Three moves on the international trade front that have taken place in the last few days have given the sporting goods industry and the world economy positive signals in the direction of free trade. While the U.S. decided not to go ahead with a new set of punitive tariffs on imports from China, the European Union signed important trade agreements with Vietnam and Mercosur.
Fesi, the European federation of the sporting goods industry, strongly welcomed the signature of a long-awaited free trade and investment agreement (EVFTA) with Vietnam by the local government and the European Commission on June 30. The agreement is set to gradually eliminate more than 99 percent of customs duties on both sides, while encouraging and protecting European investments in the fast-growing Asian country.
The pact is particularly relevant for the sporting goods sector as Vietnam is becoming a major alternative to China as a sourcing hub. Fesi points out that it has been able to secure a shorter timeframe for the full liberalization of imports of certain types of athletic footwear products that feature a non-slip synthetic outsole, an impact absorption system and a lacing system with at least five eyelet holes. The agreement is less interesting in the area of apparel, where importers will draw higher benefits at the start from Vietnam's GSP (generalized system of preferences) status.
The agreement with Vietnam is almost certain to pass the scrutiny of the European Parliament before its final ratification by the European Council, which is expected to take place during the first half of 2020. Fesi said the Parliament will take into account the encouraging progress made by Vietnam in the last few months in the areas of human rights, labor rights and environmental protection.
Fesi had nothing major to say about the FTA signed on June 28 by the European Commission and Mercosur, the free trade area comprising Brazil, Argentina, Uruguay and Paraguay. It will give European companies easier access to a market of 780 million people, much larger than that of Vietnam, but it will benefit mostly European manufacturers of non-athletic footwear and clothing, which must now pay duties of up to 35 percent in the region.
A more relevant move for the sporting goods industry at the end of last month was a decision taken during the G20 summit conference in Osaka by U.S. President Donald Trump and China's Xi Jinping to resume their trade negotiations. The U.S. said that it will delay the planned imposition of additional duties of 25 percent on a range of products imported from China, including most kinds of sporting goods made there by U.S. and non-U.S. companies. They would have come next month on top of a set of duties already imposed last year on a few sports items and other types of products.
Observers noted that the Chinese government gave no indications that it intends to take action in the area of intellectual property protection, which has been the issue raised by the U.S. from the start. Pre-electoral considerations may have led the two parties to call a truce. President Xi probably feels that President Trump cannot risk the deterioration of the U.S. economy that would stem from a trade war with China, which would likely affect his re-election in 2020.
