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April 6, 2020

Monthly trade programme roundup – March 2020

The latest monthly round-up of updates to key free trade agreements and trade preference programmes involving the United States, the European Union and Canada covers developments in March 2020.

The latest monthly round-up of updates to key free trade agreements and trade preference programmes involving the United States, the European Union and Canada covers developments in March 2020.

UNITED STATES

US-Kenya Free Trade Agreement On 17 March 2020, the Trump administration officially notified Congress of its intention to negotiate a free trade agreement with Kenya, aiming to both deepen the economic ties between the two countries and complement Africa’s regional economic integration efforts. The Office of the US Trade Representative (USTR) will publish objectives at least 30 days before trade negotiations begin.

In 2019, the US imported US$453m apparel from Kenya (or 0.5% of total US apparel imports). While being a relatively minor apparel supplier to the US market, Kenya accounts for around one-third of the total US apparel imports from sub-Saharan Africa.

US-China Section 301 Tariff Action Update In March 2020, the Office of US Trade Representative (USTR) announced additional Tranche 3 and some Tranche 4A products to be excluded from US Section 301 tariff actions against China. The exclusion covers several textile and apparel products for medical use (HS Chapters 50-63).

Effective from 1 September 2019 to 1 September 2020:

Effective from 24 September 2018 to 7 August 2020:

Deferred US tariff payment NOT Confirmed According to some media reports, the Trump administration is considering postponing tariff payments on some imported goods for 90 days to ease the financial burden on US companies struggling with the Covid-19 pandemic. It is not clear which tariffs the deferral might apply to – or if the deferral will be approved at all. When addressing the Coronavirus Task Force daily press briefing on 1 April 2020, President Trump indicated he had not approved the deferral “I didn’t – I didn’t do anything about tariff payments. I don’t know who’s talking about tariff payments. They keep talking about tariff payments. And we haven’t done that.  China is paying us…”

EUROPEAN UNION

EU-Vietnam Free Trade Agreement (EVFTA) On 30 March 2020, the EU Council officially approved the EU-Vietnam Free Trade Agreement (FTA). Once the Vietnamese National Assembly has also ratified the FTA, the agreement can enter into force – most likely in early summer 2020. Vietnam is a major apparel supplier to the EU. In 2018, EU members (including the UK) imported US$3.9bn apparel from Vietnam, accounting for around 4% of the EU’s total apparel imports that year.

CANADA

US-Mexico-Canada Free Trade Agreement (USMCA) On 13 March 2020, the Canadian Parliament officially approved the United States-Mexico-Canada Agreement (USMCA or NAFTA2.0). This means all the three USMCA parties have now approved the agreement through their respective domestic legislation processes. Once all parties have the necessary legal and regulatory measures in place to meet their USMCA commitments, the agreement will enter into force “on the first day of the third month following the last notification.” This means USMCA could enter into force and replace NAFTA as early as 1 June 2020.

However, due to the outbreak of Covid-19, it is unclear when USMCA will begin. In late March, 19 US senators urged the Trump administration to push back the planned start date for the new trade pact, saying the short lead time would add to pressures on US companies already struggling hard with the pandemic.

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