Most Favoured Nation: MC12, We Hardly Knew Ye
What could have happened at the WTO, Australia is back on, a helpful website and how to disappear completely.
The last seven days could have been very different.
Absent Omicron, the countries of the world would have spent the week locked in trade negotiations in Geneva, failing to resolve long-standing issues on agriculture liberalisation, fishing subsidies, trade and medicines, intellectual property and, well, pretty much everything.
People would have been freaking out about India and South Africa holding the customs duties on data flows moratorium hostage in revenge for not getting what they want on vaccine intellectual property. The US would have said some things, but done little. Annoyingly. The general public, if they even noticed, might have started to question the relevance of an organisation that can’t even reach an agreement to stop throwing public money at overfishing.
At the margins some progress would have been made among the coalitions of the willing, with the conclusion of the services domestic regulation negotiation being announced to much fanfare, but unable to drown out the cacophony of otherwise abject failure.
BUT THAT DIDN’T HAPPEN.
Instead, MC12 was postponed until at least March next year. Hostages were not taken.
The services domestic regulation negotiations even managed to still get done, with 67 countries committing to maintain transparent and fair authorisation procedures for foreign firms and people looking to sell services in their territory. Which is cool.[1]
The rules-based international trading system lives to fight another day. Hooray!
Silver linings
As well preventing the international trading system from descending into farce, MC12’s cancellation (nearly) delivered some other goodies. As regular MFN readers will know, the UK-Australia FTA negotiations have been held up due to a disagreement over whether beef quotas should be measured in net-weight (Australian position) or carcass weight (UK position).
[Yes, trade policy is deliciously petty and I love it.]
Anyway. MC12’s cancellation left the Australian trade minister, Dan Tehan, stranded in London. And instead of sitting on his hands and doing nothing, he decided to try and get the UK-Australia deal over the line.
AND … it’s pretty much there. I hear the quotas issue has been sorted, and all being well the deal should get finalised before Christmas. Nice work. Vegemite for all!
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The Lord’s work
Staying on the subject of the WTO for a little while longer … if you have ever tried to find out what’s actually going on with all of the joint statement initiative negotiations (the plurilaterals), which countries are involved, what’s been decided so far, what they even are, etc. you’ll know that doing so is an absolute nightmare.
Enter Dmitry Grozoubinski and his team at the Geneva Trade Platform, who have created a one stop shop with all of this information in one place.
In Dmitry’s own words:
“These negotiations are important but hard to follow and difficult to research. This website, written in plain English, lets normal people and trade nerds alike track all these negotiations at a glance, and go as deep and wonky as they want should they so choose.”
Hero.
How to disappear completely
Lithuania, for the purpose of China’s customs registry, reportedly no longer exists. Which makes exporting to China from Lithuania pretty difficult, because how can you declare Lithuanian goods at the Chinese border, if there is no such country as Lithuania?
Perhaps a test case for the MPIA?
Anyway … not cool.
Nightlife
Trade economists are forever finding jazzy new ways to measure the impact of tariffs and trade wars. And I think I’ve found my new favourite.
Davin Chor and Bingjing Li use “satellite readings of night-time luminosity to show that that locations within China that were more exposed to the US tariffs experienced a larger decrease in night light intensity, pointing to a contraction in local economic activity.”
So if I’m understanding the paper correctly, this picture shows that Trump’s trade war tariffs reduced the economic activity of Chinese exporters.
In the authors’ own words:
“Figure 1 provides an example of the variation across locations that the night lights data reveals. The figure plots night-time luminosity in the prefecture-city of Suzhou, in Q1/2018 and Q1/2019 respectively. Night lights dimmed to a greater extent in the two highlighted regions – the Huqiu New & Hi-Tech Zone and the Suzhou Industrial Park – relative to the rest of Suzhou.4 The decrease in night light intensity was greater in these two manufacturing zones that feature a high export-intensity, suggesting a possible link to the tariff war. If export demand took a hit from the US tariffs, the resulting contraction in production and in labour demand would reduce lights emitted from factory night-shifts and from the worker dormitories often situated in close proximity within China’s industrial areas.”
Very cool.
Protectionism is bad for consumers, producers and the environment, it turns out
Oh.
Single trade window consultation
As part of the UK’s vision for its border to be “the most effective in the world” by 2025, the UK is planning to introduce a single trade window. This would function as a one stop shop for companies declaring goods that move across borders.
But what should single window look like? How should it work? What should it cover? Should government just wipe out the entire customs intermediaries industry and do everything itself?
If you have views on any of the above, the UK would like to speak to you. More information here.
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As ever, do let me know if you have any questions or comments.
Best,
Sam
[1] But please please please can people stop pretending that a bunch of countries committing to do things they mostly already do will cut services trade costs by $150 billion because come on now. Behave.
Brilliant!