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FILE PHOTO: Brazilian president Lula da Silva hugging Ursula von der Leyen the President of the European Commission at the 3rd EU-CELAC Summit in Brussels, Belgium on 17 July 2023.
EU and Mercosur near trade deal (at last)
It has been a long four years since the free trade deal between Brussels and Latin America’s largest trade bloc was agreed in principle, but all sides now, finally, look close to signing on the dotted line.
European Commission President Ursula Von der Leyen and Brazilian President Luiz Inácio Lula da Silva plan to meet on the sidelines of the COP28 summit in Dubai to push through the final hurdles. If all goes well, the European Commission’s vice president for trade may attend the Mercosur summit in Rio de Janeiro on December 7 and bring an early Christmas present home for EU exporters.
The deal would create an integrated market of over 780 million consumers, one of the largest in the world. The European Commission estimates it will save over $4.4 billion in tariffs alone, and give Europe better access to minerals crucial for renewable energy applications. Farmers in Mercosur countries meanwhile – that’s Brazil, Argentina, Paraguay, and Uruguay, with Venezuela suspended, and Bolivia joining soon – are expected to get a nice boost, too, especially for their exports of beef, coffee, and soybeans to the EU.
So what’s the holdup? Environmental concerns, mostly. Some European member states have pushed for stricter external monitoring and protections against Amazon deforestation than Brasilia can stomach.That said, Lula has signaled he is ready to compromise in order to make good on his earlier pledges to revitalize Mercosur as a formidable trade power.
And Brussels has its own reasons to be flexible: after failing to land big potential deals with India and Australia, a third major trade failure could pose problems for the centrist coalition presently in charge as it tries to fend off surging right-wing challengers in upcoming EU parliamentary elections.
The effort could still fall short, but Eurasia Group expert Julia Thomson says all sides are aware the moment of opportunity is ephemeral.
“Even if they can't get everything they're expecting,” she says, “negotiators will try to advance the deal.”
But if they don’t, she warns, “it will probably go back into the fridge and take ages to be rediscussed.”
The World Trade Organization headquarters in Geneva.
Viewpoint: US reversal on e-commerce rules will hurt global consumers
What are data flows and why are they important?
Technology firms gather a lot of information on our daily online activities such as whether we like a Facebook post, someone else likes our Facebook post, or how much time we spend browsing websites for a new pair of shoes. They use that information to improve their services, to give us recommended posts or websites based on our preferences.
The internet is designed as a seamless web, so your data can flow around the world. So a US or Chinese internet company with operations in Vietnam, Cambodia, and Thailand might choose to have a single data center for Southeast Asia in one of those countries that collects data from all three. That is the most cost-effective and secure set-up.
However, there has been a trend, especially among developing countries, to establish so-called data localization requirements that prohibit the transfer of their citizens’ data to another country.
Why is that?
There are multiple arguments given, but I think the main driver is economic. Countries increasingly see data as a new resource to exploit. They believe that a data center set up within their borders will be a source of new jobs and investment.
But they often dress up the requirements as being about law enforcement or national security, saying that if law enforcement needs access to their citizens’ data, it needs to be close by for easy access, which technically is not really the case.
How do restrictions on data flows affect companies and consumers?
Data localization rules can function as a type of trade barrier. Smaller companies might not be able to afford the investment of building a data center in a new market. Even larger companies might decide it doesn’t make economic sense to do so and decide to steer clear of a market with that requirement.
Ultimately, the consumer and digital inclusiveness will suffer. The classic example is the consumer in Africa, where people have come to rely on phone-based payment services. So if a small country in Africa imposes a data localization requirement, Apple Pay and other providers might opt to suspend operations there, depriving users of their services.
Why did the USTR reverse its position on this issue?
It's purely political. Lawmakers such as Sen. Elizabeth Warren (D-MA) who have been advocating tougher regulation on big technology firms have been pressing USTR to abandon attempts to enshrine protections for e-commerce in international trade agreements. They argue that making binding commitments to foreign governments limits the space for domestic policy debate on big tech.
Similarly, labor groups and associations of domestically focused manufacturers such as the Coalition for a Prosperous America have opposed US attempts to push for free data flows because they fear that whatever foreign governments ask for in return may hurt workers and companies in the US.
What has been the reaction to this move by USTR?
Anti-trade US lawmakers and advocates are obviously very happy. Warren responded by saying that USTR had rejected the efforts by big tech lobbyists to use trade deals to thwart regulation.
