2024: What's interesting (to me) in trade in 2024
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While it's always a fool errands to make predictions (particularly about the future), I thought I’d start the year setting out some of the trade matters I’ll be keeping a particular eye on in 2024 (and thus will probably be writing about here). This isn’t a full list of what matters, but just things that I am tracking more closely.
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💻 Digital Trade
The WTO E-Commerce JSI is hoping to move into its final stretch in 2024, so will soon have to resolve a range of issues - both on the substance of digital trade and also on matters of broader ‘systemic’ importance. With data flow/source rules off the table (given the US change of heart), expect messaging to shift to highlighting the benefits of everything else in the negotiations (e.g. digital trade facilitation, electronic payments, cryptography, consumer trust) and placing the WTO at the center of global digital trade rule-making. I am particularly interested in whether the participants can find a legal architecture that gets the agreement into the WTO and is also acceptable by the broader membership (i.e. India). There’s a few potential options, but some are more courageous than others.
Meanwhile, things aren't looking that good for the WTO's moratorium on customs duties on electronic transmissions at next month’s Ministerial Conference (MC13). In the last meeting of the Work Programme on E-Commerce in 2023, 23 Members (including Australia, China, Canada, Korea, Peru, Singapore, and the UK) supported a proposal to continue the moratorium, as did the ACP Group in a separate communication. However, South Africa called for it to end, and India, Indonesia and Sri Lanka (among others) remain opposed. Fingers crossed that reason will prevail and a last minute fix will be found again.
More broadly - will we actually see actual new policy thinking and development in digital trade rules? The US says it needs to get its domestic politics in order first so I can’t see them leading any time soon. While the current ‘CPTPP-style’ approach to data rules and exceptions could be improved, a big rethink may be hard to get broad agreement on as countries outside of the CPTPP-and-adjacent set were only just recently starting to get comfortable with some version of the current rules. Generative AI and other technology developments may also (rightly) hamper enthusiasm for new binding restrictions potentially leading to more coordination/collaboration forums (e.g. IPEF) rather then new rules.
🌐WTO Plurilaterals
Apart from the E-Commerce JSI, two other tests for the WTO’s ability accommodate plurilateral initiatives will inch towards resolution of some sort in 2024. The Investment Facilitation for Development Agreement (IFD) participants are hoping to incorporate the IFD into Annex 4 (Plurilateral Trade Agreements) of the WTO Agreement, and the Services Domestic Regulation Joint Initiative (SDR JI) group is still trying to navigate the certification/objection process in regard to the incorporation of the new commitments into their GATS Services Schedules.
The IFD requires consensus to be added to Annex 4 and even though IFD participants have done their best to make clear the agreement won’t affect the rights or obligations of non-parties, India and South Africa (among others) have in-principle objections to these plurilateral initiatives (that they say required consensus from all members before negotiations could be launched). Whether those objections can be overcome and at least have them not block consensus remains to be seen.
While negotiations on the SDR JI concluded back in December 2021, India and South Africa objected to the attempt by 35 members to add the new commitments to their GATS Schedules (even though these commitments will be made on an MFN-basis and so benefit all members). It is difficult to see how the opponents can properly justify their objections under the relevant S/L/84 and S/L/80 procedures, but the process of resolving the objections could easily continue to drag out.
If neither of these initiatives can be implemented under the auspices of the WTO, that would not bode well of the E-Commerce JSI finding a way in. More broadly, it would undercut a key avenue (plurilaterals) that proponents hoped could be used to keep the WTO relevant and active on modern trade issues. There’ll also be broader lessons about visions of what the WTO is for and how it operates if progress isn’t made.
📝FTAs and IPEF
Last year there was plenty happening outside of the WTO in preferential trade agreements, and this year there remains a full agenda of negotiations, particularly in the Indo-Pacific. India is running out of time to finish all of its current negotiations (e.g. with Australia, Canada and the UK) before its election season hits.1 The EU is in a similar position, with the extra difficulty of also needing to deliver environmental and other goals that cut across trade interests (e.g. Indonesia). ASEAN States continue a range of negotiations, including on digital trade rules (bilaterally and as a group). And Australia is set to commence negotiations with the UAE - and could be in for a speedy negotiation based on the UAE’s past work.
Discussions around accessions in RCEP will likely intensify - with Hong Kong (China) pushing hard to commence formal negotiations. The CPTPP parties also need to work out what they’ll do about future accessions at some point, although can probably continue to delay dealing with the China/Taiwan issue for a bit longer by focusing on the CPTPP’s general review and implementing the UK accession. The Digital Economy Partnership Agreement is also continuing its accession work, with Canada and China both in line to join.
And there is IPEF. While things are not looking good for IPEF’s Trade Pillar, Fiji has already ratified the Supply Chain Agreement (Pillar II) and the parties will want to lock-in some concrete wins in implementation before the US election. Putting aside the trade pillar, the question will be whether Pillars II-IV can achieve anything real before the US election hits, and what impact the election has on the whole initiative’s longevity.
👩⚖️ WTO Dispute Settlement Reform
Ministers set 2024 as the year for achieving something on WTO dispute settlement reform and there was optimistic messaging in October that negotiators were “not far” from a deal. This was followed in December with word that the “finish line is within reach” (although also that there was not yet anything agreed or in the text on the Appeals Body). While the Ministerial Conference in February is a hopeful milestone for something to happen, negotiations will need to continue after that date (the US has said February is not the deadline). However, with the US election looming in November (not to mention elections everywhere else in 2024), time may quickly slip away to achieve something meaningful.
♻️Carbon Border Adjustment Mechanisms (CBAMs)
The EU’s CBAM kicked off (in a transitional way) in October 2023, with its first carbon tariffs planned to be applied in 2026. The CBAM remains controversial, with strong opposition/concern from a number of countries including China and India, and some interesting arguments around the interaction of trade law and climate change law. Other countries are also moving to implement their own CBAMs (e.g. Australia, the United Kingdom). So it will be interesting to watch how this space develops over the year, although not expecting any real fireworks just yet.
📚Other things
Of course there’s a range of other interesting trends, issues and negotiations happening in trade in 2024, including the second phase of the WTO’s Fisheries Subsidies Agreement (and indeed entry into force of phase one), the use of subsidies in areas like green energy and other industrial policies that don’t sit well with traditional approaches to trade rules, and where inclusive, sustainable and equitable trade is going. Not to mention the ever present specter of trying to manage the security exception as trade policy and security policy continue to merge. And through it all global trade continues on.
So that is my quick list of things I’m interested in watching in the world of trade in 2024, I’d welcome views from readers as to what they are focusing on or looking out for. You can expect Trade Notes to particularly focus on the above themes this year, but if there’s something you’d be interested in seeing written about drop me an email or a comment. Or of course please fill in the feedback survey!