As leaders from the world's top economies meet at the G20 Summit in Argentina this week, some of our partners share their views:
Esteban Ropolo, Partner – Buenos Aires, Baker McKenzie:
"Expectations are high regarding the signing of more than 20 trade agreements between Argentina and China during the G20 meeting in Buenos Aires, including one agreement to avoid double taxation. Argentina’s president will try to use the presidency of the G20 to keep pushing for free trade in an increasingly protectionist world. A relaunch of the negotiations for a free trade agreement between the EU and Mercosur may also be included in the agenda. Conversations between Mercosur and Mexico for a deepening of their trade relationships are also expected, although it is not clear whether their goals will be achieved."
Manuel Padron, Partner – Ciudad Juárez, Mexico, Baker McKenzie:
Perhaps the most important outcome of the summit for Mexico will be the execution of the USMCA on November 30th. This summit comes under unusual circumstances for the Federal Government of Mexico because it will begin at the end of the current administration and end during the inauguration of the new administration. That fact to some extent limits the interaction that Mexican officials would have with their counterparts from other countries because there will not be a clear lead and position by either group, the outgoing and incoming administrations. Therefore, coming out of Buenos Aires with a done deal for the new trade agreement may be of the most relevance for the country.
Peter MacKay, Partner – Toronto, Baker McKenzie and former Canadian Minister of Foreign Affairs and Defense:
"While the G20 provides an enormous opportunity to move the dial on the stated themes of trade & investment among so many member countries, the real progress if any may come in the bi-laterals meetings held on the margins. The Summit communique is most often in draft form before the leaders arrive with room for tweaks on supply chains and the agriculture sector generalities in place. While the ‘framework agreement between the US-China will overshadow most of the Argentina Summit agenda, the scheduled signing of the USMCA may provide a modest symbol of the value of trade in a time of heightened cynicism, instability and anti-globalization sentiment, but there remains much work to be done to get to ratification through the legislatures of The US, Canada & Mexico.
"The contentious issue of the remaining US steel and aluminum tariffs is a huge domestic one which still is being leveraged among the signatories. If it does not give way to quotas as proposed, it could throw the entire deal into chaos. Clearly much falls into the murky world of politics and the cajoling that must occurs far from public view remains. This is now particularly true in America due to the new composition of the House of Representatives Vs. Senate. The 'new NAFTA' definitely will not move beyond the proposed staged photo-op signature until well into 2019, which is also an election year in Canada and the official kick-off of the Presidential campaign for re-election in 2020. Expect more drama than dramatic outcomes in Buenos Aires."
Ted Murphy, Managing Partner – Washington, DC, Baker McKenzie:
"With the release of the updated Section 301 report by the USTR last week, the battle lines are drawn within the Administration on the U.S.-China trade dispute. It should be an interesting dinner between President Trump and President Xi later this week. I would not be surprised if some sort of ‘deal’ is announced, but expect it to be more aspirational than anything. As for the USMCA signing, it will go forward in Buenos Aires. Canada is hoping for resolution on the aluminum and steel tariffs, but until it agrees to quotas (which could be at more than 100%), there will be no deal. Trump holds all the cards."
Rod Hunter, Partner – Washington, DC, Baker McKenzie and former senior director for international economics at the National Security Council:
"I expect that the odds are high for some sort of “deal” at the end of the month, but any such 'deal' would likely be just a new phase, not the end or even the beginning of the end of the US/China trade dispute. As demonstrated by recent statements by Peter Navarro and by USTR Lighthizer’s Section 301 update report, there are important voices in the Administration who remain skeptical. Any deal will likely be something of a standstill while further discussions are had, but it is not clear how long any such deal will hold.
"Regarding North American trade, the agreement might well be signed in the wings of the G20, but it remains to be seen whether Congress will pass the USMCA. The last time Nancy Pelosi served as Speaker, she put several trade agreements on ice. Will she really want to force her Democratic members to vote for a Trump trade agreement? If she does what she did last time, President Trump could find himself with a choice of leaving NAFTA in place or taking the political hit with his base for the economic consequences of NAFTA termination with no follow on agreement."