The view from China
Learning to cope with zero-covid
Shanghai and Beijing are now open again after several uncertain weeks during which the authorities grappled with the strict implementation of the zero-covid strategy. The ‘new normal’ is not ‘living with covid’ but rather ‘learning how to cope with zero-covid’.
This new dynamic involves taking a test every 2-3 days, in order to have a ‘green code’ on a health app, which enables residents to enter buildings such as offices, shops and restaurants.
That said, residents are still unable to leave their city of residence without special permission, and it is highly unlikely that people will be able to travel domestically across the fast-approaching summer season.
China’s borders remain closed and international flights are either hard to find or exorbitantly expensive. That said, a steady stream of expatriates has been leaving the PRC over the past few weeks and are highly unlikely to return, especially if schools remain online at the start of the new term in September.
The knock-on impact on business confidence, and what the CBI is doing to counteract that
The European Chamber of Commerce in China (EUCCC) recently published its latest business confidence survey and the percentage of businesses now planning to leave China has increased from 14% earlier in the year to close to 25% in June.
Notwithstanding the ongoing uncertainty the CBI China team has been busy delivering for its members, organising joint events with its China partners and making the case for the opening up of the country’s borders to foreign business.
Only last week the CBI, CBBC, UK government bureaus BEIS (Department for Business, Energy and Industrial Strategy) and DIT (Department for International Trade) met with their mainland counterparts at the Chinese Ministry of Industry and Information Technology (MIIT).
High-level meetings across the region
After a two-year hiatus caused by the Covid pandemic, the UK-China Industrial Cooperation Partnership (ICP) has finally restarted. With a focus on green manufacturing, the automotive sector and digital there will be plenty of opportunities for CBI members to get involved as and when the ICP next meets – hopefully later this summer.
Looking beyond the PRC to ASEAN there have been several high-level activities in June starting with the UK-Thailand Joint Economic and Trade Committee (JETCO) which took place in London on 21 June.
The next G20 and B20 is scheduled to take place in mid-November in Indonesia, and the CBI China team is assisting in promoting opportunities for UK business in the countdown to this important summit. Please do get in touch with the Beijing office if you want to learn more.
Finally, after more than 2 months of strict restrictions on in-person meetings, the Beijing office hosted Ibrahim Chowdhury, Lead Economist at the World Bank in Beijing, for our monthly member breakfast on 21 June. The session addressed the strong economic headwinds currently facing China and gave insights into its longer-term growth outlook.
The view from Europe
G7 leaders meet in Bavarian Alps for Summit
From 26-28 June, G7 leaders are meeting in the secluded Bavarian Alps for a three-day summit. Top of the agenda was the conflict in Ukraine, and agreeing further coordinated action, and the future of the global economy and cooperation in driving the green transition.
This comes after the business federations of the G7 nations met in Berlin on 19-20 June for the B7 Summit. BDI, representing German business, brought together business leaders from across Europe, North America and Japan to discuss shared global challenges from the transition to net-zero, the future of our health systems, the resilience of global supply chains and the cost-of-living crisis.
The summit culminated in the presentation of business’ recommendations to G7 leaders to German Chancellor Olaf Scholz – a unique opportunity to highlight the importance of strong cooperation in response to Russia’s war against Ukraine, and the support business is providing. Take a look at the final B7 communiqué to read more about business recommendations for a resilient and sustainable global economy.
Long-awaited WTO Ministerial reaches agreement
The World Trade Organisation (WTO) Ministerial meeting (MC12) ended on 17 June after 5 days of intense negotiations. Over the past few years, the WTO has been called into question after numerous failed attempts to reach new agreements. Whilst the agreement reached this month is far from perfect, it seems to have done enough to keep the multilateral trading system alive and show that the WTO can still deliver concrete results.
A key win was the extension of the moratorium to ban duties on electronic transmissions until the next WTO Ministerial, a much-needed outcome for businesses both small and big. Nevertheless, we regret the agreement to waive the protection of intellectual property rights regarding COVID-19 vaccines which will not address the current challenges of access to vaccines and risks undermining efforts to address future pandemics.
