minister/penny-wong/media-release/step-forward-resolve-barley-dispute-china">the details</a> of the barley deal, China has agreed to conduct an expedited review of barley tariffs in the next three or four months. </p>
<p>China’s Ministry of Commerce <a href="http://www.mofcom.gov.cn/zfxxgk/article/gkml/202304/20230403404024.shtml">initiated a review</a>
on April 14, based on an application lodged by the China Alcoholic Drinks Association. The review is needed for the ministry to find a reasonable ground to remove the duties. The standard time frame for such a review is 12 months.</p>
<p>For Australia, this offers a quicker path to get barley back in the Chinese market than proceeding with <a href="https://theconversation.com/taking-china-to-the-world-trade-organisation-plants-a-seed-it-wont-be-a-quick-or-easy-win-152173">the WTO case</a>. </p>
<p>While a decision from the WTO panel hearing the dispute was expected in just days, a finding that Australia wasn’t dumping barley on China could have meant another year before the tariffs were terminated. This is because China would retain the option of appealing the decision. Even if it then lost the appeal, it could still have dragged out removing the tariffs.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/taking-china-to-the-world-trade-organisation-plants-a-seed-it-wont-be-a-quick-or-easy-win-152173">Taking China to the World Trade Organisation plants a seed. It won't be a quick or easy win</a>
</strong>
</em>
</p>
<hr>
<p>The approach sets a useful template for how Australia might similarly get China to remove the tariffs (of 116% to 218%) imposed on Australian wine <a href="https://www.agriculture.gov.au/abares/research-topics/trade/australian-wine-in-china">in March 2021</a>. </p>
<p>Australia initiated WTO proceeding in June 2021, with the WTO panel established four months later. It is expected to issue its decision by mid-2023. But continuing with the process will also take much longer for the tariffs to be removed. </p>
<p>This approach can also potentially be a template for the parties to suspend WTO dispute proceedings brought by <a href="https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds603_e.htm">China against Australia</a> for its anti-dumping and anti-subsidy tariffs on selected Chinese imports.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/it-might-look-like-china-is-winning-the-trade-war-but-its-import-bans-are-a-diplomacy-fail-154558">It might look like China is winning the trade war, but its import bans are a diplomacy fail</a>
</strong>
</em>
</p>
<hr>
<h2>Knocking on the Trans-Pacific Partnership’s door</h2>
<p>For China, a more strategic goal behind the agreement might be alleviating Australia’s resistance to China joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). </p>
<p>The trade pact involves 11 Pacific-rim nations and now Britain, whose request to join was approved by the other signatories in March.</p>
<hr>
<p><iframe id="Hv5au" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/Hv5au/1/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<hr>
<p>China lodged its application to join after the UK, in September 2021. It too needs consensus approval from all CPTPP parties, and Australia has made its position crystal clear: China must end its trade sanctions and show a capability and willingness to live up to the CPTPP’s high standards. </p>
<p>Resolving the barley dispute is a starting point. It will also demonstrate that a rules-based global trading system can influence China’s behaviour. That’s not unexpected, because no country has <a href="https://www.wto.org/english/res_e/booksp_e/trade_outlook23_e.pdf">a bigger stake</a> in global trade. Last year China’s goods trade reached $US6.3 trillion, nearly $US900 billion more than the US. </p>
<p>For Australia, beginning a discussion about China joining the CPTPP may speed up regaining market access for its exports, and be an opportunity to secure China’s commitment to a rules-based agreement that exceeds WTO minimums. </p>
<h2>From cautious optimism to reasonable confidence</h2>
<p>The anticipated resolution of the barley dispute is not an isolated achievement. It demonstrates the effectiveness of the Albanese government’s diplomatic approach to China. </p>
<p>This has involved incrementally rebuilding economic cooperation while managing disagreements on values and security issues through calm and professional engagement. Amid geopolitical tensions with the US, China is also looking to stabilise its external environment. </p>
<p>Economic cooperation remains a standout area of common interest. Add in political willingness and diplomatic wisdom, and an assessment of cautious optimism can be replaced by one of reasonable confidence in the upward trajectory of the bilateral relationship.</p><img src="https://counter.theconversation.com/content/203898/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Abandoning its WTO case is a quicker path to getting Australian barley back into China. It could also be a template for resolving tariff disputes over other products, including Australian wine.Weihuan Zhou, Associate Professor, Co-Director of China International Business and Economic Law (CIBEL) Centre, Faculty of Law and Justice, UNSW Sydney, UNSW SydneyJames Laurenceson, Director and Professor, Australia-China Relations Institute (ACRI), University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2031952023-04-06T09:36:50Z2023-04-06T09:36:50ZWhy Britain’s new CPTPP trade deal will not make up for Brexit<figure><img src="https://images.theconversation.com/files/519298/original/file-20230404-14-172rmi.jpg?ixlib=rb-1.1.0&rect=16%2C7%2C973%2C432&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">UNIKYLUCKK/Shutterstock</span></span></figcaption></figure><p>The UK <a href="https://www.gov.uk/government/collections/the-uk-and-the-comprehensive-and-progressive-agreement-for-trans-pacific-partnershipcptpp">recently announced</a> that it will join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), giving British businesses access to the 11 other members of the Indo-Pacific trade bloc and bringing its combined GDP to £11 trillion.</p>
<p>Some commentators have suggested the deal could make up for Brexit. It’s been called “<a href="https://iea.org.uk/media/cptpp-membership-will-boost-british-producers-and-consumers/">a momentous economic and strategic moment</a>” that “<a href="https://www.telegraph.co.uk/business/2023/03/31/britain-cptpp-trade-deal-end-rejoiner-dream/">kills off any likelihood that it [the UK] will ever rejoin the EU customs union or single market</a>”. Shanker Singham of think tank the Institute of Economic Affairs has even said: “<a href="https://iea.org.uk/the-uk-joining-cptpp-is-a-seismic-moment-for-the-global-trading-system/">it’s no exaggeration to say that CPTPP+UK is an equivalent economic power to the EU-28-UK</a>”, comparing it to a trade deal between the UK and EU members.</p>
<p>UK business and trade secretary <a href="https://uk.news.yahoo.com/forget-brexit-pain-back-pacific-110357213.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAK3HWr0ZFmy82Gqbc4XcmRBzKRsZecgOYZhp8ckmsrAEkeeXj78loWi5j5Ku8tzOrcbuyBmlHjaEYhMXLXJm1zL5UEKRF_cwa4vAgdKz6rMeGEpD667Do_rCpRHnC_4cAG7eEs1eqcZJimKn4idSIaKL_7UwcomxZj02zInKj7X1">Kemi Badenoch echoed</a> such sentiments, telling Times Radio:</p>
<blockquote>
<p>We’ve left the EU so we need to look at what to do in order to grow the UK economy and not keep talking about a vote from seven years ago.</p>
</blockquote>
<p>The problem with this fanfare is that the government’s own economic analysis of the benefits of joining this bloc is underwhelming. There is an estimated gain to the UK of <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1027860/dit-cptpp-uk-accession-strategic-approach.pdf">0.08% of GDP</a> – this is just a 50th of the <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1027860/dit-cptpp-uk-accession-strategic-approach.pdf">OBR’s estimate of what Brexit has cost the UK economy to date</a>. Even for those that are <a href="https://www.bloomberg.com/news/articles/2022-11-01/uk-minister-questions-watchdog-forecasts-in-echo-of-truss-era?leadSource=uverify%20wall">sceptical about models and forecasts</a>, that is an enormous difference in magnitude.</p>
<p>Of course, the CPTPP is expected to offer the UK some real gains. It certainly provides significant potential opportunities for some individual exporters. But the estimated gains for Britain overall are very small.</p>
<p>The main reason for this is that, apart from Japan, the major players of the global economy are not in the CPTPP. The US <a href="https://www.wsj.com/articles/america-tpp-china-japan-indo-pacific-trade-influence-11632931688">withdrew from the Trans Pacific Partnership</a> (the CPTPP is what the remaining members formed without it). And China <a href="https://www.scmp.com/economy/china-economy/article/3176487/what-cptpp-and-why-china-eager-join">started negotiations to join</a> in 2022, but current geopolitics now make its entry highly improbable. India was never involved.</p>