But the reversal of a longstanding US position came as a shock to other members of Congress, the US business community, and several countries that have been key US partners on digital trade priorities. A long list of tech and non-tech business groups issued statements and sent letters condemning the action.
So, what happens next?
The e-commerce discussions track at the WTO will continue but is not likely to achieve much, at least in the near term. The US reversal on data flows will probably affect the positions of other countries, including some that had moved away from data localization requirements. India, for example, recently significantly revised its policies to allow most data to freely transfer across borders. In the aftermath of the US reversal, reports in Indian media suggested India might follow suit.
Meanwhile, US protests over the USTR move prompted the White House to convene an interagency process with the National Security Council, State Department, and Commerce Department to discuss the issue. USTR is coming under some pressure to change its position on data flows at the WTO, or at least moderate it, but it’s not clear whether that’s really possible. Consultations may continue for some time and fail to reach any conclusion.
Edited by Jonathan House, senior editor at Eurasia Group.
How bananas demonstrate globalization
If globalization were a fruit, it might be a banana. But while bananas are still popular, globalization not as much lately.
In recent years, part of the pushback against globalization has been led by autocrats who reject things like free trade and the liberal international order.
For them, globalization means losing control, which they don't like one bit. But the world today remains more interconnected than ever, particularly in cyberspace.
So, do they want less globalization, or rather a version that fits their narrative?
Watch the GZERO World episode: The politics of resentment & how authoritarian strongmen gain power.
The Graphic Truth: Land borders crucial to trade
Hundreds of Canadian truckers angry about vaccine mandates have paralyzed Ottawa, the capital, for more than a week. They’ve blocked roads, honked their horns, and called for Trudeau’s resignation. Now, they have obstructed access to the Ambassador Bridge — a crucial artery connecting Detroit, Michigan, to Windsor, Ontario, that accommodates the transfer of more than a quarter of US-Canada annual trade worth a whopping $137 billion. Here’s a look of how this route compares with a few other major land trade routes.
GZERO Exclusive: Trudeau Defends Free Trade, Immigration and His Credibility Amidst Scandals
As his reelection campaign reels in the wake of recently surfaced blackface and brownface images, Canada's Prime Minister Justin Trudeau provided an exclusive response to GZERO Media's Ian Bremmer, host of the weekly foreign affairs program GZERO World.
In an email exchange transcribed below, PM Trudeau addressed the credibility gap the pictures and video from his past have created.
Ian Bremmer:How seriously can anyone take your passionate speeches on respect for diversity after seeing these images?
PM Justin Trudeau: Actions speak louder than words. I know that my actions in the past have been hurtful to people, and for that I'm deeply sorry. Our government has acted to fight discrimination and racism consistently over our first term, and if we earn the right to govern Canada again, we'll move forward to fight racism and discrimination in our next term.
Ian Bremmer:Can you remain credible on multiculturalism in Canada in light of this?
PM Justin Trudeau: That's for Canadians to judge. I will be spending the next few weeks working hard to earn their trust.
The exchange came following a new and wide-ranging interview Bremmer conducted in Canada's capital, Ottawa. As Canada approaches election day on October 21, the race is extremely close. His opponent, Conservative Party leader Andrew Scheer, has capitalized on scandals and the diminishing popularity of some of Trudeau's signature policies—on immigration, trade, and the economy.
The complete, exclusive interview is featured on the next episode of GZERO World with Ian Bremmer, which airs nationwide on public television beginning this Friday, September 27. Their conversation is also the basis of the latest Time magazine international cover story, written by Ian Bremmer, about Trudeau's battle to defend his globalist agenda as populism rises abroad.
As poll numbers suggest Canadians are increasingly disenchanted with Trudeau's approach to the global refugee crisis, the Canadian leader stood firm in his assertion that a more diverse population will make his nation stronger. Trudeau also delivered pointed criticism of the current economic policies of U.S. President Donald Trump, calling them unsustainable.
"Inequality continues to grow everywhere around the world," he said. "But it's growing less in Canada than it is in the U.S., and that is because we made a decision to say, 'trickle down doesn't work.'"
GZERO WORLD with Ian Bremmer airs nationwide on public television Fridays beginning at 11 a.m. ET. Check local listings. The interview will also be published in full on gzeromedia.com on Monday, September 30, at 10 a.m. ET.