IIT Monthly Newsletter - February 2021

A message from IIT Executive Director - Professor Peter Draper 

Mr Trump may have exited the White House building in – by his standards – controversial fashion, but this year is nonetheless shaping up to be an interesting one for the international trade agenda.

As Visiting Fellow Milton Churche presaged in his IIT Policy Brief at the end of 2020, the Biden Administration will initially focus on domestic issues, but nonetheless will still have to figure out how to engage China, the EU, and key allies in relation to the World Trade Organization. Biden’s inward focus may entail more pain for trading partners, as the executive order to procure more locally presages. His outward focus will entail significant adjustments in the area of climate-related trade policies for Australia in particular, as we are already seeing redound in Australian Federal politics.

On the China front, incoming Biden Administration officials expressed disquiet that the European Union forged ahead with concluding its Comprehensive Agreement on Investment with China. National Security Advisor Jake Sullivan observed that the EU could have waited to coordinate China economic diplomacy with the US. However, as the European Council on Foreign Relations reported around the same time, given what happened on the US Capitol, Europeans are unsure what the future holds for US domestic politics, and therefore the US’s reliability on the international stage. Sobering issues for Australians to consider as we contemplate the future of our trade relations with China.

Uncertain US domestic politics partially explains the EU desire to complete the CAI. However, securing substantial new economic opportunities for EU businesses is the main motive, as Pascal Kerneis, Managing Director of the European Services Forum, argues in an exclusive feature article for IIT. This will presumably carry some weight in the forthcoming ratification debate in the EU Parliament, which is likely to be heated over claims the CAI is weak on labour standards.

Our second feature article on the CAI, by Bryan Mercurio Professor of Law at the Chinese University of Hong Kong, aims to provide perspective on both the claimed successes and failures of the agreement, usefully foregrounding what are likely to be the key flashpoints during ratification.

Moving on from the CAI, there will be other significant issues for the trading system to confront, and (optimistically) solve. Patrick Low, formerly WTO Chief Economist, canvasses the emerging battle lines concerning taxation of digital services. How this is resolved will have huge implications for tax regimes globally, as well as flows of digital services in particular. As he reports, the case for a multilateral agreement on these matters is strong.

Next, Visiting Fellow Ken Ash reflects on the growing importance of global food systems, a timely contribution given that the United Nations Food Systems Summit is now (virtually) underway.

Finally, we will continue providing cutting-edge analysis from leading trade thinkers throughout 2021. So watch this space.

READ FEBRUARY NEWSLETTER