US 5 Major Trade Agreements 'Squeak'... Trade Order 'Shaken' Amid Bilateral Negotiation Crisis

Moody's "US-China Phase 1 Agreement, New Obstacle... USMCA July Implementation May Be Delayed"
UK FTA Also Pushed to Backburner

[Asia Economy Reporter Naju-seok] Concerns over the US-China trade war combined with the COVID-19 pandemic are casting a shadow over bilateral trade agreements being pursued worldwide. Following difficulties in multilateral negotiations, bilateral trade talks are also facing challenges, causing significant instability in the global trade order. According to international credit rating agency Moody's on the 20th (local time), the United States is pursuing five negotiations, but the outlook remains uncertain. The US is conducting bilateral trade talks with the UK and India, has reached the USMCA agreement with Canada and Mexico, and a Phase One trade deal with China. Tariffs on steel and aluminum are also still under consideration. However, warning signs are emerging in most negotiations.

In particular, the US-China trade negotiations are facing the greatest crisis among these. Due to the economic contraction in China caused by the COVID-19 shock and the US's continuous warnings against China, it is expected that maintaining the agreement will be difficult. The Peterson Institute for International Economics, a US think tank, pointed out that based on the progress of the Phase One agreement, China's imports of US products are less than half of the target. China is supposed to import $172.7 billion (approximately 212.26 trillion KRW) worth of US products this year. If the current trend continues, China should have imported at least $40 billion by March this year, but actual imports amounted to only $19.8 billion. Imports of agricultural products, manufactured goods, and energy are also significantly below the initial targets.

Moody's stated, "COVID-19 is creating new obstacles to the implementation of the US-China Phase One trade agreement," and added, "Both sides may review the conditions for implementing the Phase One agreement."

USMCA is also facing backlash from companies regarding the core issue of automobile imports. The original agreement imposed strict rules of origin, but following the COVID-19 crisis and the deterioration of automakers' performance, companies have begun requesting a delay in the agreement's enforcement. As a result, there are forecasts that the USMCA enforcement scheduled for July 1 may be postponed.

Brexit (the United Kingdom's withdrawal from the European Union) is also clouded with uncertainty. Since the UK officially left the EU on January 31, both sides must finalize future relationship negotiations, including trade agreements, by the end of this year. However, with COVID-19 sweeping across Europe, negotiations have been deprioritized. Although talks are continuing via video conferences, there remain significant differences between the two sides. In particular, the UK has firmly stated that there will be no extension of the negotiation deadline, raising the openly discussed possibility that trade negotiations may end without an agreement.

This content was produced with the assistance of AI translation services.