The trade tensions between China and the European Union (EU) have escalated with both sides engaging in tit-for-tat investigations. China has opened an anti-dumping investigation into certain pork products imported from the EU, while the EU plans to raise tariffs on Chinese electric vehicles. China's investigation will cover various pork products, and the EU is China's largest source of pork imports. The process could last up to a year, with a possible extension of six months. Both sides are concerned about the impact of trade barriers and analysts believe that Beijing is not interested in further escalating the trade frictions. Trade negotiators are urged to work towards avoiding further aggravation of the tense ties [013d245c] [a76575ef].
The proposed trade agreement between Australia and the European Union (EU) is facing uncertainty as negotiations have hit a roadblock. Trade Minister Don Farrell has expressed dissatisfaction with the current terms of the agreement, stating that they are not good enough [434efa56]. The negotiations, which began in 2018, have been ongoing, but there are still sticking points that need to be resolved. Australian producers are seeking greater trade access for beef, cheese, lamb, rice, and sugar in the European market. However, the EU has threatened to remove the naming rights of Australian products such as prosecco, mozzarella, feta, and parmesan. Australian negotiators oppose this proposal, citing the costs of renaming products and the cultural links many Australians have to these products. The National Farmers Federation has criticized the EU's offer, claiming it would harm the agricultural sector [434efa56].
In addition to the challenges in the negotiations, Australia's trade relationship with the EU has been further strained by the collapse of talks for a free trade deal between the EU and Australia. The talks, which have been ongoing since 2018, have been hindered by disagreements over market access for Australian agricultural products such as beef and sheep meat [db7b8b8c]. The latest round of talks, held during a Group of Seven meeting in Japan, failed to produce any breakthroughs. Australian agriculture minister Murray Watt expressed doubt that a deal would be reached anytime soon. The European Commission stated that Australia had re-tabled agricultural demands that did not reflect recent negotiations. This comes after failed talks in July, where Australia expressed dissatisfaction with the level of access to the European market for its agricultural products [db7b8b8c].
Meanwhile, talks between India and the South American trade bloc Mercosur have been put on hold as both sides focus on concluding their free-trade agreements with other regions. The trade bloc, which comprises Argentina, Brazil, Paraguay, and Uruguay, is currently prioritizing the signing of a free trade agreement with the European Union. India, on the other hand, aims to conclude trade agreements with the UK and Oman, as well as start the eighth round of FTA negotiations with the EU. Expanding the preferential trade agreement with Mercosur nations is important for India to increase its trade in the South American region. Currently, India and Mercosur have agreed on tariff concessions on 450 and 452 tariff lines, respectively, under the preferential trade agreement. The talks with Mercosur have been delayed due to various factors, including the economic slowdown in Europe. However, expanding the preferential trade agreement with India is not a priority for Mercosur at the moment, as the FTA with the EU has taken precedence. India's external affairs minister has proposed increasing trade between India and the Latin America and the Caribbean (LAC) region to $100 billion. In 2022, total trade between India and LAC stood at about $49 billion, with Brazil, Colombia, and Argentina being the major trading partners. India exports manufactured commodities to the LAC region, while imports largely comprise extractive and agricultural products. The Mercosur bloc is the fourth-largest integrated market after the EU, NAFTA, and ASEAN, with a GDP of over $2 trillion and a population of more than 290 million people [00573ca3].
On a positive note, External Affairs Minister S Jaishankar expressed confidence in the partnership between India and the European Union (EU) growing further. He noted that the relationship between India and the EU is not only consequential for both sides but also for the world. The EU is India's largest economic partner, and the ties between the two run deep across various domains. Jaishankar highlighted the importance of resilient and reliable supply chains and stronger digital cooperation based on trust and transparency. He also acknowledged the EU's interest in the Indo-Pacific and its contribution to the India-Middle-East-Europe Economic Corridor. The European Union Ambassador to India, Herve Delphin, emphasized the strategic relevance of building an enduring EU-India partnership. In March 2024, India and the European Free Trade Association signed a Trade and Economic Partnership Agreement with four European states. Jaishankar and his wife attended Europe Day celebrations in Delhi, where he delivered his remarks as the chief guest [0cf7a5a2].
Senior officials of India and ASEAN will hold the next round of talks in July to review the existing free trade agreement in Jakarta, Indonesia. The discussions for review of AITIGA (Asean-India Trade in Goods Agreement) started in May 2023. The joint committee, which is undertaking the review work, has so far met four times and has finalized its terms of reference and negotiating structure. The fourth Joint Committee meeting for the review of AITIGA was held in Putrajaya, Malaysia from 7-9 May. India and ASEAN have agreed to conclude talks in 2025. The upgradation of AITIGA will further boost bilateral trade. The next joint committee meeting will be held from 29-31 July 2024 in Jakarta, Indonesia [0036acf0].
China is forging closer ties with ASEAN states, potentially disconnecting Europe in Southeast Asia. The EU needs to diversify its supply chains to reduce economic dependence on China, with Southeast Asia being a focus due to its dynamic economic growth. However, trade between the EU and ASEAN has been slow, while China's trade volume with the region has nearly doubled in the last five years. European companies face competition from heavily subsidized Chinese businesses, and the EU must conclude trade negotiations in the region to help European businesses compete. The EU should avoid overburdening trade treaties with non-trade demands and offer support to European firms venturing into Southeast Asia. The Southeast Asian economies expect an egalitarian partnership approach from the EU and may turn to China and the USA for influence [cbceb698].
Rival pork exporters such as Brazil, Argentina, and the US could benefit from the escalating trade tensions between China and the European Union (EU). China's Commerce Ministry has opened an anti-dumping investigation into imported pork from the EU, potentially leading to restrictions on pork imports. If the EU's pork exports to China are restricted, pork suppliers from Brazil, Argentina, and the US could gain market share in China. Russia, a close trading partner of China, could also increase its meat shipments to China. China imports $6 billion worth of pork, including offal, and is the world's leading pig producer. Brazil and Russia are expected to benefit from any disruption in EU trade, with Russia aiming for a 10% share of China's pork imports within three to four years [a76575ef].