By: Alexandra Kleinschmidt, Vice President Customs Brokerage and Trade Advisory
December 20, 2019
2019 has been a big year for international trade with agreements, events, and milestones that could pave the way to 2020, or leave us exactly where we are right now. We are at a point in time where we are largely depending on texts and regulations coming into fruition, as opposed to just being signed. With the increasing flow of information and news we receive as readers and viewers, let’s take a moment and recap what has happened during this year.
US / China Trade war.
An ongoing trade battle between both countries, the initial hearing started in mid-2018 with the first round of sanctions hitting in June 2018. This later resulted in the publication of four different lists, covering a wide range of products severely affecting the US importers. As of December 15, the White House announced a Phase One Agreement between China and the US, reducing List 4A’s tariffs from 15% to 7%, while also suspending list 4B. Additional exclusions were also granted on December 17 for Lists 1 and 3, covering fruits, wood products, electronics, and more.
With Boris Johnson’s victory and the date for the UK leaving the EU set for January 31, 2020, we have yet to see if Johnson’s deal will pass, which in turn will start a new relationship with the European Union. Assuming the UK does leave the EU on January 31, a transition period will go into effect until December 2020, where the UK would remain in the EU’s customs union and single market, but outside of the political realm of the European Parliament. In relation to trade, the priority here is to ensure that a trade agreement is negotiated and ratified.
The US-Mexico-Canada Free Trade Agreement was signed off between House Democrats and the White House on December 17, modernizing a 25-year old agreement to include chapters on Digital Trade, Environmental Protection, and Labor Standards. This agreement also changes content value for the auto industry to be able to claim the preferential duty rate. While the agreement has been signed off by all parties, the document still needs to be voted in by the Senate and ratified- which is expected in early 2020. Listen in to our webinar on USMCA here
Ten years have passed, and the International Chamber of Commerce released the new incoterms rules in 2019, identifying the responsibilities of trade parties in global transactions. The updated terms will be taking effect on January 1, 2020, with new changes- including a change from DAT to DPU, FCA and on-board bills of lading, increased security requirements, insurance coverage requirements, and more. You can sign up to our upcoming webinar on Incoterms® 2020 here
Overall, it has been a difficult for importers and the trade world and we have yet to see what 2020 will bring. If we get Phase One, the USMCA, and a UK-EU trade agreement ratified, we are looking at a very positive beginning of 2020 as this will help clarify things for the international community, as well as lower barriers to trade. To be continued, but we look forward to continuing working with our clients through these issues to ensure business continues as usual and help clarify any uncertainties with what is to come.