<p>In addition, the UK already has free trade agreements with nine out of the 11 members. The remaining two, <a href="https://news.sky.com/story/trade-secretary-kemi-badenoch-says-palm-oil-is-great-product-after-deal-criticised-for-endangering-orangutans-12846290">Malaysia</a> and <a href="https://wits.worldbank.org/trade/comtrade/en/country/BRN/year/2019/tradeflow/Exports/partner/ALL/product/151190">Brunei</a>, are controversial due to environmental threats from palm oil production to rainforests and orangutans.</p>
<p><strong>Britain’s existing trade agreements with CPTPP members</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/519096/original/file-20230403-28-v6040o.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A table listing the existing British trade agreements with CPTPP members." src="https://images.theconversation.com/files/519096/original/file-20230403-28-v6040o.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/519096/original/file-20230403-28-v6040o.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=253&fit=crop&dpr=1 600w, https://images.theconversation.com/files/519096/original/file-20230403-28-v6040o.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=253&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/519096/original/file-20230403-28-v6040o.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=253&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/519096/original/file-20230403-28-v6040o.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=318&fit=crop&dpr=1 754w, https://images.theconversation.com/files/519096/original/file-20230403-28-v6040o.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=318&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/519096/original/file-20230403-28-v6040o.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=318&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://comtradeplus.un.org/TradeFlow">Author provided using GDP data from the World Bank and trade data from UN Comtrade.</a></span>
</figcaption>
</figure>
<p>And despite the widespread public perception of the Asia-Pacific area as a hub of future growth, the performance and prospects of the CPTPP members are a mixed bag. The largest member, Japan, is arguably in <a href="https://www.cnbc.com/2023/02/14/japan-economy-averts-recession-but-rebounds-less-than-expected-in-q4.html">long-term decline</a>, as is <a href="https://thescoop.co/2022/10/24/record-low-oil-output-drags-brunei-economy-deeper-into-recession/">Brunei</a>, while just three members (<a href="https://tradingeconomics.com/vietnam/full-year-gdp-growth#:%7E:text=Full%20Year%20GDP%20Growth%20in%20Vietnam%20averaged%205.89%20percent%20from,Vietnam%20Full%20Year%20Gdp%20Growth.">Vietnam</a>, <a href="https://tradingeconomics.com/singapore/gdp-growth-annual">Singapore</a> and <a href="https://tradingeconomics.com/new-zealand/gdp-growth-annual#:%7E:text=New%20Zealand's%20economy%20expanded%20by,the%20service%20(3.9%20percent%20vs.)">New Zealand</a> had average growth in the last decade above 3% annually. </p>
<p>Finally, distance really does matter in trade. All the CPTPP members are thousands of miles from the UK, which explains their relatively small shares in UK trade at present. </p>
<h2>Some benefits of CPTPP</h2>
<p>While all of these points pour cold water on the suggested gains, there are some potential benefits from the CPTPP agreement, which allows for mutual recognition of certain standards. This includes patents and some relaxation of sanitary and phytosanitary rules on food items. </p>
<p>However, agreements over standards will involve the UK submitting to international CPTPP courts on these issues. This sits uncomfortably with many of the <a href="https://www.lawsociety.org.uk/topics/brexit/what-is-the-european-court-of-justice-and-why-does-it-matter">“sovereignty” objections to the European Court of Justice</a> in relation to Brexit (largely from many of those who have extolled the CPTPP). It’s also notable that out of the nine agreements with CPTPP members that existed before the UK signed this deal, all but two are rollovers of previous EU deals. </p>
<p>But a trade deal with the CPTPP is worth more to the UK than separate deals with each member due to requirements around “<a href="https://www.wto.org/english/tratop_e/roi_e/roi_info_e.htm">rules of origin</a>”, which determine the national source of a product. When a product contains inputs from more than one country, a series of separate free trade agreements may not eliminate tariffs. But if all the relevant countries are members of a single free trade agreement, then rules of origin on inputs from other members cease to be a problem (although there might be some issues if some members do not police the requirements properly). </p>
<h2>Not the ideal agreement</h2>
<p>While these benefits should be recognised, we should also acknowledge that the CPTPP is not the ideal agreement for Britain. As stated above, distance really does matter in trade – this is <a href="https://ideas.repec.org/p/cpr/ceprdp/9322.html">overwhelmingly accepted by modern trade economists</a>. </p>
<p>Research shows that the rate at which trade declines with distance has <a href="http://www.cepii.fr/pdf_pub/wp/2016/wp2016-14.pdf">barely changed over more than a century</a>. This might seem strange because <a href="https://ourworldindata.org/grapher/real-transport-and-communication-costs">transport costs have fallen over time</a>. But, as transport and communications have improved, firms have outsourced much of their production to complex supply chains that often cross national borders many times, with “<a href="https://www.gep.com/knowledge-bank/glossary/what-is-just-in-time-supply-chain-strategy#:%7E:text=What%20is%20the%20just%2Din,is%20stockpiled%2C%20reducing%20storage%20costs.">just-in-time</a>” supply schedules to keep down the costs of holding large stocks. </p>
<p>This means that, while trade everywhere has grown, there is still a big premium for trading (many times) across borders between contiguous countries. It is exactly this type of trade which benefits most from big comprehensive trade agreements that simplify rules of origin and regulatory paperwork. </p>
<p>This suggests that, while some elements of the the CPTPP offer benefits to the UK, it is unlikely to boost its trade in the way it does between countries around the Pacific Rim. For this sort of boost, the UK really needs to look towards its own neighbours. Of course, this is just the sort of agreement that Badenoch seems reluctant to discuss.</p><img src="https://counter.theconversation.com/content/203195/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>While there are some benefits to the free trade agreement, the UK would be better off striking a deal with its neighbours.Terence Huw Edwards, Senior Lecturer in Economics, Loughborough UniversityMustapha Douch, Assistant Professor in Economics, The University of EdinburghLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1523272020-12-21T15:11:05Z2020-12-21T15:11:05ZBrexit deal or no deal, food bills are about to get a lot more expensive<figure><img src="https://images.theconversation.com/files/375909/original/file-20201218-15-12ob7b7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Affordability issues mean low-income households could eat more unhealthy amid COVID-19.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/london-jun-12-2015-fresh-vegetables-300248831">Anna Levan/Shutterstock</a></span></figcaption></figure><p>With just a few days until the end of the <a href="https://theconversation.com/what-are-australian-style-and-canadian-style-brexit-trade-deals-152123">transition period</a>, and with British freight hauliers temporarily banned from travelling to France, we still don’t know if a free trade deal will be struck between the UK and EU. Yet, even if a deal can be agreed and approved before January 1, 2020, British consumers need to prepare for the fact that their shopping bills are about to get a lot more expensive.</p>
<p>Although a respectable 52% of the UK’s food needs are currently met by domestic production, the remainder is heavily dependent on imports from the 27 European Union (EU27) countries. About 29% of the food consumed in the UK comes from the EU27 compared to just 4% each from the regions of <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/608426/foodpocketbook-2016report-rev-12apr17.pdf">Asia, Africa and the Americas</a></p>
<p>The UK’s reliance on the EU is especially acute in the horticulture sector, with about <a href="https://publications.parliament.uk/pa/ld201719/ldselect/ldeucom/129/129.pdf">40% of vegetables and 37% of fruit</a> sold in the UK imported from EU countries.</p>
