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Brexit-effects on Britons in Spain

Brexit- consequences for Britons in Spain

By | International Relations | No Comments

By Josu Kelly

Effects on UK citizens

Brexit-effects-Dos AguasOrder of countries where most Britons live in EU countries. Source: BBC[1]

As it is observed in the graph, Spain is the main destination for British citizens among the countries of the EU with an estimated considerable figure of 310.000 people living in the Mediterranean country. However, the uncertainty regarding the outcome of the Brexit, has not only become the crucial concern for many of these people but has also had demographic effects on the British population in Spain, leading to a fall of 157.107 permanent British residents[2]. The main distresses of British people in Spain have to do with; free healthcare agreements and access to pensions which possibly would be abolished; nevertheless, there is a potentially vital consequence to be considered in this process- the right to remain in the country. Spain does not allow the double nationality which would mean Britons would have to renounce to the UK passport while ‘third country’ nationals must prove an annual income of 26.000€[3], which could have major effects for pensioners. Moreover, in the recently created website by the Spanish government regarding Brexit effects on citizens, it clearly warned that key companies such as Iberia or British Airways could lose their right to establish flight connections between both countries[4] making life considerably more difficult for both British and Spanish citizens.

Effects on Spanish economy

The foreign minister Josep Borell explicitly declared recently that a no-deal Brexit would be ‘a disaster for everyone’ which is not far from what the figures suggest. In an extremely compact summary; the UK is the 5th country with highest volume of investment in the country, in 2016 Spain gained a total of 18.696€ million from exports to the UK, 16.9 million British tourists visited Spain that same year, the British are the people who most houses bought in Spain accounting for 10.200 in 2016 which is the 19% of houses purchased by foreigners and in the agrarian sector the exit of the second biggest market in the Union will have effects on the Spanish farming sector[5]. The aforementioned points can have increasingly adverse outcomes due to the foreseen plummeting of the Pound or simply because of the rise of obstacles for Britons to be able to purchase abroad.

Sources:

[1] BBC. 2019. ‘Brexit: How would no deal affect UK citizens in the EU?’. Written by Peter Laurence. Last modification the 14th of January 2019. Available online (link) [Last accessed: 14.02.2019]

[2] El País. 2018. ‘El repliegue de los británicos de España’. Written by Ignacio Zafra. Last modification the 7th of March 2017. Available online (link) [Last accessed: 14.02.2019]

[3] BBC. 2019. ‘Brexit: How would no deal affect UK citizens in the EU?’. Written by Peter Laurence. Last modification the 14th of January 2019. Available online (link)

[4] El País. 2018. ‘Spanish government launches website to warn about effects of Brexit’. Written by Lucía Abellán. Last modification the 15th of January 2019. Available online (link)

[5] El Expansión. 2017. ‘Los grandes peligros del Brexit para España en diez puntos’. Written by Juanma Lamet. Last modification the 30th of March 2017.Available online (link)

América Latina-mapa-Dos Aguas Blog

China’s penetration in Latin American markets

By | International Relations | No Comments

By Josu Kelly

The shift and restructuring of the balance of power in the Latin American region has as much to do with the introverted foreign policy of Donald Trump as the Chinese reaction to pounce on this opportunity and turn into the second commercial partner of the region[1].

Despite Donald Trump’s recent insistence that the ‘America first’ is not strictly an ‘America alone’ policy, the reality is that the American president has insulted Mexico, El Salvador and Haiti discouraging investment in the region and with talks of protectionism; while offers Latin America a strategy of mutual benefit and shared gain[2] which hitherto has been portrayed in considerably less demanding loans than any IMF or American ones which makes them an attractive options for Latin American countries. Moreover, the Asian giant has also pushed for regional agreements and cooperation in addition to bilateral free trade agreements. Firstly; the Chinese government published the first official policy paper on Latin America and the Caribbean in 2008[3], it also created the China-CELAC forum in 2014 as well as resuming conversation with Mercosur after 14 years of silence[4] in their effort to enhance their influence on the region. Furthermore, China has free trade agreements with three countries of the region which are Chile, Peru and Costa Rica which were signed in 2006 the former and the other two in 2010; making their economies very dependent on Chinese investment.