Now the WTO must build on members’ commitments to reform the organisation and take the agreement forward. As business, we strongly support the multilateral, rules-based trading system and we are committed to playing our role by garnering support and providing real world evidence.
UK publishes Northern Ireland Protocol Bill
This month, Brexit has been back in the headlines with challenges to the Northern Ireland (NI) protocol. For over a year, the UK government has argued the Protocol is creating unacceptable barriers to trade within the UK internal market and has been seeking changes. Now, after months of protracted and unsuccessful negotiations, the UK has published the Northern Ireland Protocol Bill so that it can take unilateral action.
The Northern Ireland Protocol Bill seeks to introduce powers to the UK Government to not fully apply some parts of the original Protocol. European Commission Vice President, Maroš Šefčovič, responded to the publication of the NI Protocol Bill stating that taking unilateral action broke international law and that it was damaging to the mutual trust of the UK-EU relationship.
As a first step, the EU has restarted and launched legal action against the UK. However, in a signal that compromise is still possible, the EU also published two new position papers with additional solutions to the Protocol. With fears we are heading towards a trade war, it is worth noting that on the UK side the Bill will take many months. The UK Parliament’s summer recess, starting on 21 July, will effectively hit pause on the Bill, potentially giving breathing space for the UK, the EU and the NI political parties to negotiate in parallel to find a solution to the Protocol.
The view from India
UK-India FTA update
After completing three successful rounds of negotiations, India and the UK completed the fourth round of talks on 24 June on the sidelines of the World Trade Organisation (WTO) in Geneva.
Seven chapters have been concluded in the agreement, including on gender equality and innovation. While the ambition remains strong, several non-tariff barriers, like rules related to investor protection, intellectual property rights, and harmonisation of governance and standards, procurement are among the key sticky points in the agreement.
It is believed that after the fourth round of negotiations, the negotiating teams will enter a continuous mode of negotiations to achieve the Diwali deadline of October declared by the two Prime Ministers in April 2022.
Prime Minister Boris Johnson also recently reiterated that the proposed trade deal with India would be the biggest yet in the post-Brexit context. The PM is hoping that a deal can be achieved by October that will boost trade with one of the fastest growing economies by £28bn by 2035.
The CBI continues to engage with its members and with the Indian Industry to catalyse the essence of a deal which benefits businesses. The CBI is lobbying and pushing forward for an agreement which unlocks greater ambition over pace.
India and the EU resume FTA negotiations
India and the EU have re-launched negotiations for an FTA after a nine year lull, since the earlier negotiations were paused in 2013 due to difference in the scope and expectations from the deal – including key issues such as customs duties on automobiles and spirits, and the movement of professionals.
The negotiations were re-launched at an event held at the European Union headquarters in Brussels on June 17. Besides, negotiations were also launched for a stand-alone Investment Protection Agreement (IPA) and a Geographical Indicators (GIs) Agreement. While the proposed IPA would provide a legal framework for cross-border investments to enhance the confidence of investors, the GI pact is expected to establish a transparent and predictable regulatory environment, to facilitate the trade of GI products including handicrafts and agri-commodities.
This would be one of the most significant FTAs for India as the EU is its second-largest trading partner after the US. The India-EU merchandise trade has registered an all-time high value of $116.36 billion in 2021-22 with growth of 43.5%. India's export to the EU jumped 57% in FY 2021-22 to $65 billion. India has a surplus trade with the EU.
Both parties are aiming to negotiate all three agreements in parallel and conclude them simultaneously. The first round of negotiations for all three agreements will be held from 27 June to 1 July 2022 in New Delhi.
India earlier this year has concluded FTAs with Australia and the UAE in a record time. The FTA talks with Canada and the UK are also underway. The FTA negotiations are part of India's broader strategy to forge balanced trade agreements with key economies and revamp existing trade pacts to improve trade and investment.
The UK's 22-university delegation explores India’s NEP 2020
UK higher education leaders and representatives from 22 institutions – the biggest ever education sector delegation - travelled to India to meet with Indian counterparts, for the first time since the National Education Policy (NEP) was launched in 2020.
