Regional integration through international trade agreements: business opportunities that lawyers need to know and nobody has told them yet
Friday 17 February 2023
Andrea Saffie
Cariola Díez Pérez-Cotapos, Santiago
Report on the joint session of the Regional Fora, the African Regional Forum, the Arab Regional Forum, the Asia Pacific Regional Forum, the European Regional Forum, the Latin American Regional Forum and the North American Regional Forum at the IBA Annual Conference in Miami
Thursday 3 November 2022
Session Co-Chairs
Sara Koleilat Aranjo Al Tamimi & Company, Dubai
Eduardo Botello Santos Elizondo, Monterrey
Speakers
Cesar Amendolara Velloza Advogados Associados, São Paulo
Edmund Duckwitz Von Wobeser & Sierra, Mexico City
Marlen Estévez Roca Junyent, Madrid
Jeena Kim Bae Kim & Lee, Seoul
Ohiocheoya Omiunu University of Kent, Canterbury
This session focused on helping lawyers – even those not practicing in international trade – to understand their role and the opportunities arising for them and their clients in the public and private sectors as a result of the implementation of free trade agreements and new regional economic communities.
The two Co-chairs and five experts specifically paid attention to explaining the current situation of some hot topics in international trade: e-commerce, investment protection and investor-state disputes, and the relevance of sunset clauses contained in recently negotiated free trade agreements (eg, the United States–Mexico–Canada Agreement (USMCA) case).
The experts shared their views on the impact the pandemic has had on international trade both in emerging markets and developed nations. This revealed that the pandemic accelerated changes that already existed before the pandemic: a rise of protectionism and nationalism, or a fall of free trade and multilateralism, both of which affected the value chain.
Before the pandemic, the United States–China trade war, together with protectionism mechanisms, was conquering international trade. The US adopted a variety of trade measures; Korea was also subject to such trade measures, sometimes as a substitute for China.
During and after the pandemic, international trade faced a crisis. When there is a shortage in the supply of certain goods, there are two solutions: (1) increase imports (free trade); or (2) decrease or ban exports (protectionism). Because protectionism measures were being adopted before the pandemic, most countries elected to restrict exports. This was especially critical regarding personal protection equipment (PPE) and food.
From the value chain perspective, after the pandemic, the global value chain (GVC) was restructured into a regional or local value chain (even reshoring). In a recent study, an index indicated that the participation of Asian countries decreased by 50.5 per cent in 2011 and 45.2 per cent in 2022. Within Asia, regional trade expanded. China continued to be the regional centre of the value chain, but other countries, such as Taiwan, Malaysia and Indonesia, replaced China’s role, to some limited extent.
Diversifying, regionalising or localising the value chain to maintain stability (as opposed to traditional effectiveness) gained importance. Such a change also affected the role of international trade law and international trade lawyers. Trade policy advice, rather than advising on existing world trade organisation law and dispute settlement mechanisms, started to gain much more importance.
An interesting conversation also took place in relation to the impact of Brexit on international trade agreements, with a focus on the effects of the European and African regions and lessons that can be learned.
The discussion turned to the effects of unforeseen events, such as war, in international trade and their impact, specifically in the energy sector. The experts commented that the European Union depends heavily on Russian gas, oil and coal; thus, the economic impact of the war in Ukraine and the strict sanctions imposed on Russia have been very serious for the EU. Energy conversion from fossil fuels to renewable energy (Green Future) has accelerated. However, in the short term, the retreat to fossil fuels and nuclear power was inevitable. For the US, as opposed to the EU, the impact has been limited, considering that the US condition regarding fossil fuels does not depend on Russia as an energy supplier. In the Asian energy market, the Ukrainian war impacted the energy price to a peak high, and this will continue for at least this winter. For this scenario, the panellists highlighted the importance of sunset clauses that have emerged and legal advice on trade policy.