01/06/2023
RUSSIA BLOCKS BLACK SEA GRAIN EXPORT DEAL TO THE BLACK SEA AGAIN, SAYS UKRAINE
Ukraine’s Ministry of Renewal and Infrastructure announced that the UN-brokered grain export deal in the Black Sea has been halted again due to Russia’s blockade to register ships in all Ukrainian ports.
Russia informed officials in charge of the initiative that it will limit searches at the port of Pivdennyi in the Odessa province of Ukraine until all sides agree to unblock the transit of Russian ammonia.
The agreement, established in July last year between Russia and Ukraine under UN and Turkish mediation, aims to address a global food crisis exacerbated by Russia’s invasion of Ukraine, one of the world’s leading grain exporters. Unless an agreement is reached to overcome obstacles to Russian grain and fertiliser exports, Russia has threatened to end the initiative.
The situation is considered serious, and Ukraine has criticised the unjustified restriction imposed by Russia, while offering the possibility of allowing the transit of Russian ammonia through its territory in exchange for an expansion of the agreement to include more Ukrainian ports and a wider range of products.
02/06/2023
PAKISTAN OUTLINES PROCESS FOR BARTER TRADE WITH AFGHANISTAN, IRAN, AND RUSSIA
Pakistan has passed a special order allowing barter trade with Afghanistan, Iran, and Russia for certain goods, such as oil and natural gas, according to the Ministry of Commerce.
The measure seeks to address a balance of payments crisis and control inflation, which reached a peak of 38% last month. The order establishes a barter trade mechanism between state and private entities, requiring approval.
Experts point out that this barter opportunity could benefit Pakistan in terms of energy imports from Russia and Iran, easing demand for dollars. In addition, it is expected to discourage smuggling of goods from Iran and Afghanistan, helping the country’s economy.
03/06/2023
BRITISH PRIME MINISTER SEEKS CLOSER TIES WITH BIDEN ON TRIP TO WASHINGTON
British Prime Minister Rishi Sunak heads to Washington with the aim of strengthening the relationship with US President Joe Biden. Sunak seeks to establish a close and sincere relationship, recognising the US as the UK’s closest ally. During his visit, he will hold meetings with politicians, business leaders and President Biden, addressing issues such as improving economic ties and supporting Ukraine in its conflict with Russia. While a formal free trade agreement will not be discussed, this visit is important for improving post-Brexit relations.
Sunak’s visit represents a closer and more sustained level of contact with a US President than any British Prime Minister in recent years. Both countries seek to work together on issues of mutual interest, and this visit is an important step towards strengthening bilateral cooperation and maintaining the historic ties between the UK and the US.
04/06/2023
SAUDI ARABIA PLEDGES BIG OIL CUTS IN JULY AS OPEC+ EXTENDS DEAL TO 2024
Saudi Arabia plans to make a major cut in oil production in July to boost oil prices. The country will cut its output to 9 million barrels per day (bpd), the largest decline in years.
The aim is to stabilise the market and create uncertainty about future actions, seeking to maintain a stable price floor. OPEC+, which accounts for approximately 40% of global oil production, supports this measure, and also agreed to extend existing cuts until the end of 2024.
This production cut decision by Saudi Arabia is seen as a clear signal of its desire for higher prices and its willingness to act to achieve it. Analysts expect a positive reaction in the market when trading reopens on Monday. Saudi Arabia’s ability to quickly adjust its production and its leadership in OPEC+ give it a strategic position in managing oil supply and influencing global prices.
Despite concerns about the weak global economy and its impact on oil demand, Saudi Arabia remains committed to its goal of maintaining price stability and discouraging speculation in the oil market.
05/06/2023
EUROPEAN COMMISSION DECLARES TRADE AGREEMENT WITH MERCOSUR A PRIORITY WHILE IT SEEKS NEW ALLIES
The European Commission considers it a priority in order to finalise a trade agreement with the Mercosur bloc in South America to reduce dependence on China and the United States, especially in the event of a possible re-election of Donald Trump.
The agreement seeks to secure access to Latin America’s resources and raw materials and to strengthen bilateral relations with Mexico and Brazil. The EU also seeks to reduce dependence on third countries and establish free trade and association agreements with Latin American countries. Negotiations are at an advanced stage with Chile and Argentina, and an agreement is expected to be announced in July.