The aim of the trip was to understand and deliver a new vision of Indian higher education, through championing transnational education and greater bilateral student and faculty mobility. It also put forward recommendations for effective joint governance structures for driving collaboration at both G2G and institutional level. India introduced the NEP with new measures to enhance internationalisation in the education sector.
The CBI has also recently signed an MoU with the Confederation of Indian Industry identifying the key pillar of focussing on strengthening the education program by promoting joint research programmes, mapping out desirable skill sets and areas for collaboration and continues to work on this agenda with key groups.
The UK education delegation trip also drives the UK’s International Education Strategy, which reinforces the target of increasing education exports by 75% to £35 billion a year and sustaining international student numbers at 600,000 by 2030. The delegation highlighted that Indian students and the UK-India education partnership as crucial to these goals.
UK-India Week 2022
India Global Forum has kickstarted the ‘UK-India Week 2022’ in London – themed as Reimagine@75 to celebrate the scale and multi-faceted aspect of this winning partnership, while celebrating 75 years of bilateral relations. More details here.
The CBI has been again nominated & shortlisted for the fourth UK-India awards under the category of ‘Business Promotion Organisation of the Year’ – for the most proactive, prolific, and impactful business promotion organisation in the UK-India corridor.
The view from the USA
The CBI’s business dinner in Ottawa
On 20 June, CBI Washington returned to Canada for its first in-person engagement session in the country since the start of the pandemic, for a member dinner alongside Charlotte Heyes, the UK Department for International Trade’s chief negotiator for Canada and Mexico.
The discussion focused on the opportunities and challenges for UK firms operating in Canada, and where an FTA could help ease long term economic challenges such as skilled labor shortages and supply chain resiliance. Of particular interest to members in attendance was professional services licensing at the provincial level, which is a consistant headache for foreign firms in medicine, engineering, and architecture attempting to operate within Canada.
Because skills shortages are often issues of quality over quantity, talent for specific jobs or specific practices can sometimes only be found in other countries or provinces and can’t be hired as easily as local staff. Charlotte noted that professional services qualifications are a big priority for the FTA, in which they hope to set out a federal framework that can be legally approved at the provincial level.
Other firms noted that the UK’s expertise in the defence sector is something to leverage within Canada given its defence spending plans. Canada is aiming to rebuild its submarine fleet, build new icebreaker ships, replace the NORAD missile defense system, and expand the F35 program – but procurement rules shut UK firms out of some contracting opportunities.
In the long term, members felt that opportunities in Canada will revolve around infrastructure development, thanks to unplanned population growth that has expanded Canadian cities beyond their original footprint. This population growth has led to overstretched public services like rail, wastewater treatment, healthcare, schools, jails, and roads that all require renewal and reinvestment. Additionally, renewable energy was flagged as an opportunity given Canada’s significant wind and solar deposits.
US Senate resolution endorsing the completion of a comprehensive US-UK FTA
On 25 May, a non-binding resolution passed the US Senate endorsing the completion of a comprehensive US-UK FTA. CBI Washington assisted the sponsoring Senate office in writing the original text, and the CBI’s name was included as a reference point for the number of jobs supported in the United States by British companies.
The resolution passed the Senate via unanimous consent. While the text is not legally binding and cannot compel the President to change behavior, it shows how a large bipartisan group of Senators remain supportive of the US concluding a comprehensive FTA with the UK.
The CBI continues to engage with Congressional staff behind the scenes from its office in Washington. Read a full copy of the text.
Latin America podcast series
Over the past few months, the CBI Washington office has partnered with its network in the Latin American business and government community to launch a podcast series on trade and investment opportunities for UK firms in Latin America. Produced exclusively for CBI members, this series looks to educate and inform members about how they can take advantage of the enormous potential that these markets present in the 21st century economy. Listen to the first series.
The team has also recorded and is launching two additional podcasts on opportunities for UK investment in infrastructure and advanced manufacturing in Latin America. They will be available through CBI media and podcast channels soon.