2025: What's interesting (to me) in trade in 2025
Once again, after a lengthy summer break, I thought a good way to start the year for Trade Notes would be to preview what I’ll be paying particular attention to in the world of trade in 2025. I’ve set out three categories below - Trump, trade agreements and digital trade. This gives a hint of what Trade Notes might cover, but as always suggestions for post topics are very much welcomed too.
📣 One small bit of housekeeping, I have activated Substack’s Chat function which I’ve been using to post links of interest as I find them in January. I’d also welcome links or thoughts from others and ideas for what Trade Notes should cover in the future.
🇺🇸 Trump
Of course, everyone will be watching all of Trump’s moves with interest (and there has already been much to watch and comment on already - see Simon Lester’s take on Trump’s memo as a good start). For Trade Notes, I’m particularly interested in what Trump will do on digital trade.
Under Trump’s first presidency the US signed the US-Japan Digital Trade Agreement and modernised NAFTA/USMCA’s digital trade provisions. Initial headlines have also indicated Trump will use his favourite tool of tariffs against restrictions such as Canada’s digital services tax and the EU’s aggressive regulation of technology companies such as Apple, Google and Facebook. While the Republicans and Trump have a mixed history with Silicon Valley and ‘Big Tech’, tech leaders seem to be deliberating cultivating relationships with the new administration and are already seeing some dividends from this.
This suggests the ‘America First’ agenda includes pushing for digital market access and against regulations/taxes that hurt America’s technology sector. However, it’s harder to see this translating into broader, multilateral leadership or regional leadership on digital trade. Trump’s enthusiasm for ‘deal making’ seems to seek out bilateral outcomes that he can ‘win’, rather than aiming for broader, longer-term norm setting.
The other Trump trade issue I’m interested in is how he will treat the Indo-Pacific Economic Framework for Prosperity (IPEF), or “TPP Two” as Trump called it. He promised that IPEF would be “dead on day one”, but I haven’t seen any official withdrawal yet.1 As IPEF was a signature Biden administration deal you’d expect this to happen at some point (although could Trump dump the Clean Economy Pillar, officially announce the Trade Pillar as dead, and tweak the other two Pillars to say he ‘fixed’ things?).
The key question then will be what IPEF parties do with an IPEF without the US? The benefits of continuing on without the US are far less clear than those associated with continuing the Trans-Pacific Partnership as the CPTPP, but the costs may also be low enough that IPEF could limp on (or indeed find new life?) following a US withdrawal.
🌏Regional trade agreements
Last year continued the trend of only marginal movements in regional trade agreements (there were plenty of bilateral negotiations, particularly in the Indo-Pacific, with the trend set to continue in 2025).
CPTPP finally announced the commencement of its next set of formal accession negotiations - with Costa Rica. But otherwise 2024 for CPTPP was, as Deborah Elms said, “a seriously missed opportunity”. Australia is chairing CPTPP in 2025, although I haven’t seen any foreshadowing yet of what is planned. RCEP faces similar doldrums, driven by its own geopolitical issues around accessions and the slow pace of establishing an RCEP Secretariat.
Hopefully Trump won’t be too much of a distraction to keep implementation of and engagement under these agreements continuing. The planned general reviews of both CPTPP and RCEP would be good opportunities to see what needs to change or be added to keep their rules relevant to and supportive of trade between their parties. There is also the question of whether Trump’s disregard for trade rules will embolden others or instead galvanise interest in supporting “rules-based” trade?
More positively, implementation of the African Continental Free Trade Area (AfCFTA) seemed to maintain pace in 2024 including on digital trade issues. I’m looking forward to seeing what is in the various annexes contemplated in AfCFTA’s Digital Trade Protocol, which will determine how useful that Protocol actually will be in practice.
I’ll probably also continue to complain about how difficult it is to keep track of developments across all of these various agreements and negotiations…
💻 Digital trade
Apart from the digital trade issues already mentioned, I’m also closely tracking ASEAN’s negotiation of its Digital Economy Framework Agreement (DEFA). The DEFA has been under negotiation since 2023, and the aim is to finish it this year (a goal that was recently reiterated by Malaysia as ASEAN’s 2025 Chair). The key question is the extent to which DEFA can go beyond RCEP and (more particularly) the recent upgrade of the ASEAN-Australia-New Zealand trade agreement. Both of those agreements already apply between all the ASEAN Member States, so to be meaningful DEFA really needs to not just replicate but improve upon or innovate as compared to those outcomes.
The Digital Economy Partnership Agreement (DEPA) will also be a good one to watch. Costa Rica is the latest accession candidate to complete its negotiations (following Korea). China, Canada and Peru have all had Accession Working Groups (AWG) established - which are assessing their requests in line with the DEPA accession guidelines.2 The United Arab Emirates, El Salvador and Ukraine have all also formally lodged requests to accede.
It would also be good to understand how much implementation of the DEPA has taken place - there are many references within DEPA to the parties undertaking cooperation on matters such as electronic exchange of trade administration documents, e-invoicing, cybersecurity, unsolicited e-mails, competition policy, and digital inclusion. But I’m not aware of any DEPA-specific initiatives that are actually underway.
The WTO’s plurilateral e-commerce negotiations will also be of interest, particularly now that there is a stabilised text. There are no signs of any weakening of India’s opposition to integrating that text into the WTO framework. The Trump administration means a return of the US to the negotiation is likely totally off the table now. But can the participants maintain momentum and interest from participants in what will be a very contested trade policy environment and find a path to implementation in 2025?
So those are some of my areas of interest heading into 2025. Hopefully some of these are also of interest to you. There are also other matters such as WTO reform (including on dispute settlement), economic security, and non-traditional trade agreements, that I’m sure there will also be a lot to say on as the year progresses. Don’t forget feedback is always welcomed, including through the chat function:
Just some potentially sloppy website updating at State when it archived the Biden Administration’s web presence, see my BlueSky post.
China’s AWG was established over one year before Costa Rica’s AWG, and consultations are still on-going. If China was able to join DEPA - without any major carve-outs or ‘clarifications’ - that would be surprising. It would also require a willingness by DEPA members to allow the exceptions to be used in a very liberal manner (I remember someone telling me that if a cross-border data transfer rule can accommodate China’s approach to data transfer regulation then there was not much point in having the rule at all…).
You make a beautiful deepdive! What future are you seeing out of NAFTA in the era of protectionism and isolationism forge as nationalism?