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Trade

Ramifications of Australia’s China travel ban

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A person wearing a face mask stands on Swanston Street after cases of the coronavirus were confirmed in Melbourne, Victoria, Australia, 29 January, 2020 (Photo: Reuters/Kelly).

Author: Bryan Mercurio, CUHK

The novel coronavirus is spreading rapidly through China and remains a global threat to health. Over 75,000 people have contracted the virus and over 2000 have died. Models estimate hundreds of thousands of cases, with the actual number of fatalities likely also significantly higher.

Australia closed its borders on 1 February, denying entry to all travellers who had been in or transited through China within 14 days of arrival in Australia ‘to ensure the health, safety and well-being of the Australian community’. Australian citizens, permanent residents and their immediate family members are exempt from the ban but still subject to heightened security measures. Australia has not implemented any additional border and biosecurity restrictions on imported cargo as there is minimal risk of disease transmission via cargo.

The merits of imposing a travel ban are debatable. But there is no legal ground for China to challenge the ban under World Trade Organization (WTO) rules or the China–Australia Free Trade Agreement (ChAFTA). Still, its economic and political implications may be significant.

The international trade regime primarily applies to goods and services but does not guarantee the free movement of persons. The WTO does not prohibit Australia from banning foreign travellers. But the WTO would become relevant if Australia restricted entry of goods from China. Several air couriers and shipping vessels are avoiding Chinese ports in fear of being denied entry elsewhere. If the virus is not quickly contained, countries may start prohibiting Chinese imports.

A blanket ban on Chinese goods would be inconsistent with Article XI of the General Agreement on Tariffs and Trade (GATT). But it would likely be deemed a justifiable departure from the rules prohibiting import restraints under the general exceptions clause contained in Article XX of the GATT as a measure ‘necessary to protect human, animal or plant life or health’. Or it may be justified under Article XXI as a measure ‘necessary for the protection of essential security interests’ taken in time of an ‘emergency in international relations’.

The WTO’s Sanitary and Phytosanitary (SPS) Agreement would also be relevant as it covers food safety, plant and animal health. Article 2 of the SPS Agreement grants members ‘the right to take sanitary and phytosanitary measures necessary for the protection of human, animal or plant life or health’. Such measures must only be applied to the extent necessary to protect human, animal or plant life or health based on scientific principles and sufficient scientific evidence. But with limited scientific evidence on the coronavirus, it may be difficult to fit a ban within the scope of Article 2 of the SPS Agreement. Australia could possibly, however, prevail under Article 5(7) of the SPS Agreement, which is the embodiment of the precautionary principle.

The ChAFTA would likewise not prohibit Australia’s border measures as it contains many of the same obligations and exceptions as the WTO. While the ChAFTA contains a chapter on the ‘Movement of Natural Persons’ outlining procedural obligations of the parties related to immigration formalities, there is nothing that guarantees immigration clearance. Article 10.1(3) makes clear that ‘nothing in this Agreement shall prevent a Party from applying measures to regulate the entry or temporary stay of natural persons of the other Party in its territory, including measures necessary to protect the integrity of its territory and to ensure the orderly movement of natural persons across its borders’.

There is little that China can do legally to force Australia to reconsider its policy and remove the travel ban. But China is unhappy with the measures and may take retaliatory action.

Trade with China will also be affected. With no incoming flights, goods normally transported in the cargo hold will not enter Australia. There may also be issues with sea transport as ships departing China on or after 1 February will not be allowed to enter port until 14 days have elapsed. Australian importers may experience issues and products may be delayed in reaching shelves. The lockdown of industrial China is also causing interruptions as factories are yet to resume full production following the Lunar New Year.

The larger economic impact may be felt in the services industry. China is the largest source of foreign visitors to Australia, with over 1.4 million arriving each year, spending over while in the country. The retail, hotel, and food and…

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Trade

Fixing fragmentation in the settlement of international trade disputes

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Fragmentation in global trade due to the lack of development in multilateral trade rules at the WTO has led to an increase in FTAs. The Appellate Body impasse has further exacerbated fragmentation, requiring a multilateral approach for reform.