<p>At this time of year, outside of the British growing season, the country’s dependence on Europe is even more stark, with practically all of tomatoes, lettuces and soft fruit coming from the <a href="https://news.sky.com/story/britains-food-revolution-is-about-to-get-more-expensive-12161602">Netherlands and Spain</a>.</p>
<p>Just how this trade will be affected will depend on the outcome of the current negotiations. A no-deal scenario clearly poses the biggest challenge. The UK would be legally required to apply the same tariffs on EU goods as for other <a href="https://theconversation.com/what-are-australian-style-and-canadian-style-brexit-trade-deals-152123">World Trade Organization (WTO)</a> members with which it does not have a free trade agreement. </p>
<p>These tariff rates vary between different foodstuffs and are generally quite low for fresh fruit and vegetables (typically around 10%), high for drinks and beverages (20%) and even higher for meat and dairy (up to or higher than 40%).</p>
<p>Research suggests that the tariff effect of no deal would lead to <a href="https://journals.sagepub.com/doi/full/10.1177/002795011724200113?casa_token=WsN1pNMzGO0AAAAA%3AVoxuVkd9s80ZxSvkn7Lp1M3-cCRhzqJtJB8UXr-1pv3wp5zfUjNBDUc-y2qAaIg7Wh0s1O4bA4o6">food price inflation</a> of an estimated 3.1% for fruit and 4.0% for vegetables.</p>
<h2>Additional costs and food waste</h2>
<p>Just how much of this additional cost would be passed on to the consumer is yet to be seen, since retailers may prefer to absorb it or, more likely, <a href="https://www.thegrocer.co.uk/fmcg-prices-and-promotions/co-op-tells-suppliers-to-absorb-brexit-tariff-increases-on-promoted-stock/651462.article">attempt to pass it onto their suppliers</a>.</p>
<p>Although these tariffs would only be applicable in the event of no deal, the same can’t be said for other Brexit costs that businesses and consumers will incur in 2021, even with a deal. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1320630046969704448"}"></div></p>
<p>These so-called “non-tariff barriers” come in the form of extra red tape, including customs and rules of origin declarations, as well as checks on plant and animal imports. </p>
<p>One frustrated industry association leader in October 2020 shared their thoughts:</p>
<p>As one frustrated industry association leader told us in October, whatever deal the UK strikes will create additional costs and delays for the fresh fruit and vegetable sector. They pointed out a lack of preparedness around <a href="https://theconversation.com/coronavirus-the-perils-of-our-just-enough-just-in-time-food-system-133724">“just in time”</a> supply chains.</p>
<p>An additional concern is the UK’s Smart Freight IT system, which is designed to prevent traffic chaos by ensuring haulage trucks have the correct paperwork before they arrive at ports. But it <a href="https://www.bbc.co.uk/news/business-54172222">won’t be ready in time for the end of the transition period</a>. </p>
<p>The consequences of this failure - which will be felt mostly at the Dover-Calais artery where most imported food is landed - could spark the <a href="https://www.thegrocer.co.uk/brexit/british-firms-may-pause-eu-food-exports-to-avoid-traffic-chaos-in-january/649227.article">suspension in January</a> 2021 of perishable foods transport by UK and EU companies. </p>
<figure class="align-center ">
<img alt="Worker with rejected produce in food processing warehouse." src="https://images.theconversation.com/files/375932/original/file-20201218-23-8gybqq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/375932/original/file-20201218-23-8gybqq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/375932/original/file-20201218-23-8gybqq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/375932/original/file-20201218-23-8gybqq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/375932/original/file-20201218-23-8gybqq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/375932/original/file-20201218-23-8gybqq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/375932/original/file-20201218-23-8gybqq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Worker with rejected produce in food processing warehouse.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/worker-rejected-produce-food-processing-warehouse-1586728120">Juice Flair/Shutterstock</a></span>
</figcaption>
</figure>
<p>Even short time delays of a few hours, coupled with the additional cost of doing business outside of the Single Market and Customs Union, will cascade through the UK’s just-in-time supply chains. Indeed, the current travel restrictions may be a portend of what cross-channel trade could look like in early 2021, with UK <a href="https://www.theguardian.com/business/2020/dec/21/sainsburys-port-restrictions-missing-products-uk">supermarkets already warning of possible food shortages</a>. </p>
<p>Fresh fruit and vegetables are perishable and any delay will reduce shelf-life and lead inevitably to more food waste. It is consumers who will ultimately be picking up the bill for this in the form of reduced choice and high prices. </p>
<p>Because affordability is the major determinant of consumer behaviour, food price inflation is likely to drive down demand for fruit and vegetables – especially by low income households – at a time when the government really ought to be sending the very opposite signal.</p>
<p>Not least since unhealthy diets have proved a <a href="https://www.bmj.com/content/370/bmj.m3085">key risk factor during the COVID-19 pandemic</a>.</p><img src="https://counter.theconversation.com/content/152327/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tony Heron receives funding from the ESRC and BBSRC. </span></em></p><p class="fine-print"><em><span>Bob Doherty receives funding from UKRI Global Food Security Fund BBSRC. </span></em></p>Although 52% of the UK’s food needs are currently met by domestic production, the remainder is heavily dependent on imports from the EU.Tony Heron, Professor of International Political Economy, University of YorkBob Doherty, Professor of Marketing and Chair of Agrifood, University of YorkLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1304902020-01-27T10:12:52Z2020-01-27T10:12:52ZAmerica has a unique 300 year old view of free trade – UK must recognise this to strike a deal<figure><img src="https://images.theconversation.com/files/311668/original/file-20200123-162185-i1kxcz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Let battle commence. </span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-illustration/flags-great-britain-united-states-papers-1339869017">Novikov Aleksey </a></span></figcaption></figure><p>With Boris Johnson <a href="https://www.ft.com/content/5f820986-3d47-11ea-a01a-bae547046735">hailing parliament’s</a> vote towards Britain leaving the EU on January 31, there is a general consensus among the country’s leaders that there will be an intimate trading relationship with the US after Brexit. But whenever the question of a deal comes up in the media, there is usually much talk of stumbling blocks. </p>
<p>There is the <a href="https://www.ft.com/content/9c8c232e-3d07-11ea-a01a-bae547046735">war of words</a> between UK chancellor Sajid Javid and US treasury secretary Steven Mnuchin over a digital tax on American companies in the UK, for instance. Or fears that the <a href="https://www.politico.eu/article/us-takes-aim-at-the-uks-national-health-service/">NHS will be sold off</a> to US healthcare giants. </p>
<p>Much is also written about the difficulty the UK faces in steering a course between its EU neighbours and the overwhelming political might of Washington. For example, will the UK <a href="https://www.theguardian.com/world/2020/jan/15/boris-johnson-uk-us-trade-deal-under-threat-unless-iran-stance-changes-says-trump-ally">have to abandon</a> the Iran nuclear deal to win free-trade concessions from America?</p>
<p>In light of the “<a href="https://theconversation.com/donald-trump-enthusiastic-about-boris-johnsons-victory-but-it-wont-be-smooth-sailing-for-the-special-relationship-128727">special relationship</a>”, you might wonder how these trade negotiations can be so testy before they are even underway. As my <a href="https://www.press.uchicago.edu/ucp/books/book/chicago/T/bo43233186.html">recent book</a> suggests, the conflict may well lie in the historic trading relationship between the two countries. Much as Britain and America are “two nations divided by a common language”, they are also divided by their understanding of trade. To comprehend this, you have to go back to the American Revolution and beyond. </p>
<h2>Colonist knaves</h2>
