Year in review
A look back at 2013’s top
trends and trade news
headlines
Looking forward to new opportunities awaiting us in the new
year, it’s important to recognize the major events that shaped
2013 – and will inevitably impact future trends. While many of
the issues in 2013 are ongoing from year to year, we did see
several new developments. Here’s a look at some of the top
trends in international trade that dominated the news in 2013.
Trade agreements
2013 was the year of trade agreements, as major economic
players worked to link themselves with each other as well as
with new emerging markets.
Canada alone brought into force, concluded or signed trade
agreements with 10 countries in 2013, including the long
awaited Comprehensive and Economic Trade Agreement
(CETA) with the European Union (EU). CETA is the most
comprehensive agreement Canada has signed to date.
Playing catch-up, the U.S. is working on its own EU trade deal.
The Transatlantic Trade and Investment Partnership (TTIP)
will create the world’s largest free trade area, and negotiators
hope to have a deal concluded in 2014, although the
complexity of the issues makes this unlikely. Added to that,
Learn what made news in
2013, and how the past year’s events can
help inform your 2014 decisions.
friction among the U.S. and EU countries arose when Edward
Snowden, the National Security Agency whistleblower, leaked
the news that the U.S. was spying on its allies.
One of the most significant developments in trade
agreements has been the creation of more comprehensive,
multi-lateral trade partnerships, such as the Trans Pacific
Partnership (TPP), which includes Australia, Brunei,
Canada, Chile, Japan, Malaysia, Mexico, New Zealand,
Peru, Singapore, the United States and Vietnam; and the
Pacific Alliance (Alianza del Pacífico), which includes Chile,
Colombia, Mexico and Peru. Both agreements aim to deepen
cooperation among their members by dropping barriers on
labor, finance and trade. These types of partnerships are
relatively new and are going to play a key role in shaping the
future of world trade.
Historic WTO agreement
While this could fit under the trade agreements category,
after 12 years of negotiations, the trade facilitation agreement
reached by the World Trade Organization (WTO) deserves its
own heading. As 2013 draws to a close, the WTO concluded
its first global trade agreement since the creation of the
organization in 1995. The trade facilitation agreement
will lower trade barriers between member countries, lead
to increased harmonization of regulations globally and –
according to estimates by Reuters – boost the world economy
by hundreds of billions of dollars. But the details are not
finalized, and according to Candace Sider, director, regulatory
affairs at Livingston International, “the devil is in the details,
and it will be interesting to see the scope of the TFA.”
While the agreement still needs to be approved by each
member government and there are still debates as to its
actual value, it is a significant achievement for the 159 WTO
members. Many also believe that the Bali package, which is
the first win to come out of the Doha Round since it began
in 2001, will provide badly needed momentum to further
push through more complex issues of the Doha Round of
multilateral trade talks
Tariffs
Thanks to 2013 developments, importers will soon be
paying up – particularly those that import from less
developed countries that continue to see economic
improvements. Canada introduced significant changes to
its General Preferential Tariff Regime, planning to eliminate
72 countries from the list in January 2015; this means that
tariff rates for goods imported from these countries will
rise. While it is clearly time to remove countries like China
from the list, “there is definitely an impact to importers,”
said Sider. The issue has been the speed at which the
changes are taking place, leaving companies little time
to re-engineer their supply chains or to re-negotiate long
term contracts.
In the U.S., the Generalized System of Preferences (GSP)
expired on July 31, 2013. Although this has happened in
2 Year in review: A look back at 2013’s top trends and trade news headlines
the past, with the program renewed at a later date, the
lapse in preferential duty rates provides a financial hardship
for businesses, especially smaller ones. While there is
currently a request for an extension on the GSP before
Congress, nothing has been decided.
Mexico’s government also made some major tax reforms
this year. Of particular interest are those that will affect
the commodities industries, particularly mining, and the
maquiladoras (manufacturing facilities located in Mexican
free trade zones). The new tax program will require
mining companies to pay a royalty tax, which could have
a significant impact on Canadian mining companies
operating in Mexico. It will also eliminate some of the
maquiladora tax breaks, which will increase manufacturing
costs and could encourage companies to relocate
operations to areas outside of Mexico.
Regulatory compliance
Regulatory requirements, covering everything from food
safety to intellectual property, continue to increase and
grow in complexity.
“This year, CBSA focused on specific sectors and
found many incidences of non-compliance,” said Sider,
who added that because of this, they will continue to
Top stories of 2013:
• International trade agreements
investigate companies to ensure compliance. To further
complicate matters, other government agencies, such
as the Canada Food Inspection Agency (CFIA) are
modernizing and revamping their requirements.
In the midst of all this compliance talk, there is also the
Canada-U.S. Beyond the Border Action Plan, which aims
to facilitate the movement of goods and people across the
border. The initiative was announced in 2011, and uptake
continues with both governments committed to reducing
the costs of importing. One of the projects planned for
2013 was the Single Window Initiative (SWI), aimed at
cutting paperwork; SWI’s implementation date has now
been extended into 2014.
• WTO completes historic first
trade agreement
• Changing tariffs
• Regulatory compliance
• The global economy
The U.S., Canada and Mexico all
made changes to tariff and/or tax
rates in 2013, potentially impacting
importers’ bottom lines in 2014.
The global economy
The global economy has dominated trade news in recent
years, and 2013 was no exception. For the U.S., it was a
faltering recovery early in the year, continuing in fits and
starts and culminating in the shutdown of the government
in October. After two weeks, the opposing parties
reached an agreement that allowed the government to
get back to business. The shutdown came on the heels
of earlier-announced budget cuts to operations, known
as sequestration; while the consequences were not as
dire as many had predicted, the across-the-board cuts
have slowed economic recovery. Nevertheless, the U.S.
economy is finally showing signs of strength and stability as
2013 draws to a close.
Meanwhile Canada, which had been the economic darling
through most of 2012, saw mediocre growth, although
recent reports predict that the U.S. recovery will have a
positive impact on Canada.
Globally, China made headlines early in the year as it
overtook the U.S. to become the world’s largest trading
3 Year in review: A look back at 2013’s top trends and trade news headlines
partner. This will have a significant impact on trade flows
and regional trading blocs, as trade lanes shift to service
the Chinese market. The Chinese economy also dealt with
a slowdown in early 2013, but has shown more steady
growth as due to government-implemented fiscal reforms.
In fact, some predict that China’s economy could be the
largest in the world by 2016.
Overall, it was a year of significant change in the world of
trade – change that shape 2014 as well. Be on the lookout
for our “Trends for 2014 Outlook,” where we’ll further
explore the potential impact of these changes going
forward.
Contact your Livingston account executive
e-mail us at solutions@livingstonintl.com
or give us a call at 1-800-837-1063
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