In spite of this progressive shift of main commercial partner of the region, the centre-periphery pattern among countries of the former remains being identical. Governments in the region fear their countries will be condemned to the role of providing agricultural and mining raw materials[5], and rightly so, as the 73% of exportation from Latin American countries to China has been raw materials and commodities while the 91% of the Chinese exportations to the region have been manufactured products; which enables China to extract added value.

With this pattern of growing influence of China in the region, will the US be ousted out of its traditional sphere of influence by the Asian giant?

Concerning foreign trade data:

https://www.dosaguasconsulting.com/wp-content/uploads/2019/01/China-and-Latin-America.png

About the author:

Josu Mikel Kelly Iturriaga will complete his bachelor’s degree in International Relations at the University of Deusto in June 2019. While studying his degree, he developed a strong interest in international business, global commerce, and sustainability. Born in London but currently living in Bilbao, Josu is particularly interested in UK-Spain relations and trade.

Sources:

[1] El Universal (2018) ‘China se convierte en el segundo mayor socio comercial de América Latina’. Last modification the 29th of November 2018. Available online (link) [Last accessed: 28.01.2018]

[2] The Economist (2018) ‘China moves into Latin America’. Last modification the 3rd of February 2018. Available online (link) [Last accessed: 28.01.2018]

[3] Aguilera-Castillo, Andrés and Barragán, Juan. 2018. ‘China’s Policy Paper on Latin America and the Caribbean: Ten Years After’. Last modification the 5th of November 2018. Available online (link) [Last accessed: 28.01.2018]

[4] MERCOSUR (2018) ‘Diálogo MERCOSUR – China’. Last modification the 26th of October 2018.Available online (link) [Last accessed: 28.01.2018]

[5] Lafargue, Francois (2018) ‘China’s presence in Latin America’. China Perspectives. Available online (link) [Last accessed: 28.01.2018]

G20-Argentina-Plenary- Dos Aguas Post-Blog

What has been decided at the G20 summit in Argentina?

By | International Relations | No Comments

Source: G20 Summit. 2018, Argentina. Plenary

The G20 annual summit brought the world leaders together on Friday, November 31, and Saturday, December, 1 in Buenos Aires (Argentina).

The central axes of this international event were trade and climate change. One of the main challenges of the G20 Leadership Summit has been “to achieve a more consensual dialogue” on international trade when protectionism is increasing.

Before we delve into this year’s meeting, let’s find out a bit more about the G20:

Origin and background of the Group of 20

The G20 began as a forum of finance ministers and Central bank presidents, being a result of the Asian Financial crisis. Its creation dates back to September 25, 1999, at a meeting of Ministers of Finance of the G7.

2008 was an important year for this group due to the “Heads of State” met for the first time in Washington. In this summit of G20 leaders, Western countries asked for assistance to countries with emerging markets. As an example, China had a large budget and commercial surplus, and therefore could avoid the global depression.[1] Thus, it was since the Washington summit in November 2008 and, also since the Pittsburgh Summit, when the G20 became the central instrument in the design and implementation of the multilateral response to the Great Recession.[2] Moreover, since that moment, the format of the summit changed, not only with the participation of the “Heads of State”, but also with representatives from United Nations, the International Monetary Fund (IMF), the World Bank and the Financial Stability Forum.

The G20 meets once a year and works at various levels, being the highest level the G20 leaders meeting at the annual summit. In addition, regular meetings are held by the G20 finance ministers, the central bank governors, and the Sherpas (this is the denomination received by the representatives of the “Heads of State” who meet regularly for the negotiation of the agenda, the analysis of the subjects and the documents of results).[3]

As a whole, the members of the G20 represent 85% of the global gross product, two-thirds of the world population and 75 % of the international trade.[4]G-20 2018 Summit-Dos Aguas Post/BlogWhat is new in trade and investment?