<p>The misunderstandings began the moment that English government officials tried to get 17th-century colonists to pay customs duties to William III on the tobacco, alcohol and sugar they were trading. These settlers were trading with everyone from Native Americans to the French and Dutch, and were soon breaking the rules on what they owed the Crown. </p>
<p>Customs officials failed miserably to stop the settlers trading free of government regulation. The stream of letters from colonial officers to London noting a general refusal to follow the rules suggests it was widespread. The Earl of Bellomont, governor of New York until 1700, <a href="https://www.press.uchicago.edu/ucp/books/book/chicago/T/bo43233186.html">complained that</a> America was “naturally cut out for unlawful trade”. </p>
<p>This behaviour grew exponentially in the 18th-century as Britain’s American colonies expanded. Some settlers even began to believe this was the natural way that trade functioned, arguing merchants should be free to do business without any government interference. As Philadelphia newspaper editor William Bradford <a href="https://allthingsliberty.com/2015/06/the-tombstone-edition-pennsylvania-journal-october-31-1765/">put it</a>, many thought that “trade should regulate itself”. </p>
<p>The perception of commerce in Britain was that the government had a central role as regulator and tax collector for the Crown. Colonial officials like Thomas Pownall, governor of Massachusetts Bay, <a href="http://www.masshist.org/terrafirma/pownall">insisted that</a> Americans’ dealings should be taxed to answer Britain’s “commercial interest”. Scottish economist Adam Smith might have advocated American-style free trade in his <a href="http://www.sjsu.edu/people/cynthia.rostankowski/courses/HUM2AF13/s3/Reader-Lecture-08-Adam-Smith-Wealth-of-Nations-Reading.pdf">1776 Wealth of Nations</a>, but he was very much an outlier in Britain at the time. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/311669/original/file-20200123-162221-16qmkxh.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/311669/original/file-20200123-162221-16qmkxh.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/311669/original/file-20200123-162221-16qmkxh.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=713&fit=crop&dpr=1 600w, https://images.theconversation.com/files/311669/original/file-20200123-162221-16qmkxh.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=713&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/311669/original/file-20200123-162221-16qmkxh.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=713&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/311669/original/file-20200123-162221-16qmkxh.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=895&fit=crop&dpr=1 754w, https://images.theconversation.com/files/311669/original/file-20200123-162221-16qmkxh.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=895&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/311669/original/file-20200123-162221-16qmkxh.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=895&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Stamp man: George Grenville.</span>
<span class="attribution"><a class="source" href="https://www.google.co.uk/search?hl=en&authuser=0&tbm=isch&source=hp&biw=1440&bih=760&ei=q80pXsPXCdvRgwfA5q34CQ&q=george+grenville&oq=george+grenville&gs_l=img.3..0l7j0i5i30l3.774.3485..3651...0.0..1.193.1406.14j2......0....1..gws-wiz-img.......0i131.gy5lIH-Lmyg&ved=0ahUKEwiD2YP0lZrnAhXb6OAKHUBzC58Q4dUDCAU&uact=5#imgrc=dpzaj3tHUeWHsM:">Wikimedia</a></span>
</figcaption>
</figure>
<p>In 1763, victory over France in the <a href="https://www.britannica.com/event/Seven-Years-War">Seven Years’ War</a> made Britain the supreme power in the Americas. She was free to trade profitably with its American colonies, except for <a href="https://www.yalebooks.co.uk/display.asp?k=9780300164251">tax-dodging colonists</a> skimming the potential income. Poor tax revenues from colonial trade, plus a huge bill for the war in America, prompted British Prime Minister George Grenville to pass the <a href="https://www.history.com/this-day-in-history/parliament-enacts-the-stamp-act">Stamp Act of 1765</a>. After this new direct tax was imposed on the colonies, we know what happened. </p>
<p>Like all revolutions, America’s had many causes. <a href="https://wwnorton.com/books/American-Revolutions/">Chief</a>, however, was Americans’ love of their “free” trade, which boiled down to a refusal to accept Britain’s right to profit from their entrepreneurism. By the time the US ratified its constitution in 1789, Americans had become highly protective of their right to trade, invest and deal exactly as they wished. </p>
<h2>America’s beating heart</h2>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/311667/original/file-20200123-162246-eb31p3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/311667/original/file-20200123-162246-eb31p3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/311667/original/file-20200123-162246-eb31p3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=1125&fit=crop&dpr=1 600w, https://images.theconversation.com/files/311667/original/file-20200123-162246-eb31p3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=1125&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/311667/original/file-20200123-162246-eb31p3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=1125&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/311667/original/file-20200123-162246-eb31p3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1413&fit=crop&dpr=1 754w, https://images.theconversation.com/files/311667/original/file-20200123-162246-eb31p3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1413&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/311667/original/file-20200123-162246-eb31p3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1413&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">When Benny met Libby.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/travel-tourism-background-souvenirs-around-world-1288907035">Maglara</a></span>
</figcaption>
</figure>
<p>Britain continued its close trading relationship with the US in the 19th century. English cotton manufacturers <a href="https://www.cambridge.org/core/books/cotton/4474DAC211EB8DF76A2F2538118ADDB6">relied on slave-grown cotton</a>, for example. But such dealings were now premised on <a href="https://jhupbooks.press.jhu.edu/title/fragile-fabric-union">Americans’ understanding</a> that British commercial interests could never be imposed to their detriment. If there were attempts to introduce tariffs, the cotton would be sold elsewhere.</p>
<p>Washington’s view of American interests has inevitably ebbed and flowed over the years. An alternative belief in international cooperation arguably reached a high watermark under Franklin D Roosevelt in the 1940s, albeit still with <a href="https://rooseveltinstitute.org/fdrs-comprehensive-approach-freer-trade/">strong emphasis</a> on free trade. </p>
<p>But Donald Trump’s <a href="https://www.politico.eu/article/trump-launches-reelection-campaign-saying-keep-america-great/">Make America Great Again</a> “philosophy” strongly echoes the nation’s 18th-century mindset. His trade war with the Chinese and threats to other partners such as the EU stems from the same old prioritisation of US trading freedoms. The current American threat <a href="https://www.ft.com/content/9c8c232e-3d07-11ea-a01a-bae547046735">to impose tariffs</a> on British car exports in the row over the digital tax is no different. </p>
<p>Of course, the Anglo-American relationship has rarely played out in isolation to world events. Today, Britain no longer has an empire to lean on. It can’t abandon the US to build a powerbase elsewhere, like it did in <a href="https://global.oup.com/academic/product/the-making-and-unmaking-of-empires-9780199226665?view=Standard&sortField=2&resultsPerPage=100&facet_narrowbyprice_facet=25to50&lang=en&cc=us">India</a> and the Caribbean after the loss of America in 1783. Nor can it rely on that mature empire as it did when America’s international might <a href="https://www.cambridge.org/core/books/conspiracy-of-free-trade/7C40548E83C12DF472E08E5368243771">expanded</a> at the end of the American civil war. </p>
<p>Boris Johnson and his allies have proposed an “<a href="https://www.theguardian.com/politics/2018/nov/08/empire-fantasy-fuelling-tory-divisions-on-brexit">Empire 2.0</a>” free-trade model <a href="https://foreignpolicy.com/2019/10/24/boris-johnson-dreams-anglosphere-european-union-empire-colonialism/">for a post-Brexit Britain</a> with open trading relationships with the former colonies. This misunderstands how trading actually worked when the UK had an empire. Free trade was an illusion, achieved by diktat by the colonial master, underpinned by heavy government intervention. </p>