In addition, the EU focuses on the provision of energy resources, seeking to sign agreements with Latin American countries under the Critical Commodities strategy. This aims to mitigate risks in supply chains related to sustainable energy. The EU’s investment programme in green and digital transition projects in Latin America also plays an important role in strengthening relations.
06/06/2023
CHINESE EXPORTS FALL IN MAY ON WEAKENING GLOBAL DEMAND
China’s exports in May fell by 7.5% year-on-year, much worse than expected, while imports contracted by 4.5%. These data reflect a gloomy outlook for global demand, especially in developed markets, and raise doubts about the fragile economic recovery. Weakness in foreign trade and other indicators suggest that the Chinese economy is losing momentum, supporting the need for further stimulus to boost economic activity.
This negative economic outlook has led to a fall in Asian equities and raised concerns in the markets. China’s exports are expected to continue to decline before stabilising later in the year.
Analysts are revising down their growth forecasts for China, and the government is expected to implement additional measures to boost the economy and counter the effects of the global slowdown.
07/06/2023
AUSTRALIA COMES DOWN HARD ON TRADE WITH THE EU
Australia has made it clear to the European Union that it will not sign a trade deal unless the EU opens its agricultural market to a wide range of Australian products. Australia’s trade minister, Don Farrell, has stressed that a deal will only be possible if the EU abandons its position of protecting its farmers from competition.
At the same time, Australia has sought to improve its trade relations with China, achieving a significant 12.6% growth in exports to the country in the first five months of the year, and has set out a path to resolve remaining trade restrictions during a recent meeting in Beijing.
These actions demonstrate Australia’s determination to ensure fair and equitable access to international markets for its agricultural products and to seize new trade opportunities.
09/06/2023
US AND FIVE ALLIES CONDEMN TRADE-RELATED “ECONOMIC COERCION”
The United States and five of its allies, Australia, the United Kingdom, Canada, Japan, and New Zealand, issued a joint statement condemning economic coercion. Although they did not directly name any country, the statement is believed to be aimed primarily at China.
Countries expressed concern about widespread subsidies, anti-competitive practices by state-owned enterprises, forced technology transfer and government interference in corporate decision-making. They also highlighted concerns about the use of forced labour in global supply chains. The statement comes after the G7 agreed on an initiative to counter economic coercion and pledged action to ensure that those who attempt to use economic dependence as a weapon face consequences.
The statement underlines the importance of ending forced labour and human rights abuses in international supply chains. Although no specific details were provided on the actions to be taken, the joint statement sends a clear message about the willingness of these countries to address harmful trade practices and promote fair and rules-based trade.
12/06/2023
IRAN AND VENEZUELA DISCUSS INCREASED TRADE, SIGN PETROCHEMICALS AGREEMENT
Iran and Venezuela have agreed to increase their bilateral trade from $3 billion to $20 billion. During Iranian President Ebrahim Raisi’s visit to Caracas, the two countries signed an agreement to expand cooperation in the petrochemical sector, as well as other collaboration agreements. No specific details were given on the petrochemical agreement, but it is expected to strengthen cooperation in oil exploration and development.
This visit is part of Raisi’s Latin American tour, which also includes stops in Cuba and Nicaragua. Relations between Iran and Venezuela have grown closer in recent years, especially in the energy field. Iran has provided assistance to Venezuela in repairing oil refineries and supplying fuel. Both countries, which are under US sanctions, are seeking to strengthen their economic and trade collaboration to counter the impact of restrictive measures.
14/06/2023
CHINESE E-COMMERCE WOULD LOSE U.S. TARIFF EXEMPTION UNDER NEW PROPOSED BILL
A bipartisan group of US lawmakers plans to introduce a bill to eliminate the tariff exemption that allows e-commerce sellers to ship orders from China to US consumers without tariffs.
The measure, known as the de minimis rule, exempts imports of $800 or less from tariffs. Companies such as Shein and Temu benefit from this exemption, although they are accused of taking advantage of it to avoid tariffs and import illegal goods made in China’s Xinjiang region. The bill seeks to ban such shipments from China and would only allow private carriers to carry de minimis packages, excluding postal services.