Fragmentation in Global Trade

Fragmentation in global trade is not new. With the slow development of multilateral trade rules at the World Trade Organization (WTO), governments have turned to free trade agreements (FTAs). As of 2023, almost 600 bilateral and regional trade agreements have been notified to the WTO, leading to growing fragmentation in trade rules, business activities, and international relations. But until recently, trade dispute settlements have predominantly remained within the WTO.

Challenges with WTO Dispute Settlement

The demise of the Appellate Body increased fragmentation in both the interpretation and enforcement of trade law. A small number of WTO Members created the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) as a temporary solution, but in its current form, it cannot properly address fragmentation. Since its creation in 2020, the MPIA has only attracted 26 parties, and its rulings have not been consistent with previous decisions made by the Appellate Body, rendering WTO case law increasingly fragmented.

The Path Forward for Global Trade

Maintaining the integrity and predictability of the global trading system while reducing fragmentation requires restoring the WTO’s authority. At the 12th WTO Ministerial Conference in 2022, governments agreed to re-establish a functional dispute settlement system by 2024. Reaching a consensus will be difficult, and negotiations will take time. A critical mass-based, open plurilateral approach provides a viable alternative way to reform the appellate mechanism, as WTO Members are committed to reforming the dispute settlement system.

Source : Fixing fragmentation in the settlement of international trade disputes

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WTO ministerial trading in low expectations and high stakes

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The WTO’s 13th Ministerial Conference is set to focus on e-commerce transparency, investment facilitation, and admitting new members. However, progress may be hindered by disputes, especially regarding fisheries subsidies.

The World Trade Organisation’s 13th Ministerial Conference

The World Trade Organisation’s (WTO) 13th Ministerial Conference is set to take place in Abu Dhabi on 26–29 February, with expectations of deals on electronic commerce transparency, investment facilitation for development, and the admission of Timor Leste and the Comoros as WTO members. Despite these positive developments, the expectations are relatively modest compared to promises made at the 12th Ministerial Conference, which included addressing fisheries subsidies and restoring a fully functioning dispute settlement mechanism by 2024.

Challenges in Dispute Settlement and Agricultural Trade Reform

However, challenges remain, especially in the deadlock of dispute settlement since December 2019 due to a US veto on the appointment of Appellate Body judges. Progress in restoring the dispute settlement mechanism has stalled, and discord continues regarding India’s grain stockholding policy as a potential illegal subsidy. Restoring a fully functioning dispute settlement mechanism hinges on addressing US concerns about perceived bias against trade remedies in relation to China’s state subsidies.

Geopolitical Tensions and the Future of Trade Relations

The likelihood of reaching agreements amid geopolitical tensions between Western democracies and China appears slim, with issues surrounding subsidies and global supply chains causing rifts in trade relations. As nations focus on self-reliance within the global value chain, opportunities for trading face obstacles. Advocacy for open markets and addressing protectionist sentiments remains crucial for fostering resilience to external shocks and promoting economic growth.

Source : WTO ministerial trading in low expectations and high stakes

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Getting Vietnam’s economic growth back on track

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Vietnam’s economy grew 8% in 2022 but slowed in 2023 due to falling exports and delays in public investments. The economy’s future depends on structural reforms and reducing dependency on foreign investment.

Vietnam’s Economic Roller Coaster

After emerging from COVID-19 with an 8 per cent annual growth rate, Vietnam’s economy took a downturn in the first half of 2023. The drop was attributed to falling exports due to monetary tightening in developed countries and a slow post-pandemic recovery in China.

Trade Performance and Monetary Policy

Exports were down 12 per cent on-year, with the industrial production index showing negative growth early in 2023 but ended with an increase of approximately 1 per cent for the year. Monetary policy was loosened throughout the year, with bank credit growing by 13.5 per cent overall and 1.7 per cent in the last 20 days of 2023.

Challenges and Prospects

Vietnam’s economy suffered from delayed public investments, electricity shortages, and a declining domestic private sector in the last two years. Looking ahead to 2024, economic growth is expected to be in the range of 5.5–6 per cent, but the country faces uncertainties due to geopolitical tensions and global economic conditions.

Source : Getting Vietnam’s economic growth back on track

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