<p>Boris Johnson and his negotiators are therefore mistaken on two fronts. There was no halcyon period of British free trade, and the concept means a different thing to the Americans anyway. Failure to realise this risks a trade deal that Britons find as hard to stomach as a tikka masala made with <a href="https://theconversation.com/chlorine-washed-chicken-qanda-food-safety-expert-explains-why-us-poultry-is-banned-in-the-eu-81921">chlorinated chicken</a> – if this is even avoidable. </p>
<p>The best hope is to recognise the weakness of the British 21st century negotiating position and be mindful that American tetchiness towards the former colonial power is probably never far from the surface. It will be necessary to flatter the Americans, speaking their language of free trade as well as the British version, and somehow promoting British interests without seeming to damage those of the US. With that approach, the UK may yet secure the best deal that is realistically available.</p><img src="https://counter.theconversation.com/content/130490/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Emma Hart does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The US reaction to the UK’s digital tax proposals is like 1765 all over again.Emma Hart, Senior Lecturer in American History, University of St AndrewsLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1181352019-06-05T12:39:01Z2019-06-05T12:39:01ZMore work lies ahead to make Africa’s new free trade area succeed<figure><img src="https://images.theconversation.com/files/277925/original/file-20190604-69059-1afywat.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The port of Mombasa in Kenya, which was the first country, with Ghana, to ratify the African Continental Free Trade Agreement in 2018.</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>At a time when the global trade regime is under attack, the African Union (AU) is celebrating the establishment of the African Continental Free Trade Area (AfCFTA), which came into effect <a href="https://au.int/en/pressreleases/20190429/afcfta-agreement-secures-minimum-threshold-22-ratification-sierra-leone-and">on 30 May</a>. </p>
<p>After being ratified by the required minimum 22 nations, all the member states of the AU are now legally bound to allow African goods to be traded without restraint throughout the continent. </p>
<p>This is an impressive achievement. AfCFTA not only covers the entire continent, but has proceeded at a record pace. It was <a href="https://au.int/sites/default/files/decisions/34055-ext_assembly_dec_1x_e26_march.pdf">signed on 21 March 2018</a>. Its entry into force underlines African leaders’ commitment to pan-African economic integration – a <a href="https://archive.org/details/africamustunite00nkru/">goal as old as African independence</a> in the 1960s. </p>
<p>Intra-regional trade has long been minimal in Africa, standing at <a href="https://www.tralac.org/news/article/13489-african-trade-statistics-yearbook-2017.html">13% for intra-imports and 17% for intra-exports</a> over the last seven years. Earlier continental trade initiatives, such as the <a href="http://repository.uneca.org/handle/10855/14129">1980 Lagos Plan of Action</a> and the <a href="http://www.dirco.gov.za/foreign/Multilateral/africa/aec.htm">1991 African Economic Community</a>, have lagged far behind their ambitions. </p>
<p>However, the practical implications of the continental free trade area are <a href="https://issafrica.org/amp/iss-today/will-free-trade-be-africas-economic-game-changer">not immediate</a>. Significant work is required to deliver tangible results. Negotiations on tariffs, time lines and the seat of the AfCFTA Secretariat are still ongoing. And without effective public policies, liberalising trade risks having negative implications for many people on the continent.</p>
<h2>African trade to date</h2>
<p>Establishing regional economic communities across the continent has produced a complex pattern of overlapping but inconsequential <a href="https://ecdpm.org/publications/political-economy-africas-regional-spaghetti-bowl-synthesis-report/?utm_source=ECDPM+Newsletters+List&utm_campaign=bb4d47f899-EMAIL_CAMPAIGN_2019_05_27_01_19&utm_medium=email&utm_term=0_f93a3dae14-bb4d47f899-388797801">trade regimes</a>. The only functioning <a href="https://www.sadc.int/about-sadc/integration-milestones/customs-union/">customs union</a> on the continent remains the 109 year-old <a href="https://www.sacu.int/show.php?id=394">Southern African Customs Union</a>, an imperial relic that is dominated by South Africa.</p>
<p>The last large-scale attempt to liberalise trade in Africa - the <a href="https://www.tralac.org/resources/by-region/comesa-eac-sadc-tripartite-fta.html">Tripartite agreement</a> covering most of eastern and southern Africa - was launched in 2015. Only four out of 27 countries ratified it, and the agreement was yet another hyped but ultimately stillborn initiative.</p>
<p>After a disappointing track record of African trade agreements, the AU is convinced that AfCFTA is finally the silver bullet. Indeed, there are some encouraging signs that the stars are aligning favourably.</p>
<p>At a time when the World Trade Organisation has proclaimed the <a href="https://www.bbc.com/news/business-46395379">worst crisis in global trade since 1947</a>, and in a context of China and the US waging <a href="https://www.ft.com/us-china-trade-dispute">trade disputes</a>, African governments are collectively swimming against the stream.</p>
<p>The AU leadership has been eager to push a <a href="https://au.int/agenda2063/overview">long-term integration agenda</a> and an <a href="http://ipss-addis.org/research/policy_periodicals/the_au_reform_agenda-_what_areas_of_reform_are_mos.php">institutional reform agenda</a>. But it has struggled with what Rwandan President Paul Kagame, in his role as AU chairperson in 2018, <a href="http://www.rci.uct.ac.za/sites/default/files/image_tool/images/78/News/FInal%20AU%20Reform%20Combined%20report_28012017.pdf">called</a> a “crisis of implementation”.</p>
<p>The reform process aims to focus the AU on fewer priorities and to make the <a href="https://au.int/en/commission">AU Commission</a> more efficient in steering integration. It also seeks to make the AU central budget financially independent from international partners. This plan has struck a chord with many member states and the AU Commission. Creating a continental free trade area fits well into the strategy.</p>
<h2>Why AfCFTA is different</h2>
<p>Adherence to AfCFTA has become a competition for the title of “who is the best pan-Africanist”. This peer pressure to jump on the train <a href="https://www.theeastafrican.co.ke/business/Nigeria-now-close-to-signing-African-trade-pact/2560-5133532-a9cs0m/index.html">before it leaves the station</a> is behind the agreement’s rapid ratification.</p>
<p>The free trade area aspires to a membership of 55 highly diverse countries. This seems arbitrary from an economic point of view. However, it corresponds to and will likely benefit from an increasingly recognised and institutionalised “continentalist” interpretation of Africa. </p>
<p>AfCFTA is also vague enough to appeal to advocates of both trade liberalisation and economic protectionism. At this stage it is still possible for it to become either a stepping stone towards global integration, or a barrier against businesses from outside the continent.</p>
<h2>Obstacles to overcome</h2>
<p>In practice, trade in Africa did not change overnight on 30 May. Three key obstacles must still be overcome. If they’re not, the deal may follow the same path as the ill-fated agreements that have gone before it.</p>
<p>Firstly, AfCFTA has put the cart before the horse. Although it is now in force, many of the actual rules <a href="https://www.brookings.edu/wp-content/uploads/2019/05/Keys_to_success_for_AfCFTA.pdf">still need to be agreed upon</a>. The process of negotiating rules of origin, tariff schedules, and service sector concessions will be long and cumbersome.</p>
<p>African states often lack the expertise or capacity to conduct such negotiations. International partners like the <a href="https://ec.europa.eu/europeaid/news-and-events/africa-europe-alliance-eu-supports-african-continental-free-trade-area-eu50-million_en">European Union</a> and <a href="https://www.giz.de/de/downloads/AfCFTA%20Factsheet%20%20EN%2002112019.pdf">Germany</a> have flocked to the AU Commission in large numbers to support AfCFTA.</p>
<p>Their support will likely be fragmented through the deployment of consultants and technical assistance. This does not bode well for the ownership of AfCFTA by AU member states and the AU Commission.</p>
