US tariffs trigger WTO spat escalation

Washington is meanwhile calling the WTO to investigate a number of retaliatory duties imposed by a range of countries. (AFP)
Updated 19 October 2018
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US tariffs trigger WTO spat escalation

GENEVA: China, Russia and the European Union are among a string of countries asking the World Trade Organization to probe new US steel and aluminum tariffs, the world trade body said Friday.
Washington is meanwhile calling the WTO to investigate a number of retaliatory duties imposed by a range of countries, the agenda for the next meeting of the organization’s Dispute Settlement Body (DSB) showed.
The agenda for the DSB meeting set to be held on October 29 shows that the EU, China, Russia, Canada, Mexico, Norway and Turkey plan to ask for the creation of a panel of experts to review US President Donald Trump’s decision to hit them with tariffs of 25 percent on steel and 10 percent on aluminum.
Marking a departure from a decades-long US-led drive for free trade, Trump has justified the steep tariffs with claims that massive flows of imports to the United States threaten national security.
The tariff spat has escalated into an all-out trade war between the US and China and growing trade tensions between Washington and many of its traditional allies.
The US is meanwhile planning to request that the DSB create another set of expert panels to review the legality of retaliatory tariffs imposed by China, Canada, the EU and Mexico.
The requests, which follow rounds of failed consultations, mark and escalation in an ongoing showdown at the WTO around Trump’s controversial trade policies.
Under WTO regulations, parties in a dispute can block a first request for the creation of an arbitration panel, but if the parties make a second request, it is all but guaranteed to go through.
“Once the panel is established and composed, the EU is ready to demonstrate that the United States’ import duties are WTO-inconsistent and to obtain a ruling that condemns the US and brings relief to the EU industry,” an EU Commission spokesperson said.
The creation of a DSB panel usually triggers a long and often costly legal battle that sometimes takes years to resolve.


German economy contracts on weak foreign trade, auto bottleneck

Updated 40 min 49 sec ago
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German economy contracts on weak foreign trade, auto bottleneck

  • The third-quarter dip in GDP was the first time the economy has contracted since the first quarter of 2015
  • Investors do not expect the German economy to recover rapidly from a weak patch in the third quarter

BERLIN: The German economy contracted for the first time since 2015 in the third quarter as global trade disputes swung the traditional export growth engine of Europe’s largest economy into reverse, raising concerns that a near-decade-long expansion is faltering.
Gross domestic product (GDP) in Europe’s biggest economy contracted by 0.2 percent quarter-on-quarter, the Federal Statistics Office said on Wednesday. That compared with a Reuters forecast for a contraction of 0.1 percent.
Compared with the same quarter of the previous year, the economy grew by 1.1 percent from July to September, calendar-adjusted data showed. Analysts polled by Reuters had expected 1.3 percent.
“The slight decline in GDP compared to the previous quarter was mainly due to foreign trade developments: provisional calculations show there were fewer exports but more imports in the third quarter than in the second,” the Office said.
The third-quarter dip in GDP was the first time the economy has contracted since the first quarter of 2015.
The government had flagged a weaker third quarter last month, citing bottlenecks in the car sector stemming from the introduction of new pollution standards known as WLTP as a factor.
“Germany doesn’t have an economic problem but rather an auto sector problem. Due to the sluggish certification of cars, car production had to be noticeably reduced, with collateral damage for other sectors too,” said Andreas Scheuerle at DekaBank.
However, the ZEW research institute said on Tuesday that investors do not expect the German economy to recover rapidly from a weak patch in the third quarter.
Concerns are growing in the German economy, which is in its ninth year of expansion, about the impact of global trade disputes and Britain’s departure from the European Union.
In addition to angst about the impact of US President Donald Trump’s abrasive trade policy, German firms are concerned about instability at home where Chancellor Angela Merkel’s awkward ‘grand coalition’ has come close to collapsing twice.
Carsten Brzeski, an economist at ING, said that even though he expected the auto sector to rebound in the fourth quarter, the GDP figures for the July-September period were a “wake-up call that political stability and strong growth are by no means a given.”
“The poor export performance, despite a weak euro exchange rate, suggests that trade tensions and weaknesses in emerging markets could continue to weigh on Germany’s growth performance,” he said in a research note.
Last month, Germany’s DIHK Chambers of Industry and Commerce cut its 2018 growth forecast to 1.8 percent from 2.2 percent and predicted a slowdown to 1.7 percent next year as the economy faces mounting risks at home and abroad.