'Decoupling': leaders warn about possible impacts, and other international trade stories to read this month

World leaders have warned that geopolitical tensions are fuelling economic fragmentation and protectionism that threaten global growth.

Speaking at the World Economic Forum's Annual Meeting of the New Champions, which took place in Dalian, China, in June, Li Qiang, Premier of the People’s Republic of China, said: "The history of global economic development shows that openness brings progress while isolation leaves one behind."

Governments across the globe are increasing tariffs and implementing industrial policies to bolster economic security and development, leading to a fragmentation of economic ties and a reconfiguration of trade routes.

Leaders warned that trade and technological decoupling is impacting businesses and consumers as prices rise and supply chains get disrupted.

"You see the global tension between the US and China, you see the polarized world," said Mohamad Al-Ississ, Minister of Finance of Jordan. "The challenge is, frankly, that mistrust is there. Concerns are real — and they can very quickly escalate beyond the current protectionist concerns we have."

But there were also pockets of progress, with Busi Mabuza, Chairperson of the Industrial Development Corporation of South Africa, highlighting the potential of the African Continental Free Trade Area to spur growth.

"Governments must come to the party in terms of ensuring that the tariff barriers and the non-tariff barriers that impede our trade are put down," she said.

European Union member countries have voted on imposing tariffs on imports of electric vehicles (EVs) built in China.

The European Commission gave the 27 EU countries until midnight on 15 July to decide their stance on the issue, the highest profile trade case for the EU to date, but the outcome of the vote remains confidential.

Although not binding, the outcome could influence the final decision of the Commission, which has already imposed provisional countervailing duties of up to 37.6% on EVs imported from China.

Sources told Reuters that both Italy and Spain were in favour of placing duties on China-built EVs, while Sweden was planning to abstain, according to the country's Minister for International Development Cooperation and Foreign Trade, Johan Forssell.

The Commission will take the 'advisory' vote into consideration when deciding whether to impose definitive duties that would be in place for five years, with the option to extend.

EU member states are set to take a biding vote to impose the tariffs within the next four months.

In May, the US government announced it would increase tariffs on China's EV exports from 25% to 100%.

On 15 July, China said it had requested the World Trade Organization set up an expert panel to settle a dispute over EV subsidies under the US Inflation Reduction Act.

The US has asked Indonesia to consider joining a multinational partnership to enhance the country's environmental standards as the two countries are in discussions about a critical minerals deal. The Mineral Security Partnership aims to accelerate the development of sustainable critical minerals supply chains and facilitate financial and diplomatic support, Reuters reports.

Canada has enacted a new digital service tax of 3% on the revenue of international firms that sell Canadian user data and provide services in the country. The tax will be applied retroactively from January 2022. The tax comes amidst ongoing negotiations at the OECD for a multilateral agreement on taxation in the digital space.

Global port congestion has hit an 18-month high, with 60% of ships waiting at anchor in Asia. Notably, the backlog at Singapore's container port is at its worst since the COVID-19 pandemic. The congestion is largely due to disruption caused by the Red Sea attacks.

The cost of shipping a 40-foot container from Shanghai to New York surged to $9,387 on the Drewry World Container Index on July 11 - more than double the rate from February but still below the peak of $16,000 early in the pandemic.

India's goods and services exports increased by 5.4% year-on-year to $65.47 billion in June, according to the country's trade secretary. This growth was fuelled by a surge in orders that could propel total exports to $800 billion by March 2025.

World Trade Organization Director-General Ngozi Okonjo-Iweala has been requested to run for a second term by the African Group. Okonjo-Iweala's current term is set to end in August 2025. She has not yet to publicly disclosed her intentions.

China's exports had their fastest growth in over a year in June, according to the Financial Times, with exports climbing 8.6% year-on-year in dollar terms.

Bangladesh has ‘slotted in very neatly’ as globalization patterns shift under increased Chinese influence, economic historian Adam Tooze told a session at the Forum's Annual Meeting of the New Champions in China. It’s one of many parts of the world to see opportunities for transformation amid rising protectionism and partition, writes John Letzing.

After a series of economic shocks, industrial policy is making a comeback worldwide. Governments are using industrial policy in sectors from cars to semiconductors. Here are four examples of industrial policy from around the world.

Asia dominates the top 20 list of best-performing container ports in the World Bank’s latest index. The shipping industry is transitioning to more sustainable practices and green ports are gaining traction. But, as the World Economic Forum’s Fuelling the Future of Shipping report points out, there are significant barriers to scaling zero-emission shipping that need to be addressed.