<p>Secondly, AfCFTA is facing challenges regarding its governance. The details of its secretariat are yet to be thrashed out. What we do know is that the secretariat will be a <a href="https://www.tralac.org/documents/events/tralac/2800-tralac-annual-conference-presentation-the-afcfta-secretariat-beatrice-chaytor-auc-march-2019/file.html">semi-autonomous organ of the AU</a>, and that six countries are <a href="https://www.viportal.co/kenya-leads-quest-to-host-acfta-secretariat/">competing to host it</a>.</p>
<p>The likely geographical distance from AU headquarters in Ethiopia will complicate coordination with the continental body’s policy agenda. Budget cuts to the AU’s Department of Trade and Industry further hamper the transitory facilitation of AfCFTA.</p>
<p>Finally, the free trade area will invariably pose economic challenges in AU member states. The promise of free trade agreements is to create wealth through increased competition, the equalisation of wages and the substitution of domestic labour with imported goods. </p>
<p>International experience shows that the gains tend to be <a href="https://voxdev.org/topic/firms-trade/integrated-and-unequal-effects-trade-inequality-developing-countries">unequally distributed</a>, especially if a free trade area involves a large amount of diverse economies. Entire economic sectors and communities can be heavily affected by the <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/448862/REA_FreeTradeAgreements.pdf">downsides</a>: wage cuts, unemployment and environmental degradation.</p>
<p>Questions abound. How will governments manage AfCFTA’s winners and losers when existing social protections are weak, and <a href="https://theconversation.com/why-the-voice-of-africas-informal-economy-should-be-heard-52766">informal markets dominate</a> many sectors? Will governments still respect the agreement even if it hurts some of their businesses and state companies? And how will they deal with the loss of customs revenue? Nigeria’s <a href="https://dailypost.ng/2019/05/27/settle-problem-home-dont-bring-african-union-obasanjo-tells-nigeria/">internal disputes</a> and <a href="https://www.economist.com/middle-east-and-africa/2019/05/30/muhammadu-buhari-has-big-ambitions-for-nigerian-manufacturing">protectionism</a> are a case in point</p>
<p>The road ahead to an effective free trade agreement that delivers results to Africans is still long.</p><img src="https://counter.theconversation.com/content/118135/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Africa’s new continental free trade area, the AfCFTA, is a remarkable achievement. However, decisive diplomatic, technical and social action is needed for it to succeed.Frank Mattheis, Senior research fellow, University of PretoriaUeli Staeger, PhD researcher, International Relations/Political Science, Graduate Institute – Institut de hautes études internationales et du développement (IHEID)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1046712018-11-29T11:36:58Z2018-11-29T11:36:58ZTrump was dealt a winning hand on trade – his hardball negotiating tactics are squandering it<figure><img src="https://images.theconversation.com/files/247377/original/file-20181126-140534-5q1bf8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Trump had a full hand, but he may have squandered it.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/pair-aces-chips-blackjack-winning-hand-1184225827?src=CIsUunPVUtu0rp6xxuoNJw-1-6">Happy Author/shutterstock.com</a></span></figcaption></figure><p>As President Donald Trump <a href="https://www.cnbc.com/2018/11/26/trade-is-the-only-bilateral-deal-trump-and-xi-can-discuss-commentary.html">prepares</a> to meet with his Chinese counterpart on the sidelines of the G-20 summit on Nov. 30, the stakes could hardly be higher. </p>
<p>The two countries are in the middle of a trade war Trump launched earlier this year, one of the hardball negotiating strategies he believes can extract more benefits from trading partners. Such “economic bullying” <a href="https://www.politico.com/story/2018/11/19/pressure-xi-trump-meet-g20-1003391">was blamed</a> for creating a first-ever deadlock at a recent Asia-Pacific Economic Cooperation meeting. </p>
<p>So far, China shows few signs of budging in the face of mounting tariffs. Could Trump’s tough talk work? Or will it backfire on him and the Americans he represents?</p>
<h2>Threats and humiliation</h2>
<p>Exhibit A for those who believe such tactics are effective is the <a href="https://theconversation.com/how-is-new-nafta-different-a-trade-expert-explains-104212">United States Mexico Canada Agreement</a>, negotiated to replace NAFTA. Trump used <a href="https://twitter.com/realdonaldtrump/status/788919099275390976?lang=en">threats</a>, <a href="http://www.latimes.com/opinion/la-ol-enter-the-fray-trump-s-tough-guy-negotiating-stance-1535753232-htmlstory.html">humiliation</a> and <a href="https://www.nytimes.com/2018/06/01/world/canada/steel-aluminum-trump-trade-ontario.html">punishing tariffs</a> to get Canada and Mexico to agree to the new deal.</p>
<p><a href="https://thegoldwater.com/news/38453-Trump-s-Negotiation-Brilliance-Displayed-in-Successful-USMCA-Trade-Deal">Supporters argue</a> this shows <a href="https://www.watershedassociates.com/negotiationblog/donald-trumps-art-deal-whats-his-final-grade">his brand of bluster</a> works. And that this strategy will help the U.S. win its trade war with China and get the better of the EU. </p>
<p>But even without the <a href="http://www.trumptwitterarchive.com/archive/China/ttff">taunting tweets</a>, Trump already has enormous leverage going into any trade negotiation, whether with Canada and Mexico, China or the EU. That’s because, as <a href="https://scholar.google.com/citations?user=Dj1KNt8AAAAJ&hl=en&oi=sra">my own research</a> <a href="https://doi.org/10.1111/ecin.12360">has shown</a>, boasting the <a href="https://www.weforum.org/agenda/2018/04/the-worlds-biggest-economies-in-2018/">world’s largest and strongest economy</a> puts the U.S. in a unique position to extract concessions from its partners.</p>
<p>Yet, despite this advantage and the blustery rhetoric, Trump hasn’t actually achieved all that much. And in negotiations with China, he may have already squandered some of his biggest chips. </p>
<h2>The US always has a strong hand</h2>
<p>Forgetting Trump’s negotiating tactics for a moment, the U.S. went to the bargaining table with Canada and Mexico with an inherently strong hand. And, the same will be true when arriving at the bargaining table with China and the EU. </p>
<p><a href="https://www.jstor.org/stable/2951352?casa_token=sSZ-nhWABpIAAAAA:3G2DceaYyQVpRmw-MGlduV4ZSXYqmUnzL-wQMS00mBnDNovipQT56SPfPBHh_WZU2eqZUnXInClBIQp5JHcaH4d7xcdoH2vD7zeu34yF-aeHJy6R2uqD&seq=1#metadata_info_tab_contents">Research</a> by economist John McLaren shows how small countries become more dependent on big ones when they integrate with each other. Indeed, recent <a href="https://cdn.theconversation.com/static_files/files/377/phaseOutsNAFTA.pdf?1543421844">research</a> of my own, together with economists Tibor Besedes and Tristan Kohl, says Canada and Mexico did become more dependent on the U.S. because of the North American Free Trade Agreement.</p>
<p>And <a href="https://doi.org/10.1093/qje/qjt016">empirical work</a> by economists Rod Ludema and Anna Maria Mayda shows countries like the U.S. with greater exporting power tend to get more market access during bilateral negotiations. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/247379/original/file-20181126-140516-1j8ptug.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/247379/original/file-20181126-140516-1j8ptug.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/247379/original/file-20181126-140516-1j8ptug.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/247379/original/file-20181126-140516-1j8ptug.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/247379/original/file-20181126-140516-1j8ptug.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/247379/original/file-20181126-140516-1j8ptug.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/247379/original/file-20181126-140516-1j8ptug.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Trump’s supporters argue that the new NAFTA deal with Canada and Mexico gives him a leg up.</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/US-Canada-Mexico-Trade/d315ceb2fa3c48ea95d00162870341eb/20/0">AP Photo/Manuel Balce Ceneta</a></span>
</figcaption>
</figure>
<h2>Threats and tariffs</h2>
<p>But, rather than focusing on playing the strong hand he was dealt, the president threatened to burn the house down. </p>
<p>For example, he’s been threatening to <a href="https://www.wsj.com/articles/donald-trump-lays-out-protectionist-views-in-trade-speech-1467145538">withdraw from NAFTA</a> since the 2016 U.S. presidential campaign and repeatedly tried to use his apparent eagerness to rip it up <a href="https://www.forbes.com/sites/phillevy/2018/01/22/the-nafta-withdrawal-threat-is-real/#11eb88aa6458">as a way to force</a> Canada and Mexico to the negotiating table. </p>
