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Clifford Chance

Clifford Chance

Global trade and investment

Helping businesses understand complex geopolitical changes

Global trade is undergoing fundamental change.

Brexit, tensions between the US and China, and Asia's determination to play a greater role in globalisation will have a dramatic impact on trade for years to come. Trade agreements are notoriously slow and complex for governments to negotiate, and during this period of uncertainty, our trade experts can help our clients to manage the impact on their businesses.

Global

WTO makes progress at this year's ministerial conference (MC12)

After years of stalled negotiations, the World Trade Organization agreed a suite of deals at its bi-annual Ministerial Conference (MC12) held in Geneva in June. These include: an IP rights waiver concerning COVID-19 vaccines; an Agreement on Fisheries Subsidies – the first new WTO Agreement signed since 2013 (and also the first ever sustainability-focused WTO agreement); and an extension of a moratorium on applying customs duties to electronic transmissions. The package shows that WTO Members remain capable of agreeing new multilateral trade rules, even if the substance of such rules left some WTO Members disappointed. Here, our experts assess what came out of MC12. Read about the WTOs progress at this year's ministerial conference (MC12).

Trade in 2022: Trends to watch

As global supply chains continue to be hampered by COVID-19, and geopolitical competition escalates in many parts of the world, trade policy is set to be a crucial issue for businesses and governments in 2022. Here are six trends to watch. Read more about Trade in 2022: Trends to watch.

Banks, BITs and bailouts – Investment treaty protection in the financial services sector

In times of financial and economic crisis, Governments and monetary authorities may take a range of measures which could have adverse impacts on investors in the banking and finance sector, including bailouts, restructuring of sovereign debt and implementation of restrictive financial regulations. The response to COVID-19 has seen unprecedented regulatory measures such as these being taken around the globe to ease the economic impacts of the pandemic. Banks, financial institutions and investors may suffer adverse impacts as a result of these measures, therefore it is important to be aware of the protections offered by international investment treaties, such as bilateral investment treaties (BITs) and Free Trade Agreements (FTAs). However, advance planning is essential to ensure the protections offered by BITs and FTAs are available to banking and finance investors if a dispute emerges. Read more about Banks, Bits and Bailouts – Investment Treaty Protection in the Financial Services Sector.

The evolving concept of national security

In a recent yet unmistakable trend, the regulation of foreign investments under national security and foreign investment regimes has been growing ever more comprehensive, with sectoral coverage expanding to unprecedented levels. In terms of mergers and acquisitions, foreign direct investment (FDI) regimes broadly fall into two categories: (1) those that apply only to investments made directly in domestic companies and aim to give domestic businesses in certain sectors a degree of protection from foreign competition (e.g., Indonesia, Malaysia and the United Arab Emirates), and (2) those that apply also to indirect investments (e.g., the acquisition of a foreign parent company that has a subsidiary in the jurisdiction in question). Read more about the Evolving Concept of National Security.

The role of tech in trade policy and climate change

A broad range of services – from digital and telecommunications services to engineering, cloud storage and artificial intelligence (AI) – will play an integral role in the transition to net zero. But for businesses to reach their emissions targets, the global trading system has to adapt, say business leaders in a report from Clifford Chance and the World Economic Forum (WEF). Read more about the role of tech in trade policy and climate change.

Trade Policies and the Energy Transition

Businesses across all parts of the global economy are committing to climate action, but the pace of change needs to accelerate and energy transition will be key, say business leaders in a report from Clifford Chance and the World Economic Forum. Read more about Trade Policies and the Energy Transition.

The WTO's Interim Appeal Arbitration Arrangement - A Bridge Over Troubled Waters?

On 30 April 2020, the EU and 19 other World Trade Organization ("WTO") members announced the terms of an interim arrangement enabling appeals of WTO panel decisions to be decided in the absence of a functioning WTO Appellate Body. The arrangement, dubbed the Multi-Party Interim Appeal Arbitration Arrangement’ ("MPIA"), aims to provide a temporary solution to practical and systemic issues arising as a consequence of the failure by WTO members to reach consensus on the appointment of new Appellate Body members. Read more about the WTO's Interim Appeal Arbitration Arrangement - A Bridge Over Troubled Waters?

APAC

The Japan-Georgia Bilateral Investment Treaty

On 29 January 2021, Japan and Georgia signed a bilateral investment treaty titled the Agreement between Japan and Georgia for the Liberalisation, Promotion and Protection of Investment (Japan-Georgia BIT or BIT). This is the first BIT signed by either Japan or Georgia since the outbreak of the COVID-19 pandemic. It is expected that the BIT will enter into force later this year once it has been through the requisite ratification procedures in Japan and Georgia.