The issues relating to trade and investment are addressed in the G20 Trade and Investment Working Group (TIWG), with the aim of strengthening the G20 cooperation in trade and investment. Currently, the primary objective is to find an inclusive trading system that contributes to a fair and a sustainable development.

The three new thematic areas are agri-food global value chains; the New Industrial Revolution; and the dialog of the G20 on current developments in international trade. Special emphasis is also made on the particular situation of the micro, small and medium-sized enterprises, developing countries and women.[5] 

What was decided at the Summit in Argentina?

Certain agreements and positions on trade have been reached during the Summit of the G20, as well as an agreement about the need to modernize the World Trade Organization (hereinafter referred to as WTO). Another element that was discussed was the need to invest in infrastructure that it is resistant to the effects of climate change and natural disasters. According to the final declaration titled “Building consensus for fair and sustainable development” the WTO does not meet these goals and as a consequence there is a commitment to meet them in the near future. The Declaration establishes that the International trade and investment are important engines of growth, productivity, innovation, job creation and development. We recognize the contribution that the multilateral trading system has made to that end. The system is currently falling short of its objectives and there is room for improvement. We therefore support the necessary reform of the WTO to improve its functioning”. [6]

Another element that is emphasized in the declaration is the digitalization in the trade and the economy. In fact, it consolidates the need to continue working on artificial intelligence (AI), emerging technologies and new platforms of business. From that text we would like to stress the following extract: “To maximize the benefits of digitalization and emerging technologies for innovative growth and productivity, we will promote measures to boost micro, small and medium enterprises and entrepreneurs, bridge the digital gender divide and further digital inclusion, support consumer protection, and improve digital government, digital infrastructure and measurement of the digital economy […]”.[7]

Conclusion

The Summit concluded that there is a large consensus on the idea that international trade and investment are important regarding growth, productivity, innovation, the creation of employment and development. However, commercial relations between some of the participating countries are not at their best. Lets remember here the trade wars between the United States and China, which do not facilitate international trade.

From Dos Aguas Consulting, we work to inform and offer analysis on the events of international trade that may be of your interest. We are delighted to read your comments and suggestions. Don’t forget to subscribe!

Sources:

[1] Nancy Alexander (2011) Introducción al G20, Heinrich Böll Stiftung, page: 1. Available online (link) [Last accessed: 5.12.2018]

[2] Jorge Eduardo Navarrete (2012) Los otros 12: rol de los países energentes en el G20, at Günther Maihold, El G-20 y el nuevo orden internacional, Los cuadernos de la cátedra Humboldt de El colegio de México, page: 13.

[3] Nancy Alexander (2011) Introducción al G20, Heinrich Böll Stiftung, page: 3. Available online (link) [Last accessed: 5.12.2018]

[4] G-20 (2018) What is the G-20? Available online (link) [Last accessed: 5.12.2018]

[5] G-20 (2018) Trade and Investment. Available online (link) [Last accessed: 5.12.2018]

[6] G-20 (2018) G20 Leaders’ declaration. Building consensus for fair and sustainable development, paragraph 27. Available online (link) Last accessed: 5.12.2018]

[7] G-20 (2018) G20 Leaders’ declaration. Building consensus for fair and sustainable development, paragraph 9. Available online (link) Last accessed: 5.12.2018]

Brexit- Countries affected-Dos Aguas Blog

Brexit: Which countries will be affected the most?

By | International Relations, Trade News | No Comments

A few weeks ago the team of Dos Aguas Consulting wrote a blog about the current situation of Brexit. In that article it was analyzed the possible scenarios after Brexit, as well as the resulting consequences. In this new post, it will be discussed the countries that are going to be affected the most by this new situation.