<p>He also imposed steep tariffs on steel and aluminum – new levies that adversely affect <a href="https://www.bloomberg.com/news/articles/2018-10-01/with-nafta-sorted-focus-shifts-to-aluminum-and-steel-tariffs">Canada and Mexico</a> much more than China. They’ve also hurt American carmakers, <a href="https://www.vox.com/business-and-finance/2018/11/26/18112988/general-motors-plant-closures-tariffs-trump">playing a part</a> in General Motor’s plan to close up to five plants in North America and lay off more than 14,000 workers. </p>
<p>Yet Trump used these steel and aluminum tariffs – as well as the <a href="https://business.financialpost.com/news/economy/trumps-auto-tariffs-threat-is-making-it-harder-to-secure-a-nafta-deal">specter of new and severe auto tariffs</a> – to back Canada and Mexico <a href="https://www.bloomberg.com/news/articles/2018-03-06/steel-tariffs-transform-into-nafta-chip-as-trump-plays-dealmaker">into a corner</a>, even though both are key allies. </p>
<p>Furthermore, after reaching a separate deal with Mexico in August, Trump used it to put even more pressure on Canada by <a href="https://www.nytimes.com/2018/08/27/us/politics/us-mexico-nafta-deal.html">threatening to exclude</a> America’s northern neighbor if it didn’t agree to their terms. </p>
<h2>Tough talk and modest gains</h2>
<p>And after all this, did he get “the <a href="https://www.forbes.com/sites/johnbrinkley/2018/10/08/usmca-is-not-the-magnificent-trade-deal-trump-says-it-is/#6bbe5ea34054">most important trade deal we’ve ever made</a>, by far,” as he claimed? Not quite. </p>
<p>In fact, U.S. gains in the United States-Canada-Mexico Agreement <a href="https://www.forbes.com/sites/johnbrinkley/2018/10/08/usmca-is-not-the-magnificent-trade-deal-trump-says-it-is/#4c363c1a4054">are modest</a> at best, even in the three areas most touted as wins.</p>
<p>While it’s true that U.S. dairy producers now have better access to the Canadian market, the <a href="https://www.cnbc.com/2018/10/24/fed-says-the-new-nafta-isnt-going-to-help-us-dairy-farmers.html">Federal Reserve Banks</a> of Minneapolis and Chicago predict little benefit. The increased market access is small. And U.S. dairy farmers are still facing tariffs from Mexico and Canada as retaliation for Trump’s metal tariffs.</p>
<p>Mexico’s promise of passing laws strengthening labor unions and worker rights also has little value for the U.S. Although these laws should reduce the extent to which Mexican workers are low-wage substitutes for U.S. workers, the new deal <a href="https://www.vox.com/2018/8/29/17791430/trump-mexico-trade-deal-nafta-labor">doesn’t spell out</a> enforcement. So, like the old NAFTA, these are unenforceable promises by Mexico.</p>
<p>Finally, the U.S. did manage to get its way on a rule requiring a zero-tariff car coming from Mexico to have at least 30 percent of the work done by employees earning at least US$16 an hour – three times the typical Mexican autoworker wage. <a href="https://www.reuters.com/article/trade-nafta-autos/trump-administration-says-trade-pact-will-bring-auto-jobs-back-to-us-idUSL2N1WH1V0">Some argue</a> this will create more high-wage auto jobs in the U.S. </p>
<p>Good news for American autoworkers right? Wrong. The penalty tariff for missing this mark is just 2.5 percent. Rather than shifting lots of labor back to the U.S., car companies will <a href="https://www.washingtonexaminer.com/policy/economy/usmca-deal-may-pressure-white-house-to-add-auto-tariffs-too">simply pay</a> the tariff. </p>
<h2>Squandering a good hand</h2>
<p>Now we turn to China, a trade relationship that’s far more complex.</p>
<p>Interestingly, the U.S. has even more leverage with China because most of its allies, such as the EU, <a href="https://www.brookings.edu/blog/order-from-chaos/2018/10/05/why-its-time-to-end-the-tit-for-tat-tariffs-in-the-u-s-china-trade-war/">agree with its concerns over intellectual property theft</a> and a lack of market access. They would have joined a coordinated effort to push China to change its ways. </p>
<p>But once again, rather than playing this already strong hand, Trump doubled down on go-it-alone confrontation by piling on the <a href="https://piie.com/blogs/trade-investment-policy-watch/trump-trade-war-china-date-guide">tariffs</a>, which now cover more than half of U.S. imports from China. </p>
<p>And he’s repeatedly threatened to go for broke and slap tariffs on <a href="https://www.cnbc.com/2018/07/20/cnbc-transcript-president-donald-trump-sits-down-with-cnbcs-joe-kern.html">all imports</a> from China. </p>
<p>What has this achieved? A tit for tat, full-blown trade war, in which each Trump salvo is greeted by retaliation. This retaliation has pummeled U.S. farmers: <a href="https://piie.com/blogs/trade-investment-policy-watch/first-tariffs-then-subsidies-soybeans-illustrate-trumps">Over 90 percent</a> of U.S. agricultural exports to China are now subject to tariffs. Although the Trump administration has <a href="https://www.wsj.com/articles/farmers-say-aid-wont-cover-tariff-damage-1537974178">promised billions</a> in tariff relief to farmers, many say it won’t be enough to offset the losses. </p>
<p>Putting aside China’s slapping of the U.S. with retaliation, possible concessions outlined by China don’t amount to much. They include offers of <a href="https://www.forbes.com/sites/charleswallace1/2018/04/06/china-offers-to-help-us-reduce-its-trade-deficit/#544cfeca3f08">helping reduce the bilateral trade deficit</a> – even though economists say they <a href="https://www.nytimes.com/2018/10/05/business/surprising-truths-about-trade-deficits.html">don’t matter</a> – and <a href="https://www.bloomberg.com/news/articles/2018-11-14/china-said-to-outline-concessions-to-u-s-ahead-of-g20-talks">other modest changes</a>. </p>
<p>Moreover, Trump <a href="https://www.cnbc.com/2018/04/18/trump-dismisses-tpp-but-may-have-missed-opportunity-in-china-trade-skirmish.html">already gave up</a> the ace in the hole that could have helped achieve so many of his goals: the <a href="https://theconversation.com/us/topics/tpp-7972">Trans-Pacific Partnership</a>. </p>
<p>Because the TPP would have been the largest trade deal ever and included so many of its Pacific neighbors, China would most likely have <a href="https://foreignpolicy.com/2015/10/07/china-tpp-trans-pacific-partnership-obama-us-trade-xi/">eventually joined</a>. That would have resulted in more market access for American companies in China and forced China to abide by rules essentially written by the U.S., the dominant economic superpower in the deal. </p>
<p>Alas, one of Trump’s first official acts as president was to <a href="https://www.washingtonpost.com/news/worldviews/wp/2018/04/13/a-timeline-of-trumps-complicated-relationship-with-the-tpp/">withdraw</a> from the TPP. </p>
<h2>How to play a winning hand</h2>
<p>Holding aces doesn’t ensure a win, of course. It’s more about making the right moves.</p>
<p>Trump’s best move now on China is to <a href="https://www.ft.com/content/ee361e2e-b283-11e8-8d14-6f049d06439c">focus on cooperating with the EU and Japan</a>. Uniting as a massive trading bloc is the best way to extract concessions from China. </p>
<p>And while early rumors of a possible <a href="https://www.nytimes.com/2018/11/27/us/politics/trump-xi-trade-g-20.html">truce</a> in the trade war are encouraging, the EU and Japan will only take part if they believe Trump is serious about cooperating with them and negotiating with China. That belief <a href="https://www.chathamhouse.org/expert/comment/us-allies-aren-t-buying-its-new-strategies-confront-china">has surely been dented</a> by Trump’s negotiating tactics. </p>
<p>The U.S. doesn’t have to keep threatening to burn down the house to get a good deal. The U.S. only has to play the cards it’s been dealt, which is typically a winning hand.</p><img src="https://counter.theconversation.com/content/104671/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>James Lake does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Boasting the world’s biggest and strongest economy, the U.S. has enormous leverage when it sits down with a partner to negotiate a trade deal. Threats and tariffs are not really helping.James Lake, Associate Professor of Economics, Southern Methodist UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1037092018-10-02T14:47:05Z2018-10-02T14:47:05ZHow the special migration rules in free trade deals work<figure><img src="https://images.theconversation.com/files/238924/original/file-20181002-85605-1bo4am0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Special immigration provisions are increasingly being written into free trade deals. </span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/visa-application-form-travel-immigration-document-1104710696?src=4zT64h6JqNoifpy8qS219g-1-16">One photo/Shutterstock</a></span></figcaption></figure><p>EU migrants will be treated the same for immigration purposes after Brexit as migrants from elsewhere in the world, according to a <a href="https://www.bbc.co.uk/news/uk-politics-45714413">new UK immigration strategy</a> outlined by the prime minister, Theresa May. But she has admitted that any free trade deal struck between the UK and EU after Brexit could include special provisions on the mobility of people. </p>
