Britain and Canada have struck a rollover trade deal to protect the flow of $27 billion-worth of goods and services between them after Brexit, and vowed to start talks on a custom agreement next year.
As Britain prepares to end its transition out of the European Union on Dec. 31, it has negotiated multiple rollover bilateral deals to maintain trade, with many simply replacing the terms the bloc had already agreed.
British Prime Minister Boris Johnson joined Canada’s Justin Trudeau and their respective trade ministers on an online call to mark the deal, which paves the way for a tailor-made agreement covering more areas such as digital trade, small businesses, the environment and women’s economic empowerment.
The Canada-United Kingdom Trade Continuity Agreement (CUKTCA), would preserve the main benefits of the Comprehensive Economic and Trade Agreement (CETA) and allow for a continuation of trade and market access between Canada and the UK.
The Canadian Parliament must approve legislation that would enable the deal to come into effect.
Britain is Canada’s fifth largest trading partner after the United States, China, Mexico, and Japan.
In less than two years, Britain has agreed to trade deals with 53 countries, accounting for 164 billion pounds ($217.82 billion) of British bilateral trade.
The UK-Canada Trade Continuity Agreement will be subject to final legal checks before it is formally signed.
Global container shipping rates have surged, with increased demand for restocking across the United States and Europe, container scarcity at export hubs, and changes in freight flows due to the COVID-19 pandemic.
The Freightos Baltic Global Container Index (FBX), a weighted average of 12 major global container routes, rose to $2,359 per forty-foot equivalent (FEU) container this week, the highest on record and up 30% since July 1.
“The spike is driven by very high demand for container freight since July, driven by post-lockdown restocking, limited air-freight capacity, incremental demand for stay-home goods and PPE (personal protective equipment), and a severe shortage of containers,” said Hua Joo Tan, container shipping market analyst at Liner Research Services.
Aside from the restocking swell, container rates have also climbed on a surge in orders from firms that usually ship goods in the belly of passenger jets, but now must use container vessels while much of the global air fleet remains grounded.
An uneven worldwide distribution of containers caused by disruptions to logistics channels because of COVID-19 lockdowns has also boosted rates.
While container costs are expected to stay high through the end of 2020, the evolving pandemic situation in major economies may abruptly change the trajectory of rates next year.
If the pandemic worsens and leads to stricter lockdowns and deeper recessions, consumers would likely cut spending as unemployment rises, reducing container demand.
Canadian Prime Minister Justin Trudeau says a trade agreement with Britain should be secured by the end of the year — though there’s a chance Britain might not have the “bandwidth” to move forward with talks.
“I think we’re ready to have it done before January 1. One of the challenges is bandwidth,” he told an online conference hosted by the Financial Times on Wednesday, and reported by Reuters.
“The U.K. hasn’t had to negotiate trade deals in the past few decades so there is an issue of not really having the bandwidth within government to move forward on this,” he added.
“Canada is a really easy one — we’re there for it, we’d like to do it, so I’m very hopeful that it’s going to get done, but that is really up to the U.K. government.”
The U.K. officially left the European Union on Jan. 1, 2020, after more than three years of political and legal wrangling following a 2016 referendum on the question of whether to leave the trade bloc.
While the separation was official, it also kicked off an 11-month in-between period where existing rules for things like trade rules and regulations remained in effect as officials worked to nail down the final terms of major new deals to replace the existing regulations.
That transition period expires on December 31 of this year.
The deal is expected to largely mirror the Comprehensive Economic Trade Agreement, or CETA, which is the free trade deal Canada has in place with the European Union.
A prolonged influx of Asian imports into the U.S. is building on the East and Gulf coasts, as volumes in October rose by double-digits over September, while West Coast ports saw more modest single-digit gains in traffic.
Between September and October:
Asian imports through East coast increased by 14.6%
Asian imports through Gulf coast increased by 48.4%
Asian imports through West coast increased by 6.2%
Of the top 10 US gateways for Asian imports, Houston saw the sharpest growth in October, with volumes rocketing 56%, as it handled approximately 26,500 more TEU than September. Baltimore saw the second sharpest growth, as volumes jumped 17%, or about 4,100 TEU.
Even with the surge of Asian port volumes through East Coast ports, their total volumes in the first 10 months of this year are still 2.3% lower than a year ago. Comparatively, Asia import traffic through the West and Gulf coasts is up 0.1 and 8.4%, respectively.
U.S. retailers’ restocking from low inventory levels along with a surge of e-commerce shipments for Americans who have retained their purchasing power amidst the COVID-19 has extended past the peak season past August.
Retailers and shipping executives anticipate that volumes will finally begin moderating as early as December, although some forwarders and carriers say elevated volumes could last until Chinese New Year; a week-long closure of factories that begins February 12.
China and 14 other countries agreed Sunday to set up the world’s largest trading bloc, encompassing nearly a third of all economic activity, in a deal many in Asia are hoping will help hasten a recovery from the shocks of the pandemic.
The Regional Comprehensive Economic Partnership, or RCEP, was signed virtually on Sunday on the sidelines of the annual summit of the 10-nation Association of Southeast Asian Nations.
The accord will take already low tariffs on trade between member countries still lower, over time, and is less comprehensive than an 11-nation trans-Pacific trade deal that President Donald Trump pulled out of shortly after taking office.