The countries that will be affected the most by potential imposition of tariffs, rates and/or other trade barriers in the United Kingdom are those that export on a large scale to the country. Thus, according to exports data from the period between 2013-2017, these will be EU countries that have been benefited by the existence of a Common Market and the absence of trade barriers. In the next table it can be seen that the countries that will suffer a greater impact are the following:

Top 10 countries with the largest shares of imports to the UK (in thousands of euros)

Exporters UK-Europe- Dos Aguas

According to the Brexit Sensitivity Index (BSI) elaborated in 2016 by the rating agency Standard & Poor’s (S&P), the most affected country will be Ireland, followed by Malta, Luxembourg, and Cyprus. The aforementioned agency has established a ranking of the 20 countries that are most affected by migratory flows, exports to the UK foreign direct investment in the UK, and the demands of the financial sector on the institutions of the UK. In the following graph, Spain is placed in eighth position in a ranking that shows the impact on the financial sector. In this same graph it can be seen that the damage on exports is not as big.

Brexit-IndexAccording to the BSI, the Spanish exposure to the exit of the United Kingdom from the EU is notable. This index stresses the idea that the financial sector and the investments of Spanish companies in the UK will be weaker in this new scenario. It is also noticeable that, according to the BSI, the exposure of the Spanish economy is higher than that of countries such as France, Germany, and Italy due to the great interest that some of the main Spanish corporations have in UK.

The Spanish case

The exposure is particularly relevant in the British financial sector through the Santander and Sabadell banks (owners of TSB), as well as to the telecommunications companies. In this way, according to data from International Financial Analysts (Analistas Financieros Internacionales in Spanish), Santander UK would be depositary of 10% to 20 % of current British accounts, a percentage that in the case of TSB is estimated at around 5%. In 2015, Grupo Santander obtained 30% and Sabadell 17.2% of their net profit in the UK.[1]

Another sector highly affected will be telecommunications. According to IMF estimations and some economists, the possible deterioration of the economy in the United Kingdom could lead to a loss of value of the British subsidiary of Telefonica, O2.[2]

It is paradoxical that, despite Spain’s large market share in UK services, especially in tourism, exports of Spanish goods and services to the country is only 2.7% of its GDP, which represents 0.1% below Germany, and slightly above the average.[3]

Conclusion

In short, there is still no damage in the Spanish exports to the United Kingdom. However, it is true that Brexit is still not fully resolved and few dare to venture its long-term consequences.

The strategy of Dos Aguas Consulting is to provide information, security, and confidence in each step for business in both countries to tackle this new situation. Do not hesitate to contact us, we will be happy to answer your questions!

Sources:

[1] Luis Meyer (April 26th, 2017) Las empresas españolas que hubieran votado “NO” al “Brexit”, Ethic website (Link) Last accessed: 15.11.2018

[2] Luis Meyer (April 26th, 2017) Las empresas españolas que hubieran votado “NO” al “Brexit”, Ethic website (Link) Last accessed: 15.11.2018

[3] Funds Society (2016) S&P lanza un índice de sensibilidad al Brexit y sitúa a España como el octavo país más afectado, Funds Society (Link) Last accessed: 15.11.2018

Other consulted sources:

S&P Global (2016) Who Has The Most To Lose From Brexit? Introducing The Brexit Sensitivity Index, S&P Global Ratings (Link) Last accessed: 15.11.2018

Switzerland is also in Latin America

By | Economic Analysis, International Relations | No Comments

By Eduardo Fort

Located east of Argentina and south of Brazil, unknown to the vast majority of European citizens, Uruguay is undoubtedly a pearl to discover for foreign investors. With a fascinating history, the former Spanish colony, which became independent in 1828 from its two huge neighbors, is considered, since the end of the 19th century, the “Switzerland of Latin America”: it was one of the first countries in the world to establish a public, free educational system, compulsory and lay (1877) and pioneer in passing a divorce law (1917). The State guarantees free access to education, from preschool to university and 4.5% of GDP is invested in education. To this must be added the political stability that has been its trademark for decades. With the pragmatism and tenacity of the children, the Oriental Republic of Uruguay became, in its own right, a very attractive horizon for the most diverse companies.

