With Whom Will the UK Trade?

With Brexit on the horizon, the UK must decide what kind of trade relationship it should craft with the European Union. The cases of Norway, Switzerland, Canada and other members of the WTO offer inspiration. All have varying degrees of access to the single European market, and particular rights and obligations. So how do they differ?

1. Norway

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ECB President Draghi's Comments are In Line with Expectations

Draghi said nothing that surprised the market.  He acknowledged the resilience of the markets in the aftermath of the UK referendum.  He also noted that with new staff forecasts, next September, and the upcoming data, the ECB would be in a better position to assess the macroeconomic situation. The risks to growth remain tilted to the downside. 

The Philippines and China Look to the AIIB

The Philippines’ new President Rodrigo Duterte has indicated that China could play a key role in developing the Philippines’ infrastructure. Even before the election, Duterte announced that he is willing to back down on the South China Sea dispute with China if it can build railway systems in the Philippines within his six-year term. So could infrastructure investment offer a way forward for the China–Philippines relationship?

South Korea's Bridge Between the U.S. and North Korea

US and North Korean diplomats attended the Northeast Asia Cooperation Dialogue (NEACD) in Beijing on 22 June. Despite having talked at dinner, the US State Department insisted they did not ‘meet’ with North Korean officials. Also in June, Han Song-ryol, Director-General of the department of US affairs at North Korea’s Foreign Ministry, reportedly met with retired US ambassador Thomas Pickering in Sweden. So do these diplomatic movements mean we should expect some change on the Korean peninsula? Unfortunately, they do not.

Post-referendum Fear of Contagion Lessens

It is a bizarre turn of events.  Just as the Game of Throne's Westeros is a map of the UK put on top of an inverted Ireland, so too do UK events seem to be a strange permutation of the pre-referendum views. 

Although sterling and interest rates have not fully recovered from the Brexit decision, equity markets have, and fear of contagion has died down.  Indeed, it appears the UK may not be in the back of the queue from trade deals after all, and the IMF's more pessimistic scenario about the contagious impact has been significantly revised away. 

China and the Philippines Historic Window of Opportunity

After the South China Sea arbitration ruling, uncertainty and friction may increase in the region. However, the economic promise of China’s rise and the Asian century will only materialize with peace and stability in the region.

On July 12, the international court in The Hague ruled in the dispute between China and the Philippines over the South China Sea. In international media, the ruling of the Permanent Court of Arbitration (PCA) has been characterized as a sweeping rebuke of Chinese claims in the South China Sea.

Changing Russia and Japan's Status to Friends

According to conventional wisdom, regarding Russia–Japan relations there is no prospect for the resolution of the territorial dispute between these ‘distant neighbours’ over the Northern Territories/southern Kuril Islands. However, the words and actions of both countries’ leaders in recent times may be cause for optimism.

Top 5 Tuesday

The US dollar is sporting a firmer profile today, but it is not the driver.  Heightened speculation that Australia and New Zealand may cut interest rates next month is pushing those respective currencies more than 1% lower today.  The Canadian dollar is being dragged lower (~).5%0 in what looks to be primarily sympathy, but it had seemed vulnerable to us in any event.

Can The Hague's South China Sea Ruling be Enforced?

Southeast Asia has descended into a maritime insecurity spiral since the April–June 2012 standoff at Scarborough Shoal between Chinese maritime security forces and the Philippine Navy, which motivated Manila to initiate legal arbitration proceedings in The Hague.

The Permanent Court of Arbitration’s (PCA) ruling in favour of the Philippines will be difficult to enforce. To forestall an even more intense security dilemma in the South China Sea, regional policymakers should not lose sight of four vital underlying strategic trends.