Commercial Awareness Update – W/C 16th November 2020

The round-up of the stories that a budding Student Lawyer should be aware of this week. Sign up here to get these updates in your inbox every week.

‘Making America Great Again’

Article by Andrew Dewey (Second Year LLB student at Reading University)

Joe Biden is the new President-elect of the United States of America and it can be said that this election will go down in the history books. This article outline what the future looks like for Joe Biden.

The US election is based on a system of electoral college. Across the 50 States, as well as Washington DC, a number of electoral votes are issued. This number is 538. Therefore, in order to secure the position in the White House, a candidate must win 270 of these votes. At the time of writing this article, Joe Biden has won 290 of the electoral votes.

However, a President can face problems despite being victorious in the election. In order to pass policies through Congress without objection, President’s party should have control of the House of Representatives (the House) and the Senate. As it stands, Biden has control of the House, but Trump currently maintains control of the Senate with a scoring of 50 votes to Biden’s 48. Thus, unless Biden can secure three more votes, his time in office will have its difficulties.

It can be said that Trump has not gone down without a fight. Trump has issued legal proceedings in at least 5 States on the grounds of fraud and ‘rigged’ elections, but these claims are currently unsubstantiated. Further, despite his vowel to take his claims to the US Supreme Court, this is not as easy as the President claims.

In order to have an election recount order by the Supreme Court, as democrat Al Gore attempted in 2000, the initial claim must be filed before a State Judge. It is only when the Judge is satisfied on the evidence that there are sufficient grounds to order a recount that the Supreme Court will intervene to weigh in the decision. To make the process harder for Trump, the claims being made must also have clear constitutional concerns. It has been announced by members of the US legal profession that Trump is facing an uphill task in his claims although it is predicted that he will be running again in 2024.

Once Trump’s term of office is completed on 20^th January 2021, the US will be under new direction. However, this is not the case on all matters. For example, Joe Biden’s “Buy America” mirrors Trump’s policy of “America First” so it appears that America will continue to increase US foreign employment whilst remaining cautious of China’s ambitions and business activity.

Biden will also continue to maintain the global dominance of America, although this will differ to the methods adopted by Trump. It can be seen under Trump that he favoured a more independent approach to America’s future. On the other hand, Biden has made it clear he is willing to rebuild and maintain relationships with America’s closest allies. This will also see the US re-joining the WHO, the Paris Environment Agreement and building stronger relations with the EU. From a UK perspective, the President-elect does not appear to be in much of a hurry to reach any trade agreements and it will be interesting to see the future of the “Special Relationship” since Biden has been so against Brexit.

The Regional Comprehensive Economic Partnership: One of the largest trade deals in history 

Article by Shreya Dristi (2nd yr LLB student at Durham University)

One of the largest trade deals in history has been signed on the 15^th of November 2020. The Regional Comprehensive Economic Partnership (RCEP) consists of ten Southeast Asian countries of the Association of Southeast Asian Nations — Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam — as well as Australia, China, Japan, New Zealand and South Korea. In essence, the RCEP converts the existing trade agreements with the group of Southeast Asian countries and merges them with agreements with the five other nations to form a large Asia Pacific multilateral pact which covers a third of the world’s population. “Its membership includes a larger group of nations, notably reflecting the membership of China, which considerably boosts the total Gross Domestic Product (GDP) of RCEP members,” according to Rajiv Biswas, Asia Pacific chief economist for analyst firm IHS Markit.

Commentators view this deal as a significant step towards turning Asia into a coherent trade bloc similar to the EU and North America. The RCEP is expected to eradicate a variety of tariffs on imports within 20 years. It also includes provisions and chapters on intellectual property, telecommunications, financial services, e-commerce and professional services as well as customs administration, sanitary measures, services and investment. This pact is important because of the need for economic collaboration due to the devastating effects of the pandemic. “Under the current global circumstances, the fact the RCEP has been signed after eight years of negotiations brings a ray of light and hope amid the clouds,” as stated by Chinese Premier Li Keqiang. Mr Li described the agreement as “a victory of multilateralism and free trade”.

A significant part of the deal is the change in the “rules of origin”. Now, “[w]hen you manufacture a product for RCEP it works for all 15 countries. And there’s only one piece of paper that you need,” said Deborah Elms, executive director of the Asian Trade Centre consultancy in Singapore. However, when comparing this pact with the Trans Pacific Partnership (TPP), the tariff reduction are not as impressive because with the RCEP, 90% of tariffs are removed compared with almost 100% in TPP. Additionally, the 15 countries were unable to reach a consensus on any rules about cross-border data flows or a customs moratorium on data transmission. Furthermore, a disappointment is the fact that India is not a part of the RCEP. It was initially part of the negotiations, but later withdrew due to concerns of lower tariffs affecting local producers and businesses. As a huge economy, Indian participation could have led to a drastic increase in commerce, but the country’s main fear is that local manufacturers would be adversely affected by Chinese competition if protectionist policies towards China are abandoned. On the bright side, there is a clause in the deal which allows for a door to remain open for India to join in the future. Additionally, this deal is bespoke and viewed as a blessing for many during this age of economic uncertainty. According to Prof Petri and Michael Plummer, a professor of international economics at Johns Hopkins University, RCEP will add an estimated amount of $186bn to the size of the global economy and 0.2 per cent to the gross domestic product of its members.

India’s fears are reflected in the views of commentators who also view the RCEP as an expansion of China’s influence over the region. China’s influence is expected to extend further in light of the USA’s declining Asia Pacific presence considering them pulling out of the Trans-Pacific Partnership shortly after President Trump took office. However, with President Biden in office, we are yet to see is the USA will make a rival comeback in the Asia Pacific Region. Additionally, this deal makes history as it is the first instance of a free trade deal between China, Japan and South Korea. This is a positive step forwards for these countries and may lead to a China-Japan-South Korea Free Trade Agreement which could significantly boost global commerce considering the strengths of the manufacturing and technological abilities of these countries.

The European Union and The United Kingdom: Deal Struck?

Article by Francis Louis (1st yr LLB student at a London university)

In the coming weeks, the negotiation between these two institutions will be under the spotlight; the UK has threatened to exit the EU without a deal on the 31^st of December 2020 if the deal doesn’t favour the UK. However, many Members of Parliament (MPs) in the Commons aren’t inclined to go by it; Boris Johnson—the Prime Minister—is facing a political uphill to get a deal secured between the EU.

What will a no-deal means for these institutions? Firstly, the UK will default to WTO terms from 1 January 2021. Hence, the UK would have to apply tariff and quotas to goods coming into the country from the EU, and the EU would apply its “third-country” tariff and quotas to the UK. Significantly, the EU would begin imposing border checks on UK products from 1 January, even if the UK hadn’t changed any of its rules and regulations. With that, the UK government admitted it expects massive border queues and delays for six months or longer in the UK if it leaves without securing a deal. Lastly, the UK exports half (46%) of its goods to the rest of the European Union, making it by far the largest UK export market. Taking that into account, the tariff, if imposed, would deal a huge financial blow to the UK. Thus, the UK will strive to get a deal by the end of the year.

However, whether a deal will be struck is unsure, but it is arguable that it’s in the UK’s best interest to get a deal.