This is a country with a broad trajectory of political, democratic and social stability and a strong macroeconomic solidity, which creates the right environment to develop successful investments. It is also a stable and predictable country, qualities that are taken as a differential by investors. Several international organizations place Uruguay among the top positions for transparency, respect for democratic values ​​and human development.

Its strategic location – as a gateway to the region – offers the perfect springboard to Latin America.

The advantages of settling in Uruguay

As previously stated, the small South American has a strong sociopolitical stability. Uruguay’s trade and investment regime is one of the most open in the world. Uruguay’s main trade strategy is to continue liberalizing trade and investment, both multilaterally and regionally. Being an economy of small dimensions, it requires markets free of restrictions and distortions to trade, especially in the agricultural sector, which generates most of Uruguay’s exports. As a financial and monetary tactic, Uruguay actively seeks to improve its business environment to continue bringing direct foreign investment and thus support economic growth, employment and promote technology transfer, with very successful results.

On the other hand, Uruguay had an average annual growth of 6% between 2004 and 2011, which has allowed it to consolidate the structural improvements achieved after the economic crisis of 2002. These improvements helped the country to be more resistant to external shocks, like the international crisis of 2008-2009. At the tax level, Uruguay presents extensive tax exemptions (20-100%) on investment, as well as attractive regimes of free zones, ports, and airports of free circulation (exports of services are exempt from VAT payment).

Investment in Uruguay, both national and foreign, is declared of national interest. The foreign investor and the locals are treated equally, having a wide range of incentives that are adapted to the different types of activities, both industrial, commercial or services that want to be carried out in the country.

MERCOSUR

It is important to remember that Uruguay is a founding member of MERCOSUR, the booming free trade area between Argentina, Brazil, Paraguay, and the currently suspended Venezuela. Uruguay has signed free trade agreements with Israel and Mexico, as well as a macro trade and investment agreement with the United States.

Through Uruguay, you can access a market of 400 million people, which accounts for 68% of Latin America’s GDP and represents a flow of foreign trade of almost 74% of Latin America’s total.

The infrastructure

Unlike other Latin American countries, Uruguay has a first level infrastructure in Montevideo (its capital and most important city), being already a regional hub par excellence for the Southern Cone of Latin America. 50% of the merchandise entering the port of Montevideo is in transit. In addition, Uruguay has the densest road network in Latin America. It is ranked number 1 in the region with respect to Internet penetration, PC and telephone lines. It benefits from a very reliable electrical supply, mostly from renewable sources.

In short, Uruguay has become the destination par excellence for international companies seeking quality, efficiency, experience and new opportunities in the most stable and reliable business environment in Latin America.

About the author:

Eduardo Fort holds a degree in Political Science from Complutense University of Madrid. He has participated in academic projects related to History of Ideas and Political Theory. He has collaborated with various media – newspapers and television- as an international analyst and specialist in Latin America.
Brexit- Dos Aguas Blog

A new chapter in the Brexit process, a new history of uncertainty

By | International Relations, Trade News | 3 Comments

In recent weeks Brexit have been back in the news. Since the referendum on the permanence of the United Kingdom in the European Union, Europe has been plunged into uncertainty due to the future relationships between both parties. It is well known that uncertainty is not good for business and economy. At Dos Aguas Consulting we are making a list of those risks that importers and exporters may face in the new scenario, as well as we explain how Dos Aguas Consulting can help making safe business in Spain.

What are the risks for importers and exporters?

We are not facing an easy issue, considering the growing fear among businessmen about this new situation in which tariffs in the trade between the UK and EU may be raised.