Apart from the 10 ASEAN members, it includes China, Japan, South Korea, Australia and New Zealand, but not the United States. Officials said the accord leaves the door open for India, which dropped out due to fierce domestic opposition to its market-opening requirements, to rejoin the bloc.
The accord is also a coup for China, by far the biggest market in the region with more than 1.3 billion people, allowing Beijing to cast itself as a “champion of globalization and multilateral co-operation” and giving it greater influence over rules governing regional trade, Gareth Leather, senior Asian economist for Capital Economics, said in a report.
The agreement is expected to help China, Japan and South Korea finally reach a trilateral free trade deal after years of struggling to bridge their differences.
Dairy and poultry producers are worried that the U.S. government’s investigation into Vietnam’s currency practices and alleged use of illegally-harvested lumber could hurt U.S. farm sales to a fast-growing export market.
“In 2019, total [poultry] sales to Vietnam had reached more than $140 million annually,” the USA Poultry and Egg Export Council said in comments to USTR. “For 2020, U.S. exports are on pace to maintain those same high levels despite the difficulties of trade during the worldwide pandemic.”
The trade group said it has seen no evidence that Vietnam’s allegedly undervalued đồng has negatively affected exports to the Southeast Asian nation, but they did express concern about losing sales if the U.S. applies tariffs on Vietnamese goods.
“In our view, the current 301 investigation is structured in a way that will invite trade retaliation on U.S. exports, and U.S. poultry will be a likely candidate for that retaliation,” the group said.
The National Milk Producers Federationsounded similarly concerned in comments they filed along with the U.S. Dairy Export Council, asking USTR to “refrain from taking steps through this investigation that could damage the progress we have achieved with Vietnam.”
“Given the very significant barriers U.S. exporters continue to face in other markets, we believe that U.S. efforts can most constructively be directed at these barriers, rather than in a market in which progress has been occurring and in which we expect progress to continue,” the dairy groups wrote.
The European Union will impose tariffs on $4 billion worth of U.S. goods, CNN reported.
Last month, the World Trade Organization ruled that the EU could impose the tariffs on the U.S. for subsidies the U.S. granted to the Chicago-based aircraft manufacturer Boeing.
The move is largely reciprocal. The WTO in October 2019 allowed the U.S. to impose tariffs on $7.5 billion worth of EU goods and supplies as a consequence of the bloc’s financial assistance to the Netherlands-based Airbus, Boeing’s chief rival.
Last month, following the WTO ruling, President Donald Trump said the U.S. would retaliate if the EU went ahead with the tariffs.
“If they strike back, then we’ll strike much harder than they’ll strike. They don’t want to do anything, I can tell you that,” Trump told reporters before boarding the Marine One helicopter ahead of campaign rallies.
Shipping containers have seemingly paradoxically become a hot commodity throughout the COVID-19 pandemic.
The containers, a staple of the global economy for over half a century, are now plaguing transpacific routes in particular. The scarcity is boosting the purchase price of new containers and lease rates by 50%, disrupting port traffic, adding surcharges, and slowing deliveries heading into the holiday season.
A surge in Chinese exports and robust consumer demand in the U.S. help explain container scarcity. Dire predictions that global trade would collapse amidst the COVID-19 pandemic prompted container carriers to cancel sailings to underpin freight rates. Those forecasts proved pessimistic, however, and industry observers now say a sharp second-half rebound may mean container volumes for 2020 end up not far off levels reached in 2019.
The current scarcity means importers are facing longer waits for their goods, and might pay extra fees to secure the transport equipment. And the impact ripples beyond the flow of goods between the world’s two largest economies — the United States and China.
The beneficiaries of such booming demand are Chinese manufacturers that dominate the global market for newly built containers, the sales price of which has increased to about $2,500 each, from about $1,600 a year ago.
Industry figures show the availability of dry-freight containers produced in China were down to about 250,000 20-foot equivalent units at the end of October, from 871,000 in May. Order books are full until April or May next year.
The Canadian federal government has named Hamilton, Ontario a Foreign Trade Zone (FTZ) in an effort to accelerate business, attract investment and establish the city as a hub for international trade.
“We know Hamilton has a strong economy and has been diversifying itself in recent years,” Mélanie Joly, the country’s Minister of Economic Development and Official Languages, said in an interview on Monday afternoon.
“Of course, it is a steel superpower, but also, in the tech and health and life science sector.”
The designation means local businesses can access programs for tariff and tax exemptions when buying or importing raw materials, components and finished goods. Being an FTZ also generally means materials can be stored, processed or assembled for re-export — usually without any taxes and duties — or for entry into the domestic market, in which case taxes and duties would be deferred until the time of entry.
The move benefits local businesses that are shipping product around the world, or trying to attract investors. The hope is that the designation also creates local jobs and reinforces the city’s position as a key contributor to the economy.
Joly hopes the designation will allow McMaster University to turn research and development into business, while also allowing the city’s tech and life science sectors room to grow.
She added that the more than 1,100 local businesses and Hamilton’s easy access via air, water, rail or road, made it “well-positioned in the global advanced manufacturing marketplace.”
The big business announcement also follows investments into Hamilton by Amazon and Canadian National Railway.
Hamilton is the third FTZ in Ontario, along with Windsor and Niagara, and is the 14th in the country.
