Trade Secrets makes its predictions for 2020


FT premium subscribers can click here to receive Trade Secrets by emailHappy new year and all that. Now, where we were? Ah yes, indefinite global trade tension and Brexit.Making predictions is the done thing around this time of year, and we’re not unknown for sticking our necks out. So in today’s newsletter we give you ours (or at least this particular writer’s) for events in the trade world.We plead in mitigation that predicting trade politics, particularly the timing of events, is difficult at the best of times given the interminable bureaucratic processes involved. And these days we have Donald Trump and Boris Johnson, possessing respectively no consistent decision-making criteria at all and a genius for unacknowledged U-turns. Also, Iran. Sometimes it feels like you might as well be betting on raindrops running down a window. Be kind to us if some of these forecasts turn out wrong. Our chart of the day looks at something which definitely did happen, namely the slump in trade between South Korea and Japan last year.Don’t forget to click here if you’d like to receive Trade Secrets every Monday to Thursday. And we want to hear from you. Send any thoughts to, or email me at here’s what’s comingUS-China

Arguments will continue about exactly how many tonnes of US soyabeans China is buying © AP
The first phase of the US-China mini-deal will be signed — on January 15, according to Trump — but there won’t be another substantive one this year. Even the first one will lead to continual grumbling about exactly how many tonnes of soyabeans China is buying. Goods tariffs between the two countries won’t end the year higher than they are now, but those implemented since Trump became president in 2017 won’t be eliminated either.Despite the huge importance of November’s US presidential election, trade itself won’t play a big role in the campaign. The Democratic candidate will aim to neutralise the issue by tough rhetoric against trade deals in general and Beijing in particular, though not explicitly promising higher tariffs towards China than under Trump.US-EU

US president Donald Trump will not impose tariffs on car imports from Europe © EPA
US relations with the EU will take a turn for the worse, but not disastrously. Trump will not impose car tariffs on imports from Europe. After the World Trade Organization issues its ruling against Airbus over the summer, Washington and Brussels will start talks on resolving the issue, but these won’t get done quickly and the EU will introduce tariffs in the meantime. The US will take some kind of action over the digital services tax, and the EU will start a WTO case.EU-China

The German city of Leipzig will host the EU-China summit in September © Mellimage |
The EU’s relationship with China will be much less combative than US-China and EU-US relations, but not particularly fruitful. Brussels and Beijing will continue to talk quietly about reform of the WTO, but those discussions will produce little of substance.The bilateral investment treaty being negotiated between the two countries will miss its 2020 deadline, at least in any meaningful state. The main sticking point will be designing a mechanism to hold China to its promises.The big EU-China Leipzig conference in September will be a stalemate on the trade front, with noticeable divisions between the more China-sceptic western and northern European member states and the eastern and southern “17+1” grouping. The European Commission’s attempts to impose collective EU policies on 5G procurement, foreign investment and procurement with China in mind will make little progress.EU and others

Disputes about deforestation in the Amazon will contribute to lack of progress over the EU-Mercosur trade deal © Reuters
With environmental and specifically Amazonian deforestation considerations unresolved, ratification of the EU-Mercosur trade deal will be stalled indefinitely. The bilateral deal with New Zealand will progress quickly and will be nearly or totally agreed by the end of the year. The EU-Australia agreement will be slower: it will become tangled up in arguments over beef quotas and a similar (though less dramatic) overlay of climate change concerns. Tensions between different commission directorates over practicalities and legality mean that hopes for introducing a multi-sector carbon border tax by 2021 will start to look shaky.UK

UK prime minister Boris Johnson will seek to camouflage retreat on Brexit as victory © Kay Nietfeld/dpa
On Brexit, UK prime minister Boris Johnson will find a way (one suggested by an FT colleague here) of de facto extending the transition period rather than having the UK drop into a bare-bones bilateral trade deal by year-end, and will seek to camouflage this retreat as victory. There will be talks and possibly completion of a UK-US bilateral deal covering essentially minor technical measures that could be implemented by the White House without reference to Congress, such as regulatory co-operation. In both cases, the newsrooms of Britain will be rent by arguments between political journalists repeating the Downing Street spin that this is a huge success and economics/trade reporters correctly pointing out they are mediocre outcomes for the UK reflecting a position of weakness.World Trade Organization

By the end of the year, at least a dozen countries will have signed up to an alternative version of the WTO appellate body © AFP
The WTO appellate body crisis will not be resolved, as the US will continue to block judge appointments. By the end of the year, at least a dozen countries will have signed up to the EU-inspired alternative version. The US-EU-Japan paper aiming to reform WTO rules on industrial subsidies will in effect be vetoed by China if it is actually presented to WTO members.The most that the June WTO ministerial in Kazakhstan will produce is an outline agreement on reform of fisheries subsidies. A strong European candidate to be the new director-general of the WTO will emerge ahead of the incumbent Roberto Azevêdo retiring in 2021, but US opposition will mean an African nominee will be the favourite by December 31.And that’s it. Of course, the huge event for trade policy this year will be the US election. Since we’re not politicos we’ll resist making predictions about the outcome of the electoral college. One thing is clear, though. Another term of Trump and powers such as the EU and China, which have been seeking to stall major trade conflict, will start taking a much more confrontational line. But that’s a question for 2021.Charted watersJapanese prime minister Shinzo Abe met Moon Jae-in, South Korea’s president, on December 24 for the first talks between the two in 15 months amid a continuing political and economic dispute that had a significant effect on trade between the two Asian nations last year.Don’t missBoris Johnson will seek to fast-track EU trade talks, as fears mount of another Brexit cliff edge at the end of the year.Read moreFrance has warned the US against digital tax retaliation, as the French finance minister says the EU is likely to respond in kind to aggressive trade sanctions.Read moreUncertainty surrounding the US-China trade war remains the biggest challenge facing the global economy in 2020, according to investment chiefs at the world’s largest fund managers.Read moreTokyo talkThe best trade stories from the Nikkei Asian ReviewFrom Beyond Meat to Fuji Oil Holdings: Asian fast-food chains and food processing companies are looking to tap a regional meat substitute market that is expected to hit $15.8bn in 2020. Read moreAnalysts forecast a boon for semiconductor and components makers as south-east Asian governments and telecoms players plan 5G rollouts in 2020.Read more


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