Global Trade Update

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Hello, from Brussels now almost completely deserted, welcome to the last trade secret of summer (in this half of the earth, anyway, let us not all be centered in the northern hemisphere) disappear before we rest on our own, and return to September 6 day. Today we summarize what we have seen in the trade world so far this year. All in all, it is not as unpredictable as 2020—if any, we may be exhausted—but there are some very big stories hitting us from unexpected angles. There is no doubt that when we meet again in the fall, there will be more.

As the pandemic threat fades, politics takes precedence

The first thing to note is Actual trade and globalization Yes well done. Ish.Yes, there have been some very serious scavengings in the supply chain of certain departments, especially those involving semiconductorBut, as we have spent a lot of time saying last year, it is mainly political tensions that have led to uncertainties in the cross-border flow of goods, services and data. The pandemic has not brought the huge permanent impact many people worry about on global value chains.A large container ship (Ever Given) was stuck in the Suez Canal for a few days, which is also very interesting-remind “Financial Times” readers Know more There is more fluid dynamics on large ships in shallow waters than we have done before – but this is not a serious threat to globalization Beyond the short term.

The big project launched at the end of 2020 was one of the first to fail: the EU’s ill-fated Comprehensive Investment Agreement (CAI) and China.Regardless of whether you think its own advantages are a good idea (we have always Skeptical From the beginning), the communication surrounding CAI was not handled properly within the EU, which caused dissatisfaction in the European Parliament.Then Chinese Counter sanctions Opposition to EU policymakers and law firms (oddly, a very respected think tank) put the deal in a deep freeze indefinitely.We think our Early verdict Persevere: This is an unwise gamble in Brussels (and Berlin) that has damaged the credibility of the European Union.

The traditional view before the new U.S. government took office in January was Joe Biden’s trade policy It will not be as crazy and destructive as Donald Trump. He will seek long-term cooperation with EU and other allies in the strategic supply chain, but we should not expect all the policies of the Trump era to suddenly reverse. Facts have proved that traditional wisdom is largely correct. (It happens sometimes.) Washington Brussels bombed by love Following the discussion of transatlantic harmony, the United States and the European Union announced a stupid armistice agreement on the dispute between Airbus and Boeing, and promised to reach some agreement on Trump’s steel and aluminum tariffs. But turn the time back to 2016 and continue to advance a positive trade agenda? Do not. Biden’s focus is mainly domestic.

The real breakthrough story in 2021 is COVID-19 vaccine, First is about Export ban Whether it is actual or factual, then there is a battle Intellectual Property Exemption Medical products of the World Trade Organization.At the end of last year, the debate on WTO exemptions proposed by India and South Africa remained at a moderate level until the Biden administration suddenly came to power in May. Declare oneself in favor It became one of the important stories of the global pandemic.Sadly, although We say For tactical reasons, the limited exemption may be meaningful, and the WTO dialogue has now become a ritual confrontation, demanded by India and South Africa. Oversized loopholes They won’t get it, the EU is seen as Mime villain Because it is pointed out that intellectual property is not a real issue, in our view, the United States sits idly by and satisfactorily, and enjoys raising this issue without producing the negotiation text itself or breaking the deadlock.

Speaking of which, WTO In the end, she obtained a new dynamic director general in the form of Ngozi Okonjo-Iweala. She is a heavy veteran in the global governance circle. She announced her determination to inject some energy into dying institutions and boldly challenge member governments to make progress. This has What effect? Not that you will notice.A ministerial meeting a few weeks ago focused on fisheries subsidies Clarify the difference There is no real solution to these problems, and there is not much optimism about the biennial large-scale ministerial gathering to be held at the end of the year.

BrexitOf course, the Northern Ireland problem is also happening As you think In view of the fact that the government that signed the agreement either does not really understand the content, or pretends not to understand.In other news in the UK, the UK seems to be Surrender to Australia It is called a victory in the bilateral trade agreement.

By 2021, this is what we are going to do. Many climate and carbon emission actions will be taken in the fall, coupled with long-standing issues such as Sino-US competition and global data and technology governance, as well as a large amount of money. We will be back before you know it.As song Say, see you in September.

Concession waters

One of the hot topics so far this year is how to solve the shortage of semiconductor chips, which is a problem exposed by the pandemic.

Many jurisdictions, including US and I, Is seeking to solve this problem by reducing its dependence on exports from Asia (especially Taiwan and China) and investing more funds in domestic production capacity construction.

It is worth remembering that the export of chips has been declining for some time-at least in terms of value. Data compiled by Coriolis Technology, an agency specializing in trade information, shows that the value of exports has been declining since 2017.

“As the supply chain from China was shifted to avoid tariffs, intra-regional trade in the Asia-Pacific and Southeast Asia regions has increased rapidly. The chains are now geographically closer, so the reliance on exports is reduced,” Corioli CEO Libe Kahadin said. “The Sino-US trade war since 2016… is pushing the two countries to become more and more self-sufficient in semiconductor production.”

Taking into account the geopolitical developments so far in 2021, we will only see this trend continue, as the production return plan has depressed cross-border trade in chips. Claire Jones

Trade ties

Ever Given finally did it To the port! Four months have passed since the giant container ship weighing nearly 200,000 tons was trapped in the Suez Canal, hindering shipping from all over the world. It is docked in Rotterdam today It is expected to set sail on Monday to Felixstowe, and then to Dunkirk, France, where further inspections will be conducted. (Wall Street Journal $).

House of Lords Subcommittee Northern Ireland Protocol Published its Report Assess the impact of the agreement to date.At the same time, it seems Supply restriction Is one of the factors to be measured On the recovery of the Eurozone.

Chip shortage This has disrupted global production of cars and electronics (and what we mentioned above) and it looks like it’s more and more likely to continue until next year, Apple revealed it Supply problems are expected to spread To iPhone (Nikkei Index, USD)

at last, Southeast Asia exports have exceeded Due to the economic recovery in the U.S. and China, the pre-pandemic levels Increase demand Electronics and auto parts for the region (Nikkei, $).