First of all, it must be borne in mind that the situation will depend on the political sphere and the negotiations between the EU and the UK. These negotiations began in March 2017 and some experts see the final agreement far away, especially after the latest statements by Theresa May in the European Parliament, opening the possibility to extend the transition period of the Brexit beyond December of 2020.[1]

In the event that both parties do not reach an agreement, the basic rules of the World Trade Organization (hereinafter, WTO) are applied, which implies the existence of various tariffs for both imports and exports. In this scenario, tariffs will reduce competitiveness and benefits for Spanish and European exporters, as well as for British importers.

However, we must take into account that since the UK is a member of the WTO (prior to its membership in the EU), the most favored nation (MFN) treatment must exist between the EU and the UK. In this way, the British exporters would face the EU Common Customs Tariff, while the EU exporters would face the tariffs that the UK freely chose to apply. In addition to the already mentioned tariffs, the exporters of both parties would face other non-tariff barriers when exporting to the other party because the compliance of the regulations in force would not be automatically secured any longer.[2]

Secondly, within the scope of the WTO the customs tariffs set by the WTO will apply to British exports (10% to the automotive sector and 36% to agricultural products in 2014). This fact will put British companies at a competitive disadvantage, even more because there is no room to negotiate other rates within the organization. In this regard, main product groups will be affected by this alleged situation:

Dos Aguas Blog- United Kingdom exports from Spain 2017

Source: Elaborated by Dos Aguas Consulting

Dos Aguas Blog- United Kingdom imports from Spain 2017

Source: Elaborated by Dos Aguas Consulting

On the one hand, the EU is one of the main export partners of the UK, since 47.43% of British exports are destined to a member state of the EU. In fact, 3.05% go to Spain, being the main groups of products: vehicles, machinery, pharmaceutical products, mineral fuels and electrical machinery.

On the other hand, Spain also finds in the British market sales opportunities for its products. In the period between 2013 and 2017, Spanish imports increased by 20.56%. Among the groups of imported products include: vehicles, machinery and food products.

In short, the increase in business costs between the UK and the EU after Brexit can be divided into three parts:

  1. Higher tariffs on imports;
  2. Greater non-tariff barriers to trade (derived from different regulations, border controls, etc.);
  3. The UK can not be part of future EU actions to achieve a deeper integration and the reduction of non-tariff barriers in the EU.

Recommendation for the British in the event of a non-agreement:

The British Government has prepared a series of guides and informative material in case the agreement between both parties cannot be reached. Information can be obtained on different aspects such as agriculture, export and import, money and taxes, health issues, study in the UK or the EU and rights in the workplace.

Conclusion

Given the situation of uncertainty surrounding the negotiations, we recommend to pay special attention to the drafting of contracts when exporting or importing, as well as to choice the most advantageous INCOTERMS, the currency to carry out the transaction, the insurance contracting, etc. At Dos Aguas Consulting we can help companies with these issues and others business problems in the Spanish market. Remember our motto: “Information is Safe Business”.

Methodological Note:

Information trade between the United Kingdom and Spain from International Trade Center.

Sources:

[1] EC/Agencies (22th October, 2018) May abre la puerta a extender el periodo de transición del Brexit. El Confidencial website.Available online (link). Last accessed: 25.10.2018.

[2]  Spanish Department of Agriculture, Food and Environment in London (2015) Implicaciones de la salida británica de la UE
para el sector agro-alimentario. Spanish Ministry of Agriculture, Fisheries and Food website. Available online (link). Last accessed: 25.10.2018.

busqueda de socios para empresas

Looking East: Innovation and Business in Singapore

By | Economic Activities, Economic Analysis, International Relations
Vivian Hendrikse
 
Of the 20 best global innovations of the year 2017, 3 initiatives originated from Singapore [6]. According to the Bloomberg Innovation Index, Singapore is ranked 3rd globally when it comes to innovation [7]. Next to that, Singapore is ranked as the number one smart city according to ABI’s and Juniper’s researches in 2018 [7]. If that is not enough, the world bank names Singapore as the “easiest place in the world to do business”, and Singapore was the main subject of a Michael Porter Harvard Business Innovation case study [3]. If there is one thing that these facts bear in common, it is their message that Singapore, as a city and country in one, is a successful hub for doing innovative business. What is the cause that led Singapore to be this successful when it comes to innovations?

