What to watch this year in trade

BREXIT AND FUTURE TRADE: 2018 will be the year when Britain and the EU decide on their future trading relationship. If talks are orderly, they’ll be about deciding to what extent London keeps its regulatory standards aligned with Brussels’. The negotiations should determine which EU rules Britain can change or opt out of, including positions on customs, car standards and food safety. The big question is how much divergence from its norms the EU will accept. If talks collapse, everything from a hard Brexit through to Britain remaining in the single market (in the Norway model) is conceivable.

TALKS WITH THE US: Fueled by its dealmaking successes elsewhere, the EU wants another shot at trade talks with America. “It sounds rather odd that we are negotiating with almost 20 different [partners] on trade but that we have nothing going with the United States,” Commission Vice President Jyrki Katainen said in November. The EU and the U.S. are major trade partners, which means that any reduction in tariffs and other barriers would have a big effect. According to EU trade chief Cecilia Malmström, Brussels and Washington are eyeing deals that would eliminate the costly business of certifying products such as medical devices separately on each side of the Atlantic.

EU INVESTMENT SCREENING: The EU wants to monitor investments into its most strategic sectors like encryption firms, robotics, defense and utilities — with the aim of blocking Chinese takeovers that are steered by Beijing’s political objectives. China has gained influence in some European capitals like Lisbon and Athens through takeovers of important firms, and the worry is that it could use those companies as vehicles to buy up firms with valuable technological knowledge. A Commission proposal is being debated in Parliament and Council: Expect Parliament to insist on more reciprocity from Beijing.

CHILE: Chile and the EU are negotiating an upgrade of their trade and association agreement, which should help increase investment and could boost exports of special manufacturing goods, according to the Commission. The European Parliament and some countries, including France, want to seize the opportunity to push for increased environmental and labor standards in Chile. Parliament’s rapporteur Inmaculada Rodríguez-Piñero said she wants a deal before Chile’s new president begins his or her term on March 11.

PUBLIC PROCUREMENT: The EU wants to use the buying power of its market — it is the largest public procurement market in the world — to push countries like the U.S. and China to allow EU companies to bid for more contracts there. Back in 2012, the Commission and Parliament proposed banning EU governments and cities from awarding public contracts to firms whose home countries didn’t allow EU firms to compete in their own tenders. But that move ended in deadlock. Things could change this year. France’s President Emmanuel Macron has mentioned the file as one of his nation’s priorities in trade.

DATA FLOWS: This is the year that will determine whether the French preoccupation with privacy will predominate, or whether the EU’s trade deals will include more liberal rules on data flows. Trade officials want to include clauses that would ban countries from forcing companies to keep data saved within their borders — so-called localization. EU investors complain that localization is a form of protectionism when, for example, a European bank is forced to build an expensive data server for a regional branch.

This article is part of the spring policy primer.

Original Article

Politico