The leader of World Trade Organization (WTO), Roberto Azevedo, says most trade deals collapse due to over-ambition and suggests that countries should do trade deals that are of reach. He also notes that over-ambition is not the only problem affecting trade deals, as many countries engage in much ant-trade rhetoric which is very catchy and thus affects most business deals, so catchy are these ant-business deals that they have infected even beyond the World Trade Organization. The world most famous regional trade agreements are slowly falling out of control at the time they are most needed. On 27th September, this year, the WTO predicted that for the first time in fifteen years, the global trade grew by just 1.7%, and thus this cannot keep the same pace with the global GDP.
The advise of WTO is that all the financial trading deals and agreements to be regulated by some regulator. For example, FCA UK or The Financial Conduct Authority is the conduct regulator for all legit financial services firms and financial markets in the UK, including forex trading. FCA Forex brokers in UK are one of the highly regulated and secured.
One of the partnership deal that is currently faltering is the Trans-Pacific Partnership deal (TPP) which was signed in February; this is a deal between Japan, America and other 10 countries from around Pacific. This TPP deal is very controversial especially to the minority of the American population who know it.
The EU is also not sure of its own trade deals. Recently, there has been widespread condemnation of the Comprehensive Economic and Trade Agreement (CETA), which is a trade deal between Canada and the EU which will cause major impact at the markets. This deal is also likely to be undermined by any of the EU member countries that may refuse to ratify it. Though the informal meeting of European trade ministers held in Bratislava on 23rd of September gave the deal a green light, but it is likely to falter as the Austrians look very reluctant to sign it.
If CETA falters, the TTIP (Transatlantic Trade and Investment Partnership), a deal being brokered between America and EU, will likely fail. The negotiations have been very slow. The decision by Britain to leave the EU makes the US to be unable to meet the European concerns. The nearing elections of German and French have also complicated the matters as well.
The nasty side of the skeptical and opportunistic politics which has often misinformed the electorates is the one to largely blame for this faltering process. However, we have other reasons as to why trade liberalization is becoming harder. TPP has reduced some of the bilateral quotas and tariffs, like those covering the American Imports of cars and that of Japans beef, but because this agreement involves other NAFTA members (Mexico and Canada), and 4 other countries that have bilateral free trade agreements with America, the larger part of it centers mainly on behind the border non-tariff barriers such as removing the privileges of the state owned businesses, harmonizing regulations, and protecting the intellectual property. Such like issues become a greater obstacle than the old style tariff reduction talks since they probably encroach on the part already covered by the domestic law.
If the TPP and TTIP collapse then the short-run trade impact would not be that huge, since they focus on setting the rule rather than scrapping the tariffs. However, it would mean that the US will have to retreat as the leader of the free world in global trade liberation. President Obama had advertised TPP as very essential if the US, not China, will set the rules of the deal.
A trade deal spearheaded by China would not be that ambitious compared to the US-led one. The hope of global rules that can cover trade unions, free movement of data, and competition from the state-owned businesses would fade, as tariff reduction would most be favored in place of the later. The attention would go to the RCEP (Regional Comprehensive Economic Partnership). This is a traditional deal between 10 members of the Association of South East Asian Countries and other six nations including India, Japan and China.
Indeed, if TPP and TTIP fail, then it would give the WTO an opportunity to re-emerge as the largest platform for trade-liberation agenda.
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