The bill has the backing of both Republican and Democratic senators, but it is not yet clear how much support it will receive. The aim is to address the increase in the volume of de minimis shipments, which has made it difficult to detect unsafe imports. While a similar proposal failed to make it through Congress last year, this new bill seeks to regulate e-commerce shipments from China and ensure fair and secure trade.
15/06/2023
ACCORDING TO MAJOR AFRICAN STATES, AFRICA NEEDS TO IMPORT CEREALS
Vladimir Putin, Russia’s president, is considering abandoning the Black Sea grain export agreement because of obstacles facing Russian grain and fertiliser shipments.
Meanwhile, African leaders have emphasised the importance of grain imports in addressing food insecurity on the continent. During African leaders’ visits to Ukraine and Russia, the Black Sea grain deal is expected to be discussed, and a possible unconditional grain and fertiliser deal has been proposed.
However, not all African countries are concerned about the possible disruption of the agreement, and some, such as Uganda, would even be willing to accept free grain from Russia.
18/06/2023
MODI PROPOSES FULL G20 MEMBERSHIP FOR THE AFRICAN UNION
Indian Prime Minister Narendra Modi has proposed that the African Union gain full membership in the G20. This initiative reflects India’s commitment to strengthen Africa’s representation and partnership in global affairs. The G20, comprising 19 countries and the European Union, is an intergovernmental forum comprising the world’s major developed and emerging economies. Modi, who chairs the G20 this year, seeks a fairer and more equitable global architecture and governance, and considers it important to give a greater voice to African and Global South countries on international platforms.
Modi’s proposal has been made in the context of his presidency of the G20, which will run throughout the year and culminate with the summit that India will host. The aim is to push for a more inclusive and representative approach on the world stage, recognising the importance of Africa and its contribution to global development. This proposal is seen as an appropriate step towards a more equitable global architecture and seeks to strengthen relations between India, the G20 and the African Union.
19/06/2023
SCHOLZ REJECTS STATE SUPERVISION OF EXPORTS TO CHINA
German Chancellor Olaf Scholz said the German government should not subject all exports to China to supervision. Speaking at an event organised by the industry association BDI in Berlin, Scholz said that laws are already in place to ensure the security of the German economy.
The European Commission will bring forward measures, such as a review of outbound investment and export controls, to protect valuable EU technology from countries like China and prevent it from being used for military purposes by its competitors.
This economic security strategy will be presented as a “communication” to EU lawmakers and countries, whose leaders will discuss relations with China in Brussels next week. Scholz stressed the importance of being cautious about defence armaments and surveillance technologies.
20/06/2023
COLOMBIA WILL EXPORT FOSSIL FUELS FOR A LONG TIME TO COME
Colombia’s finance minister, Ricardo Bonilla, announced that the country will continue to extract fossil fuels for “much longer” until it has other exports to replace that source of income. At the same time, it is considering diversifying its financing through carbon credits and green bonds. Oil and coal are the South American nation’s two main sources of revenue through exports, royalties, and tax collection.
Bonilla noted that the transition to renewable energy will be a long process and is expected to take 15-20 years. The minister stressed the importance of securing revenues from fossil fuels and provided information to investors on current exploration fields and contracts in the country.
In addition, Colombia is seeking to diversify its sources of financing by issuing carbon credits focused on combating deforestation, green bonds to finance environmental restoration and water source recovery projects, as well as social bonds to reduce poverty and inequality. The country is also seeking to strengthen its dialogue with credit rating agencies.
21/06/2023
IRAN HOLDS TALKS WITH EU’S ENRIQUE MORA AMID EFFORTS TO SAVE NUCLEAR DEAL
Iran met with EU mediator Enrique Mora in Qatar in an effort to revive the 2015 nuclear deal with world powers. The talks have sought to find solutions to curb Iran’s nuclear programme, release detainees and unfreeze Iranian assets abroad. Although indirect negotiations have been stalled since September, the two sides have held recent meetings to address bilateral, regional, and international challenges, including the way forward on the nuclear deal.
The 2015 deal limited Iran’s uranium enrichment activity in exchange for the lifting of international sanctions. However, US President Donald Trump abandoned the pact in 2018 and re-implemented sanctions, leading Iran to exceed the deal’s restrictions. Despite the challenges, the meetings in Qatar have opened up the possibility of a new nuclear deal between Iran and the West, although much remains to be discussed and agreed.