Singapore’s “Home” strategy

 
According to Damian Chan, international director at the Singapore Economic Development Board – the leading governmental agency that decides on the nation’s strategy for innovation – the “success” of Singapore is not caused by just one factor, rather it is driven by a general “welcoming approach to business” as a basis for everything that Singapore does [3]. Singapore was formed a little more than 50 years ago, when it became independent from Malaysia. At the start of being a new nation, the Economic Development Board (EDB) was formed in order to create new jobs, attract international companies and enhance the development of export-oriented industries to lead Singapore, as small as it was and with the few resources it had, towards becoming an independent nation. In this process, the focus of the EDB slowly started to include a focus on innovation, motivated by the need to stay ahead of global competition [7]. The result: Singapore’s “Home” strategy: “Home for Business. Home for Innovation. Home for Talent” [3].

The attractiveness of doing business in Singapore

 
When it comes to attractiveness for businesses, Singapore already has the advantage of its unique characteristics: being a small, Western and developed country in Asia. These characteristics matter: new regulations can quickly be set and applied in a small country and offer, in combination with business efficiency and knowledge, a fast-growing, future-minded business environment [8]. What is more, Singapore is often seen as the gateway for the Western world to Southeast Asia, a region where resources are ample yet corruption reigns. Singapore is the rare exception of a non-corrupt nation in the region. Add English as the country’s official language to that and it quickly becomes clear that Singapore is an attractive investment for businesses that want to reach out to Southeast Asia [8].

Source: NCC Group [9]

The “Home” strategy applied

 
However favourable these business conditions of Singapore are, they would not sustain if the EDB had not recognised them and created the “Home” strategy. The strategy enables these conditions to further develop and even strengthen, placing Singapore far above other Southeast Asian countries when it comes to foreign investments [7]. The “Home” strategy is applied to all sectors related to innovation and business, for example the start-up scene, (digital) technologies, and education. This entails that Singapore is investing enormous budgets in these sectors, for the development of both enabling regulations as well as a stimulating environment. By creating laws that are favourable and even financially incentivising for start-ups or technology related firms, and developing multiple incubators, hubs, and open workspaces across the city, Singapore successfully pushes for innovation. Moreover, Singapore keeps investing in these sectors, even when results have already been seen: the nation recently created a new innovation fund of 1 billion Singaporean Dollars to drive enterprise growth [2]. The results are astonishing: Singapore doubled its number of start-ups from 22,000 in 2003 to 43,000 in 2016, and in the same time-span, the number of tech start-ups also roughly doubled (from 2,800 to 4,300) [1]. Next to that, it obtained the reputation of the number one smart city, a highly ranked innovation hub and the go-to place for start-ups, as mentioned in the introduction. All in all, it indeed seems as if the “Home” strategy works. Therefore, when it comes to innovation and business, it is of importance to keep Singapore high on the radar.
 

