Trump, EU chief set to meet in Davos as US digital tariffs loom

US President Donald Trump is likely to meet with EU leader, Ursula von der Leyen, in Davos, Switzerland at the World Economic Forum. (AFP)
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Updated 19 January 2020

Trump, EU chief set to meet in Davos as US digital tariffs loom

  • Pair have previously sparred over NATO spending, with Iran high on agenda

WASHINGTON: Donald Trump is expected to meet with EU leader Ursula von der Leyen in Davos, Switzerland, next week, three sources said on Friday, as tensions mount over tariff threats, and the US president faces an impeachment trial at home.

Just days after Trump scored big victories by inking a partial trade deal with China and passing a revamp of the North American Free Trade Agreement, he will travel to the World Economic Forum where he is expected to discuss deepening trade disputes with the European Commission president.

The White House and the European Commission did not immediately respond to requests for comment.

Among the raft of trade issues dividing the allies, Washington’s most immediate concern is France’s plan to impose a 3 percent digital services tax, which the US government believes would harm US technology giants like Google and Amazon, with a host of other countries poised to follow suit.

In retaliation, the US trade representative last month threatened to impose a 100 percent tariff on champagne, handbags, cheese and other goods and services. Trade experts say those tariffs could hit as soon as late January, given the lack of progress in negotiations.

“Things are not really going anywhere,” said a European official, despite frequent talks between French Finance Minister Bruno Le Maire, US Treasury Secretary Steve Mnuchin and top US trade negotiator Robert Lighthizer. “The US is not really ready to compromise in terms of having some sort of digital services tax.”

FASTFACT

Among the major trade issues is France’s plan to impose a 3 percent digital services tax, which the US government believes would harm US technology giants like Google and Amazon.

EU Trade Commissioner Phil Hogan ended a round of talks with senior US officials in Washington on Thursday, saying that negotiations were off to a “good start” but there was more work to do.

Iran will also be high on the agenda, after the UK, France and Germany triggered a dispute mechanism in the 2015 nuclear pact, following Tehran’s decision to begin scaling back compliance.

The pact offered Iran sanctions relief, but Trump withdrew from it in 2018 and reimposed sanctions, saying he wanted a tougher deal.

Tensions in the region heightened after the US killed powerful military commander Qassem Soleimani. Iran’s foreign minister, Mohammad Javad Zarif, canceled plans to attend the forum.

Trump and von der Leyen, Germany’s former defense minister, previously sparred over Berlin’s failure to reach NATO’s 2 percent defense spending target.

In December 2016, von der Leyen defended her shocked reaction to Trump’s election, saying, “I am not a political machine, but a human being ... and I heard exactly what he said during the campaign, also as a woman.” 


Gulf economies to take coronavirus exports hit says S&P

Updated 17 February 2020

Gulf economies to take coronavirus exports hit says S&P

  • S&P expects oil prices to remain at $60 per barrel in 2020 and decline to $55 from 2021
  • The ratings agency expects the impact on the banking sector to be low, with little direct exposure to Chinese companies

LONDON: Gulf states already hurt by a weak oil price could reap further economic pain from the impact of the coronavirus on their exports, S&P Global Ratings warned on Monday.

The ratings agency believes there is a risk that the economic impact of the virus could increase unpredictably with implications for overall economic growth, the oil price and the creditworthiness of some companies. Still, its base case scenario anticipates a limited impact for now.

“Given the importance of the Chinese economy to global economic activity, S&P Global Ratings expects recent developments could weigh on growth prospects in the GCC, already affected by low oil prices and geopolitical uncertainty,” it said in a report.

Although the rate of spread and timing of the peak of the new coronavirus is still uncertain, S&P said that modeling by epidemiologists indicated a likely range for the peak of between late-February and June.

Notwithstanding the spread of the virus, S&P expects oil prices to remain at $60 per barrel in 2020 and decline to $55 from 2021.

It sees the biggest potential impact on regional economies to be felt in terms of export volumes. S&P estimates that GCC countries send between 4 percent and 45 percent of their exported goods to China, with Oman being the most exposed (45.1 percent) and the UAE the least exposed (4.2 percent).

Beyond the trade of goods, the Gulf’s hospitality sector could also feel the effect of reduced tourist arrivals with hotels and shopping malls likely to suffer. The impact could be further amplified because of the high-spending nature of Chinese tourists.

On-location spending by Chinese tourists is the fourth largest in the world at $3,064 per person, according to Nielsen data. About 1.4 million Chinese tourists visited the GCC in 2018 with expectations of that figure rising to 2.2 million in 2023, and with the UAE as the main destination.

Chinese passengers also accounted for 3.9 percent of passengers passing through Dubai International Airport in 2018.

S&P said that if the effect of the new coronavirus is felt beyond March, the number of visitors to Expo 2020 in Dubai could be lower than expected.

The ratings agency expects the impact on the banking sector to be low, with little direct exposure to Chinese companies.