Some trade news

Some interesting news from the trade front:

1. India and Australia signed off on a Free Trade Agreement - the text of the agreement is here. Christened the "India-Aus Economic Co-operation and Trade Agreement". It covers substantial tariff reductions on the goods side and services trade liberalisation. Justin Brown writing earlier this week for the Lowly Institute highlighted the importance of trade policy for Australia in it's overall foreign policy and stated:

First, negotiating free trade agreements (FTAs) and trade facilitation arrangements must remain a priority to promote export diversification. Comprehensive FTAs with India and the EU will be difficult to land in the near term; the government’s efforts to strike an early progress agreement with India is a pragmatic way forward.

There would be merit in considering bilateral trade facilitation arrangements in sectors that are key to our economic resilience, such as critical minerals and the green economy/manufacturing.

After the UAE, it is India's second back to back trade agreement in recent times.

2. How important is standard setting in regional trade agreements? Should one participate in it to be rule-setters rather than rule-receivers? Should we be concerned if we are not at the table negotiating these deals? Do we lose an opportunity to shape them or is that fear over-exaggerated. 

Evan A. Feigenbaum, vice president for studies at the Carnegie Endowment for International Peace makes a forceful point on the importance of being at the negotiating table in large regional trade arrangements. Commenting on the Indo-Pacific Economic Framework and the US, he testified:

And so we should be rediscovering our role as a standard-setting nation. But somehow, we now manage to find ourselves on the outside of agreements—the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), the Regional Comprehensive Economic Partnership (RCEP), and the Digital Economy Partnership Agreement (DEPA)—that could set standards in Asia for a generation.

How important is rule-making in a multilateral setting? Who should frame them and what motivations should drive this agenda?

3. Trade agreements for the metaverse? Metaverse has been in the news - for creating this virtual reality where a parallel professional and personal life can be re-created. What about trade in this metaverse? Would they be subject to trade rules? Who will make these rules? Trade Policy Expert, Sam Lowe, has some thoughts on how trade rules will ultimately require to catch up with the meta-universe and its virtual trade realities, whether it is in services or goods. Reacting to a question on whether we can have a trade treaty on this subject, he realistically notes:

That’s the other thing we haven’t actually discussed. How do you govern? If you have a global metaverse, you also then have to govern trade within it. So the exchange of digital property – tokens, or you could have your own house – who do you buy it from, how do you get a legal guarantee to it?

 We’ve got a pretty good treaty in place, when it comes to trading goods under the auspices of the WTO. There are provisions relating to services, but they’re very undeveloped. No one’s really managed to make any multilateral progress on anything new or modern. You do get some in bilateral contexts – say, the U.K. and Singapore, most recently, reaching a digital economy agreement that has sorts of commitments to refrain from data localization, placing duties on data flows and the like, but it’s very piecemeal. 

My view is that in terms of how this will develop, individual countries, and particularly the larger ones – the U.S., European Union, India, China – will introduce their own piecemeal approach to all of this and it won't be a collective vision. It won’t be, "We will think about how we regulate the metaverse," it will just be, "Well, we’ll think about how we regulate the fact that we’ve got all of these people providing consulting services from the other side of the world and displacing our local consultants." And the regulation you introduced to deal with that has an impact on what you can do in the metaverse.

Not many people are thinking about trade rules to govern this new reality - a shot in the dark?