22/06/2023
MEXICO’S “SUPER PESO” CONTINUES TO RISE, BUT EXPORTS ARE LIKELY TO SUFFER
The Mexican peso has reached its highest level against the US dollar in seven years, which is cause for celebration for the president. However, analysts warn of possible negative effects on exports and remittances.
Although the peso has strongly performed this year, its strengthening makes Mexican exports more expensive, which could affect its competitiveness. In addition, remittances are also affected because a weaker dollar translates into fewer pesos when converted.
Although President López Obrador highlights the strengthening of the peso as a positive sign of austerity policies, there are concerns about possible adverse impacts on the Mexican economy and sectors such as tourism.
23/06/203
PANAMA CANAL POSTPONES DRAUGHT RESTRICTIONS AFTER MUCH-NEEDED RAINS
The Panama Canal Authority has postponed the restrictions that were to affect the largest ships crossing the waterway, due to the rains that have eased the shipping lane.
These measures, which would require ships to float at greater depths, would affect trade at one of the world’s busiest commercial crossings. However, the rains expected in the coming days have provided a respite for the canal, allowing ships to continue to sail at the previous depth limit.
The Panama Canal Authority will continue to monitor water levels and will announce future draft adjustments in a timely manner.
Since the beginning of the year, the canal has implemented depth restrictions due to water shortages caused by the drought. The restriction measures, originally scheduled to take effect in June and July, have been postponed due to the current weather conditions. The canal authority has not specified until when the measures will be postponed but will continue to assess the situation and announce changes to the draft in the future.
23/06/2023
EU TAKES ACTION AGAINST SANCTIONS EVASION WITH ITS ELEVENTH PACKAGE AGAINST RUSSIA
The European Union has formally adopted its 11th package of sanctions against Russia over its invasion of Ukraine. These measures focus on preventing evasion of existing sanctions. The package includes trade restrictions, transport, and energy measures. In terms of trade, the sale of sanctioned goods and technology to third countries will be restricted if they resell them to Russia. In addition, the transit of certain sensitive goods from the EU through Russia is prohibited. On transport measures, a total ban is imposed on Russian trucks with trailers to transport goods to the EU, and vessels carrying out transfers of sanctioned Russian cargo are restricted from entering EU ports. As for energy measures, the import of Russian oil by pipeline to Germany and Poland is banned. More than 100 individuals and entities are also added to the asset freeze list. In addition, the ban on Russian media broadcasting in the EU is extended to five additional channels.
24/06/2023
LULA CALLS FOR “COMMON SENSE” TO NEGOTIATE EU-MERCOSUR TRADE PACT
Brazil’s President Lula da Silva urged the European Union and Mercosur to approach negotiations on the long-awaited trade agreement between the blocs with a common-sense approach, leaving arrogance aside.
During his meeting in Paris, Lula stressed the importance of remembering that both sides need each other and that it is necessary to find equitable solutions. While acknowledging the differences in the French and Brazilian positions, especially on agricultural issues and government procurement, Lula expressed confidence that, despite the difficulties, an agreement will be reached.
These statements come after his concern over the annex to the proposed EU climate change agreement, which he considered a threat to Brazil. The agreement, which was reached in 2019 but suspended due to concerns over deforestation in the Amazon, remains a key issue on the agenda of Brazil and the EU.
25/06/2023
SAUDI ARAMCO SEES “GOOD” PROSPECTS FOR OIL IN THE SECOND HALF OF THE YEAR DUE TO DEMAND FROM CHINA AND INDIA.
Saudi Aramco’s CEO, Amin Nasser, believes that oil market fundamentals remain solid for the second half of the year, as demand from emerging markets, especially China and India, will offset downside risks in developed markets.
Industry leaders at the Energy Asia conference in Kuala Lumpur highlighted the complexities and uncertainties in the market. Petronas reported a slowdown in demand, while growing refinery capacity and geopolitical factors such as Russian supply and Chinese demand made it difficult to forecast market balance and prices.
While oil market fundamentals are generally considered to be sound, there are concerns about weak demand and pressure in the market. Overall, there is cautious optimism, but the various factors impacting the market need to be carefully monitored and analysed.
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In Madrid, 30 june 2023
International Trade and Sanctions Department
Lupicinio International Law Firm
