The UK and Taiwan Continue Push for Trade Growth With Recent Policy Changes

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Published Jun 2, 2023

As the first half of 2023 concludes, policy changes and trade agreements have dominated industry headlines. However, two recent deals that stand out are the US-Taiwan trade agreement and the UK's accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The significance of the 21st Century Trade Initiative is emphasised by the fact that Taiwan is the US's 6th largest market, and, therefore, a key destination for the country's soybeans, beef, wheat, and poultry. This UK's accession into the CPTPP means that more than 99% of the goods, like chocolate and whiskey, exported from the UK to member countries will now be eligible for zero tariffs. In 2022,

As the first half of 2023 concludes, policy changes and trade agreements have dominated industry headlines: the recent two-month extension of the Black Sea Grain Initiative, India's sugar export ban, and EU members restricting the import of Ukrainian grain to consolidate local markets. However, two recent deals that stand out are the US-Taiwan trade agreement and the UK's accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Historically, Taiwan has been dependent on trade with mainland China but the island's strained relationship with Beijing has led to trade bans and restrictions that impacted Taiwan's food security. Consequently, Taiwan sought to solidify its relationship with other industry players, such as the US, to lessen its dependence on China. Resulting from this is the 21st Century Trade Initiative, an agreement penned by Taiwan and the US to improve trade relations. The initial stages of the deal were agreed on May 19, covering customs and border procedures and regulatory practices, according to Taiwan's Office of Trade Negotiations. The deal is expected to reduce red tape for American suppliers seeking to export goods to Taiwan by allowing electronic filing of customs forms and online payment of duties and fees, thereby cutting vessel waiting times. It is expected that this deal would open the door for more US exports to Taiwan.

The significance of the trade deal is emphasised by the fact that Taiwan is the US's 6th largest market, and, therefore, a key destination for the country's soybeans, beef, wheat, and poultry. In 2022, US exports of food and agricultural products to China totaled a record USD 4.4 billion, 13% more than the previous year, surpassing the previous record of USD 4.1 billion in 2018. US soybean exports to Taiwan rose to a record USD 1.1 billion, a 50.3% YoY increase, surpassing the previous record of USD 854 million in 2018 amid the US-China trade war. Soybean export growth was driven by strong demand and low production output from competitors in South America. US Beef exports to Taiwan also rose by 13% YoY to a record USD 747 million, wheat exports grew by 24% YoY to a decade high of USD 379 million, and poultry exports totaled USD 287 million, a 74% increase compared to 2021 and the highest on record.

Source: Tridge, USDA

Similar trade growth is expected in the UK, as the country continues to work on cementing relationships with industry players through trade agreements, a trend that has persisted since Brexit. One such deal involves Britain's accession into the CPTPP, an FTA between 11 countries (Australia, Canada, Japan, Mexico, New Zealand, Singapore, Brunei Darussalam, Chile, Malaysia, Peru, and Vietnam). On March 30, the UK became the first new member since the creation of the CPTPP in 2018 and the first European country in the bloc. This move means that more than 99% of the goods, like chocolate and whiskey, exported from the UK to member countries will now be eligible for zero tariffs. In 2022, British exports to member countries totaled USD 74.8 billion, a figure expected to increase significantly following the UK's initiation into the trade bloc.

London also penned a trade agreement with Singapore in 2022 and is in talks with Canada and India. The UK recently concluded the fifth round of bilateral negotiations with Canada. The deal with India is more advanced, currently in its eighth round of talks, with more than half of the policy areas agreed upon. Additionally, the bilateral agreements between the UK, Australia, and New Zealand are expected to come into effect at the end of May, allowing the removal of all tariffs on UK exports to Australia and New Zealand. As leading global sheep and beef producers, exporters from Australia and New Zealand will relish shipping their products to the UK, void of tariffs.

Source: Tridge

As the year progresses, the UK will seek to consolidate further treaties with key global players to strengthen its position. Despite the strides made by the UK to improve trade relations, it remains to be seen whether these ventures will compensate for the economic damage sustained by leaving the EU, the world's largest trading bloc. The case is similar with Taiwan, as the deal with the US is expected to boost trade between the two countries, thereby improving Taiwan's food security. However, it is not yet clear whether the pact could result in retaliatory trade bans from China.

For further reading, follow the links below:

1. Webinar Recap: The Impact of Trade Wars and Policy Changes on Global Agricultural Commodities

2. Recent Wheat Market Trends in Russia and Their Implications to the Global Wheat Market