Sources:

[1] Enterprise Singapore (link)
[2] Rumi Hardasmalani (April 26, 2017), New S$1 billion Innovation Fund to Drive Enterprise Growth, TODAYonline. Available Online (link) [Last Accessed: 04.09.2018]
[3] Dominic Basulto (May 26, 2015), The Secrets to Singapore’s Track Record of Innovation Excellence, The Washington Post. Available Online (link) [Last Accessed: 06.09.2018]
[4] Monetary Authority of Singapore (link)
[5] Economic Development Board: Industries and Key Activities (link)
[6] Ministry of Finance: Innovation Initiatives (link)
[7] Economic Development Board: Innovation (link)
[8] Singapore Expats: A Brief History of Singapore (link)
[9] NCC Group: Infographic Facts about Singapore (link)
Japan-EU-Agreement

EU-Japan Economic Partnership Agreement

By | International Relations, Law, Trade News | No Comments
An answer against trade protectionism
An ambitious trade agreement between the European Union and Japan was signed in July 2018. The negotiations began in 2013, when the EU governments commissioned the European Commission to start negotiations with the Japanese country. Negotiations have been delayed during 18 rounds, the last one was held in April 2017. On July 6, the European Union and Japan reached a principle of agreement on the main elements of the EU-Japan Economic Partnership Agreement.[1]According to some experts, the signing of this agreement not only has a commercial purpose but also implies a message and a reaction against the protectionist retreat of the US president.[2]
However, an analysis of the content of the Agreement in figures shows much more since EU companies export more than 58,000 million euros in goods and 28,000 million euros in services every year to Japan. This instrument will eliminate most of the 1,000 million euros of rights paid annually by EU companies that export to Japan, as well as a series of long-standing regulatory barriers. At the same time, this agreement will open the Japanese market of 127 million consumers to the main agricultural exports of the EU and increase the opportunities for EU exports in a range of other sectors.
 
On the one hand, regarding the EU’s agricultural exports, the Agreement affects the tariffs of many cheeses, such as Gouda and Cheddar (which currently stand at 29.8%), as well as wine exports (currently with an average of 15%). Moreover, it allows the EU to increase its exports of beef to Japan. In fact, there will be duty-free trade for processed pork and almost duty-free trade for fresh meat. It also guarantees the protection in Japan of more than 200 high quality European agricultural products (Geographical Indications, GI). A selection of Japanese GIs in the EU will also be protected.
 
In addition, it establishes transition periods before opening markets that are particularly sensitive for the EU, such as the automotive sector[3] which, as can be seen in the following image, consists of the second category of products that the EU exports to Japan, and represents 14.38% of the trade involving 9,941,226 thousand euros. Nevertheless, imports from Japan of motor vehicles amounted to 20,986,186 thousand euros (accounting for 24.38% of imports). In the following image you can see the main categories of products imported / exported between both regions:

Bilateral Commerce Japan EU

On the other hand, the Agreement opens markets of services, in particular financial services, electronic commerce, telecommunications and transport. The aim is to guarantee EU companies access to Japan’s large supply markets in 48 large cities and eliminate barriers to contracting in the rail sector of economic importance at the national level.
 
Differently from the climate of uncertainty in international trade due to protectionist waves as well as possible trade wars, the EU has opted to continue with its agenda and its focus on commercial liberalism and its commitment to its main trading partners.
 
If you are interested in the Japanese market and are thinking of exporting to the country of the rising sun, from Dos Aguas we can give you the support and the necessary guidance to the export path. Do not miss the opportunity!
 

A brief overview of the Agreement between the EU-Japan

Sources:

[1] European Commission (2018) Negotiations and agreements EU-Japan Economic Partnership Agreement. Available online (link) [Last access: 07.08.2018]
[2] Alastair Gale and Emre Peker (July 17, 2018) Japan, EU Sign Trade Deal: ‘We Stand Together Against Protectionism’. The Wall Street Journal. Available online (link) [Last access: 07.08.2018]
[3] European Commission (December 8, 2017) EU and Japan finalise Economic Partnership Agreement. Available online (link) [Last access: 07.08.2018]

Recommended reading:

Agreement between the European Union and Japan for an economic partnership (Full text)
Reports from the negotiating rounds. They are available in the following link: (link)
EU-Japan EPA – The Agreement in Principle (July 2017) (link)
 

Methodological note:

The image uses data from the International Trade Centre. EU’s data are from the 28 member countries.