<p>Ultimately, migration could be included in a section of any new trade deal between the UK and the EU. This is something the Migration Advisory Committee noted in a wide-ranging <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/741926/Final_EEA_report.PDF">report</a> on EU migration to the UK, published in September. </p>
<p>Most trade today takes place under the governance of regional and bilateral free trade agreements between two countries, or groups of countries. Increasingly this covers provisions on services as well as the movement of goods – and it can also include special rules on immigration too. </p>
<p>The World Trade Organisation (WTO) supports different means for the liberalisation of services, based on its <a href="https://www.wto.org/english/tratop_e/serv_e/gatsqa_e.htm">General Agreement on Trade in Services</a>. Part of this framework, known as [Mode 4], refers to the movement of people providing services across borders. </p>
<p>Such movement of people to provide services refers to two broad categories: key employees transferred on an intra-company basis, including managers and technical staff; and business visitors or independent foreign professionals in selected sectors. However, the vast majority of “Mode 4” movements remain restricted to short-term visits, and do not allow for gainful employment in the host country. It is also telling that only some 1-2% of all trade in 2005 was accounted for by the “Mode 4” services trade, according to <a href="https://www.wto.org/english/tratop_e/serv_e/mouvement_persons_e/mouvement_persons_e.htm">WTO statistics</a>.</p>
<p>The <a href="http://rtais.wto.org/UI/publicsummarytable.aspx">WTO</a> records 288 physical free trade areas (FTAs), 145 of which include specific provisions on free movement of services. Only about 40 of these agreements allow for further preferences with respect to mobility of people as service providers. Overall, this means that the liberalisation of free trade has not liberalised the free movement of people around the world. </p>
<p>In most FTAs that include immigration provisions there are time restrictions on how long a person can stay in the country, as as well as limits to labour market access. These FTAs usually impose additional requirements for citizens who want to take advantage of the mobility provisions. For example, some free trade deals exclude citizens from each country from working in certain sectors. </p>
<h2>Visa exemptions</h2>
<p>According to <a href="http://unesdoc.unesco.org/images/0026/002606/260669e.pdf">UNESCO</a> visa arrangements under FTAs can include full visa exemptions, temporary visa exemptions, visa exemptions for specific activities, or agreements regarding entry rights or visa-free travel. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/238934/original/file-20181002-85611-1q5gxmv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/238934/original/file-20181002-85611-1q5gxmv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=384&fit=crop&dpr=1 600w, https://images.theconversation.com/files/238934/original/file-20181002-85611-1q5gxmv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=384&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/238934/original/file-20181002-85611-1q5gxmv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=384&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/238934/original/file-20181002-85611-1q5gxmv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=483&fit=crop&dpr=1 754w, https://images.theconversation.com/files/238934/original/file-20181002-85611-1q5gxmv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=483&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/238934/original/file-20181002-85611-1q5gxmv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=483&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Many of the mobility provisions within free trade deals are aimed at business people.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/london-uk-7-september-2015-canary-314796533?src=hhhrXA_5uPWvMSI9AVqRxg-1-13">IR Stone/Shutterstock</a></span>
</figcaption>
</figure>
<p>A key example of a regime with full visa exemptions is the European Union’s single market, which provides free movement of member states’ citizens in its territory. This means that somebody from an EU country, such as Italy, could seek to live anywhere else in the EU, such as Ireland or the Netherlands. They are expected to gain employment within three months of their arrival as a condition of their right to remain, although this has been difficult to monitor in the EU. Other agreements that facilitate visa-free travel, which also include a common identification system with shared passport symbols, are those of <a href="http://www.ecowas.int/life-in-the-community/education-and-youth/">Economic Community of West African States</a> and the <a href="https://theconversation.com/how-the-free-movement-of-people-could-benefit-africa-92057">African Union</a>. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/what-the-eus-rules-on-free-movement-allow-all-its-citizens-to-do-62186">What the EU's rules on free movement allow all its citizens to do</a>
</strong>
</em>
</p>
<hr>
<p>An example from South America is the Common Market of the South (known as MERCOSUR) between Argentina, Brazil, Paraguay, Uruguay, and Venezuela. Its “Agreement on Residence for State Party nationals” <a href="http://www.ilo.org/dyn/migpractice/migmain.showPractice?p_lang=en&p_practice_id=187">envisages</a> that all MERCOSUR citizens will be granted an automatic visa and the freedom to live and work in another member state. But in reality, visa exemptions apply just to artists, scientists, sports people, journalists, specialised professions, and technicians for up to 90 days.</p>
<p>Examples where mobility is restricted to certain categories of people are the North American Free Trade Agreement, or NAFTA. This makes temporary arrangements for the mobility of business visitors, traders and investors, intra-company transferees, or professionals, with different rules applying to Canadian and Mexican citizens in the US. This agreement includes the “professional visa”, aimed specifically for economic purposes and related to intra-company mobility, professionals and highly skilled people moving on a temporary basis. A new <a href="https://theconversation.com/how-is-new-nafta-different-a-trade-expert-explains-104212">deal struck</a> in late September between the US, Canada and Mexico will not change these provisions. </p>
<p>The bilateral agreement struck in 2017 between the EU and Canada, known as <a href="http://ec.europa.eu/trade/policy/in-focus/ceta/ceta-chapter-by-chapter/">CETA</a>, also has immigration provisions for certain people – and has become a reference point in the Brexit debate. </p>
<p>A Canada-type deal has been proposed in the UK as a model for a liberal regime that governs the types of mobility allowed between country partners. Yet, this is another example where freedom of movement is linked to business services and professionals, built around a platform that promotes the mutual recognition of qualifications. The stated objective of the agreement, set out in chapter ten, is to allow for people mobility which “facilitates trade in services and investment by allowing temporary entry and stay to natural persons for business purposes and by ensuring transparency in the process”.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/chequers-vs-canada-plus-brexit-trade-plans-seven-key-differences-explained-103969">Chequers vs Canada-plus Brexit trade plans – seven key differences explained</a>
</strong>
</em>
</p>
<hr>
<p>Overall, FTAs can provide for various levels of access to the labour market, but the emphasis remains on “trade”, rather than migration liberalisation. Their purpose remains to liberalise trade, with freedom of movement as a byproduct and free migration almost never an end in itself.</p><img src="https://counter.theconversation.com/content/103709/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Liliana Harding does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>There is a gap between free trade and free migration.Liliana Harding, Senior Lecturer in Economics, University of East AngliaLicensed as Creative Commons – attribution, no derivatives.