EU calls US trade threats ‘dangerous’ for growth

“The biggest risk to this rosy outlook is protectionism, which must not become the new normal: that would only hurt those of our citizens we most need to protect,” said EU Economic Affairs Commissioner Pierre Moscovici. (AFP)
Updated 03 May 2018
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EU calls US trade threats ‘dangerous’ for growth

  • Sparking particular worry about the economy is an ongoing trade dispute with US President Donald Trump
  • The Europeans and other allies have so far won a US exemption on the metals tariffs to June 1

BRUSSELS: The EU warned Thursday that a rise in trade protectionism exemplified by the Trump administration’s tariffs was the biggest threat to eurozone growth despite solid economic forecasts for the next two years.
Brussels unveiled the optimistic forecasts for 2018 and 2019 a day after official data showed growth slowed in the eurozone, fueling fears that the recovery in Europe was losing steam after a strong 2017.
Sparking particular worry about the economy is an ongoing trade dispute with US President Donald Trump, who has threatened to impose major metals tariffs and provoke a trade war.
“The biggest risk to this rosy outlook is protectionism, which must not become the new normal: that would only hurt those of our citizens we most need to protect,” said EU Economic Affairs Commissioner Pierre Moscovici.
The commission, the EU’s executive arm, said the 19-country single currency bloc would expand by a robust 2.3 percent in 2018, and by 2.0 percent in 2019, the same forecast as in February.
But the commission warned that policies taken by Trump, including a massive tax cut, had created a real threat to Europe’s economy.
The tax cuts “and inward-looking trade policies present a dangerous nexus,” to commission wrote in its forecast.
The Europeans and other allies have so far won a US exemption on the metals tariffs to June 1, but have prepared a long list of countermeasures in case Trump delivers on his threat.
“An escalation of trade protectionism presents an unambiguously negative risk to the global economic outlook,” the commission said.
The commission also had a warning for Britain ahead of Brexit, predicting that the UK economy would grow by a sluggish 1.5 percent in 2018, well below the EU pace of 2.3 percent.
Britain’s growth would slow even further to 1.2 percent in 2019, the year it is officially to divorce from the bloc.
“Within Europe, risks related to the outcome of the Brexit negotiations remain,” the EU added.
In its forecast, the commission delivered welcome news to pro-reform French President Emmanuel Macron, with France officially in position to emerge from the deficit procedure after nearly a decade.
The EU said that after 2.6 percent in 2017, the French deficit will reach and an even lower 2.3 percent in 2018.
France is indeed one of the last two countries in the eurozone, along with Spain, still concerned by the excessive deficit procedure, which can lead to sanctions and fines, even if this has never happened.
During the worst of the eurozone crisis in 2011, 24 EU countries were simultaneously under the procedure, which when the public deficit exceeds three percent of GDP.
Powerhouse Germany once again blew through targets on public spending, though remained open to criticism that it overly privileges austerity which punishes the wider European economy.
The German public budget is forecast to run a stunning surplus of 1.2 percent of GDP in 2018.
The EU also said Thursday that inflation in the eurozone fell to 1.2 percent in April, a dip from 1.3 percent in March.
That edges inflation further away from the European Central Bank’s target of near 2.0 percent.


US-China trade talks resume in Washington from Tuesday

Updated 48 min 13 sec ago
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US-China trade talks resume in Washington from Tuesday

  • The last set of talks ended Friday in Beijing with no deal
  • The next round of negotiations will commence with deputy-level meetings before moving on to principal-level talks on Thursday

WASHINGTON: US-China trade talks aimed at ending a damaging tariff war will resume from Tuesday in Washington, the White House has announced.
The last set of talks ended Friday in Beijing with no deal, though US President Donald Trump said the discussions were going “extremely well” and suggested he could extend a March 1 truce deadline for an agreement to be reached.
The next round of negotiations will commence with deputy-level meetings before moving on to principal-level talks on Thursday, a White House statement issued Monday said.
For the US, the talks will be led by Trade Representative Robert Lighthizer and include Treasury Secretary Steven Mnuchin, Commerce Secretary Wilbur Ross, economic policy adviser Larry Kudlow, and trade adviser Peter Navarro.
China’s commerce ministry meanwhile announced it would be represented by Vice Premier Liu He, Beijing’s top trade negotiator.
On Friday, Trump re-iterated he might be willing to hold off on increasing tariffs to 25 percent from the current 10 percent on March 1 on $200 billion in Chinese goods if Washington and Beijing are close to finalizing an agreement to deal with US complaints about unfair trade and theft of American technology.
American officials accuse Beijing of seeking global industrial predominance through an array of unfair trade practices, including the “theft” of American intellectual property and massive state intervention in commodities markets.
Since a December detente, China has resumed purchases of some US soybeans and dangled massive buying of American commodities to get US trade negotiators closer to a deal.
The talks are aimed at “achieving needed structural changes in China that affect trade between the United States and China,” Monday’s statement said.
“The two sides will also discuss China’s pledge to purchase a substantial amount of goods and services from the United States.”
Beijing and Washington have imposed duties on more than $360 billion in two-way trade, which are weighing on their manufacturing sectors and have shaken global financial markets.