Foreword Co-Authored By Andrew Chilvers And Bob Brewer
Global Trade: Combating protectionism and the pandemic
The past 18 months were a huge shock to international trade as increasing protectionism and Covid-19 wrought havoc with all previous forecasts and economic roadmaps.
Many business analysts predicted that the double whammy of protectionism and pandemic would spell an end to globalised trade.
Indeed, if we roll back a few years many economists were already warning that international trade was tapering off even before President Trump, Brexit and the coronavirus. As older, more established economies converted to the new digital economy, less goods were being shifted around the world. This coincided with the rise of China as an economic superpower, the proliferation of international laws, regimes and treaties governing trade and the increasing interconnectedness of supply chains.
But this complex global trading pattern was also the architect of its own undoing, creating financial instability, a trade imbalance, climate change, a rise in cyberattacks and the spread of the pandemic through trade networks. These crises then reverberated across the globe, appearing in different jurisdictions and spreading across local borders.
The Trump administration’s moves to address the trade imbalance with other trading partners was a catalyst for the resulting rise in protectionism – overnight he was using tariffs as a tool. This was particularly the case with China, where supply chains were impacted as businesses had to work around the tariffs, causing supply chain diversification and huge issues around the rules of origin.
This imposition of tariffs has now forced US businesses to take on higher costs at exactly the wrong moment, ie during a global pandemic. This has also had a knock-on effect with other US trading partners such as Canada, Mexico and the EU, which are all re-evaluating their trading relations with China, particularly around the rules of origin to ensure products are not using mainly Chinese components.
What are the opportunities and challenges that face global and regional trade in your jurisdiction?
Poland has emerged as a dynamic market over the past 20 years and has become a major actor within Europe. In 2019, prior to the pandemic outbreak, Poland was the 21st economy in the world in terms of GDP, 22nd in total exports and 18th in total imports. All companies operating in Poland have equal access to international and domestic trade, but because Poland is a member of the European Union it is obliged to adhere to certain trade regulations introduced by the European Union. There are certain licensing requirements for trading in categories of goods and services applicable to military goods and technologies, certain chemicals, especially narcotic drugs, psychotropics and cultural goods.
Special arrangements are relevant to trade with certain agricultural products under the European Union’s Common Agricultural Policy including preferential tariff arrangements.
What is the impact of non-preferential rules of origin in the post-pandemic trading environment in your jurisdiction?
It should be stressed that Poland, as a member of the European Union, is also a member of the Customs Union. The EU Customs Union means there are common customs duties on imports from outside the EU, common rules of origin for products from outside the EU and no customs duties at internal borders between EU Member States.
The nationality, the value and the tariff classification of goods entering the European Union including Poland must be determined to find out if any duties, customs restrictions or special requirements are applicable. There are two different types of Rules of Origin that apply to imports: preferential and non-preferential. Reduced duty rates apply to imports from countries that have trade agreements within the EU. Preferential origin rules in these agreements are used to determine the country of origin of the imported goods. Non preferential rules apply for purposes other than preferential duty and are used to stipulate if for instance trade embargoes apply.
Predictions: what do you think global and regional trade integration will look like in your jurisdiction in five years?
Poland has, since entering the European Union, been embedded in the European integration process. This process enables Polish exporters of goods and services to be part of a market much larger than Poland.
In addition, the integration processes between Poland and the EU have started from free trade. Free trade in industrial goods with EU partners was the entrance to the European Single Market. After accession to the EU, Poland introduced free trade which included not only industrial products, but also trade in agricultural products. Furthermore, Poland has also enlarged the liberalisation process to free circulation of services, capital and people. It was obliged to abolish not only the last direct barriers to trade and migration of actors of production but also many so-called indirect barriers, like technical standards, administration rules, harmonisation of taxes, and public procurement law.
My prediction is that European integration will play a larger role shaping European and global trade markets in the future.