Upon signing the BIT, Georgia's Minister of Economy was reported to have said "We will do our best to bring as many Japanese investors as possible into various fields of the Georgian economy to create new jobs especially in the post-Covid period, when we need active investments". This builds upon a steady increase of Japanese investment into Georgia particularly in the energy sector. For example, last year a major Japanese utility company acquired a significant stake in a Georgian hydropower company.

The Japan-Georgia BIT contains wide-ranging investment protections for investors from Georgia and Japan. This briefing provides further detail on who is covered and how these rights may be used. In summary, consistent with its own aims, and the emerging Japanese 'standard form' for investment treaties, the Japan-Georgia BIT is favourable from an investor's perspective. Importantly, the treaty has "teeth" in the form of an investor-State dispute settlement (ISDS) mechanism.

As well as looking at the provisions of the treaty in more detail in this briefing, we highlight some of its limitations and exclusions, for example, for measures aimed at protecting public health. There are also other exclusions specifically focused on the construction, engineering, electricity, gas and oil sectors. Read more about the Japan-Georgia Bilateral Investment Treaty l Japanese version

A New Chapter in UK-Japan Economic and Trade Relations

The new trade agreement between the UK and Japan, the Comprehensive Economic Partnership Agreement (CEPA) came into force on 1 January 2021. As a result, the UK-Japan trading relationship is no longer governed by the Japan-EU Economic Partnership Agreement (JEEPA). This briefing considers how the provisions of CEPA depart from the EPA regime and, in the context of Brexit, what impact the new arrangements have on key sectors. Read more about A New Chapter in UK-Japan Economic and Trade Relations.

UK & EU

Tariff sweetener not a subsidy: The first test of the UK's post-Brexit-subsidy control regime

This briefing provides an overview of the High Court decision in R (on the application of British Sugar Plc) v Secretary of State for International Trade, which provides guidance on the scope, role and interpretation of EU and WTO jurisprudence under the UK's post-Brexit trade and subsidy regime. Read about the tariff sweetener not a subsidy: The first test of the UK's post-Brexit-subsidy control regime.

New EU guidelines on state aid for climate, environmental protection and energy: which sectors could benefit

On 1 January 2022, the revised Guidelines of the European Commission on State aid for climate, environmental protection and energy entered into force, extending the scope of the previous Guidelines to new areas in order to achieve the goal of reaching climate neutrality by 2050. Read about the new EU guidelines on state aid for climate, environmental protection and energy: which sectors could benefit.

The UK's new national security screening regime is now in full effect

A new national security screening regime came into effect on 4 January 2022 which gives the Government the power to assess certain transactions for national security risks. The new rules apply if there is a "change of control" in relation to a wide range of entities or assets and impose mandatory filing obligations for certain investments in entities with specified activities in sensitive sectors. Read about the UK's new national security screening regime is now in full effect.

Trade and customs in the UK beyond Brexit

As of 1 January 2021, the transition period of the UK's access to the EU's Single Market and Customs Union ended, meaning the EU's trade law regime no longer applies to the UK following Brexit. For the first time in 48 years, importers and exporters must grapple with a UK trade and customs administration entirely independent from the EU, including new domestic regulations, international trade agreements and, in some cases, government agencies. Read more about Trade and customs in the UK beyond Brexit.

The UK's National Security and Investment Bill: key points and implications

The UK Government has published its National Security and Investment Bill. The draft legislation will create a new, standalone screening regime, allowing the Government to review acquisitions of certain interests in legal entities, assets and intellectual property and to prohibit such transactions, or impose remedies on them, if it identifies national security concerns.

Mandatory filing obligations will apply to qualifying transactions in 17 sensitive sectors, with all other transactions subject to a voluntary filing regime and possibilities for the Government to review unnotified transactions up to five years after they have closed. Once the legislation has passed, the Government will also be able to retrospectively review any transactions that closed on or after 12 November 2020. Read about the UK's National Security and Investment Bill: key points and implications.

The European Commission 2019 - 2024

On 27 November 2019, The European Parliament confirmed the new class of European Commissioners with 461 votes in favour, 157 against and 89 abstentions. The new President of the European Commission, Ursula von der Leyen, and her team of European Commissioners took office on 1 December 2019 and will drive the EU’s agenda for the next five years. President Von der Leyen, the former German defence minister, says that it will be a “geopolitical Commission,” signalling an intention to position Europe as a heavyweight on the world stage.

Here Clifford Chance experts, including Of Counsel Michel Petite who worked for EU institutions for 27 years and was legal adviser to three Commission Presidents, assess the priorities for the von der Leyen Commission. Read more about the European Commission 2019 - 2024

The EU Trade Process Explained

This briefing paper provides an overview of the European Union’s role in trade policy on behalf of its Member States, the process by which it undertakes different aspects of that policy, and the roles of the various EU institutions. Read more about the EU trade process explained.