Recent US trade deals: A flavour

The risk of renegotiation and reset haunts US trade deals

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Even as the United States Supreme Court began hearing the case on the validity of the President’s powers to impose tariffs under the International Emergency Economic Powers Act (IEEPA), there has been a flurry of trade announcements by the White House trade team.

Apart from a reversal of reciprocal tariffs on agricultural items ranging from tomatoes and avocados to beef and some fertilisers — announced soon after the Democrats’ victory in key US states and cities in the first major election in Trump 2.0 — negotiations towards several trade deals were also stated to have been concluded.

Prominent among these are two final trade deals on reciprocal trade with Malaysia and Cambodia and two framework trade deals with Thailand and Vietnam, which were finalised at the end of October by President Trump during his trip to Association of Southeast Asian Nations and East Asia. This has been followed in November with framework agreements with Switzerland and four Latin American countries — Argentina, Ecuador, Guatemala and El Salvador. While two trade and investment agreements with Japan and Korea were announced in July, the details of the US-Korea trade deal were finalised and released only last week. Prominent features of the major trade deals may be worthy of note.

The final trade deals have been concluded after a substantial time lag since the initial announcement of the deal, while framework trade deals remain open for further negotiations. However, both framework and final trade deals have been concluded through executive orders and, unlike free trade agreements (FTA), are not legally binding. Therefore, renegotiation or resetting the constituent provisions remains a potential possibility even for final trade deals. This has, in fact, been evident most recently when the US, not satisfied with the slow implementation progress by the European Union on the trade deal finalised in August, initiated discussions on renegotiating the trade deal.