Bilateral TRADE
While UK’s Prime Minister Theresa May is all set to trigger Article 50 in May 2017, to begin Brexit negotiations, UK and Ireland are working towards strengthening bilateral trade ties – before Brexit creates any havoc. As per the British Irish Chamber of Commerce (BICC) website, the British Irish Gateway for Trade or BIG as it is popularly known, aims to establish itself as a platform to connect the trade organisations in two countries. The platform was launched during the first week of January 2017.
It’s worth noting that bilateral trade between the two countries, as per Director General John McCain of BIG, supports nearly 400,000 jobs and is worth €60 billion. The BICC also added that the focus for companies on “both sides of the Irish Sea” would be improving trade of goods and services between the two in CY2017. The service, backed by BICC, will be free of cost to members who register on the website. This move fortifies, to an extent, UK’s trade from Brexit fallout.
While total trade of goods between the two countries saw a 12.91% decline between CY2011 and CY2015, the overall trade (both good and services) between them has risen from £11.23 billion in CY1996 to £26.3 billion in CY2015.
Theresa May
Prime Minister, UK
GOODS TRADE
A bright orange locomotive pulling 44 cargo containers left Yiwu in eastern China on a 17-day journey. Destination: London! China, under its ambitious One Belt One Road (OBOR) initiative, is creating alternative trade routes through Europe, and London recently became the 15th European city to be on the ever-expanding list of destinations for China’s freight trains. The freight train, laden with clothes, socks, bags and suitcases worth $4 million, reached London’s Barking’s Eurohub freight terminal on January 19, after covering about 12,000 km and having passed through Kazakhstan, Russia, Poland, Belarus, Germany, Belgium and France. Yiwu Timex Industrial Investments, which runs this service with China’s state-run China Railway Corporation, claims that transportation cost is half that of air cargo and the travel time is cut by two weeks of the journey time by sea. And that is not the only reason to opt for this mode over air freight. It is environment friendly too! Calculations suggest that a 40 ft. container with 20 metric tonne of cargo would account for just 4% of the CO2 emissions it would take to move the same by air. The dragon it seems is taking all the right steps!
EXPORTS
In a landmark deal, Cuba for the first time in five decades has “legally” exported a consignment to United States. The consignment, 40 metric tonne of artisanal charcoal derived from the Marabu bush (widely available in Cuba), is said to be valued at $17,000. And, as per reports, the importing company, Coabana Trading LLC, has reportedly paid $420 per tonne for the coal, which is $60 above the regular market price.
It was in CY2014, that for the first time attempts were made by former US President Barack Obama and Cuban President Raul Castro to resolve the frigid relations between the two countries through various trade measures. And under a new decree that came into being in CY2015, export of goods from co-operative or privately-owned farms in Cuba were allowed into United States of America. The historic shipment reached US on January 18, 2017. Cubaexport, the state-run export firm which handled the Cuban side of the deal, believes that this is just the beginning of a new era of trade between Cuba and US.
However, in what may pose a threat to the future of Cuban exports to United States is the dispensation of the present US President Donald Trump. Trump has threatened that he may end the detente and reinstate most of the trade barriers, unless the Cuban government make further “political and other concessions.” Donald Trump, as usual, has not specified what these concessions are.
EGGS import
South Korea’s hunt for fresh eggs has ended in US! The Republic of Korea has, for the first time since 1999, decided to import eggs from US. Reason: the ongoing bird flu attack, which has created shortage of fresh eggs in the country. As per reports, the avian flu virus has had a major impact on the poultry industry of Korea, and since November 2015 at least 30 million birds have been culled to date. The South Korean government has announced incentives for importers, which will cover around 90,000 Korean won per tonne on shipments by sea and 1 million Korean won per tonne on air shipments. However, importers have expressed their dissatisfaction over the incentives on air shipments saying it takes more than 1 million won to import eggs by air – importers prefer air route, as it takes 7 days by air and 21 days by sea to import eggs from US. On the other shore, US has also been for long trying to reach a deal to get through the Korean eggs market. For, total production of eggs in US has increased 11% y-o-y in CY2016 (American Egg Board data). And with the Lunar New Year around the corner (this is when demand for eggs increase), the deal seems to have happened at just the right time for both countries.
TPP
US President Donald Trump, in the process of making ‘America great’, officially walked out from the Trans-Pacific Partnership (TPP). Following through on his campaign promise, Trump made sure that one of his first executive orders as the President of US was to formally withdraw from the trade alliance.
Trump though wasn’t the only presidential candidate who opposed the TPP. Democrats Bernie Sanders and Hillary Clinton were also anti-TPP. Clinton even went on to call it a threat that could take jobs away from America.
Lest we forget, this is just the beginning of Trump’s move to dismantle his predecessor Obama’s eight-year legacy. For the record, TPP is an accord that was negotiated by Obama and his administration. The accord has already been signed by 12 countries (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, US and Vietnam) and was waiting for approval from the US congress.
Japan has gone on record to say that without participation from Washington the deal is meaningless. Some experts believe that this radical move may end up helping China take a leadership role in the global trade.
oil exports
Only weeks before Organisation for Petroleum Exporting Countries (OPEC) fully starts to implement its decision to cut oil production, Iraq’s crude exports created ripples across the global market. It was announced that Iraq’s exports of crude oil in December 2016 had crossed 3.541 million barrels per day (bpd), which is up from the 3.407 million bpd it had clocked in November. In November 2016, OPEC and a group of 11 non-OPEC countries had agreed to cut production by 1.2 million bpd and 558,000 bpd, respectively, to stabilise oil prices. However, Iraq’s exports brought an immediate reaction in the market resulting in the fall of oil prices by 4%. The market reaction, as per media reports, came amidst concerns that the high output would “undermine the OPEC measures to curb global oversupply”.
At the Geneva meeting in November 2016, Iraq had agreed to cut production by 200,000 bpd to 4.351 million bpd. Media agencies though report that Iraq’s State Oil Marketing Company had committed to exporting a “full order to three importers in Europe and Asia for February”. Nevertheless, Iraq’s Oil Minister, Jabar Ali Al Luabi, has assured that Iraq will fully comply with the OPEC decision.
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