WORLD: Global Counsel Chief Economist, Gregor Irwin, and Senior Associate, Thomas Gratowski, discuss implications of the global trade war.
Something rather important flew under the radar last week, as the US secured a deal with Mexico on NAFTA. With most of the coverage focused on the revamped rules of origin for auto trade, little light was shed on the Trump administration’s other achievements in the auto sector. The deal struck with Mexico reportedly includes a clause allowing the US to charge more than its most-favoured nation (MFN) tariff on auto imports from Mexico which fail to meet the new rules of origin.
In Sweden’s general election this weekend, the anti-immigration Sweden Democrats (SD) are projected to win approximately 20% of votes. This will make them the second largest party in the country – the result of a swift rise that will dramatically impact Sweden’s political landscape. It echoes a similar surge from anti-establishment and Eurosceptic parties seen in the recent German, Austrian, Dutch and Italian elections.
There is nothing new in British government ministers showing a basic lack of understanding of trade policy. The Brexit referendum and its aftermath have been characterised by ministers asserting ambitious free trade goals which are not deliverable in the real world. Now the opposition Labour party has followed suit with its leader, Jeremy Corbyn, setting out a new “Build it in Britain” agenda, which seeks to re-write international trade rules.
US trade policy under Donald Trump has become volatile, noisy and aggressive. This makes it hard to follow policy developments, let alone to understand what is driving them. But the key to understanding the dispute with China is to recognise it is quite different from the disputes the US has provoked with other countries. In fact, it is not a conventional trade dispute at all.
British retailer Dixons Carphone reported on Tuesday that ten million customers may have been affected by a cyber-attack. This is yet another example of the privacy breaches that are affecting every day operations of European companies. The Dixons Carphone incident follows other major cyber-attacks. The WannaCry and NotPetya attacks led to substantial financial losses for firms across France, Germany, Italy, Poland, Portugal, Spain and the UK.
The Irish border has become a major obstacle in the Brexit negotiations. With time running short, the probability of a no-deal Brexit – and the chaos this would imply – is increasing. So what are the potential solutions?
The torrential downpour which greeted President Putin as he walked onto the turf at the Luzhniki Stadium as the final whistle brought the 21st World Cup to an end was the only cloud over a tournament graced with many footballing silver linings. His counterpart at FIFA, President Infantino, had declared before the final that the championship was “changing the perception of Russia, particularly in the west.” For observers in the Kremlin totting up the cost of the tournament, judging whether the FIFA President is right is their next task.
US President Trump upped the ante in his trade dispute with China earlier this week by mandating his US Trade Representative to release a list of up to $200bn in Chinese goods on which a new 10% tariff would apply by the end of the summer. Whether this can bring change in Chinese trade practices, or at least force Beijing back to the negotiating table, remains questionable. But what is certain is that it is becoming increasingly difficult for Trump’s trade officials to hit China with new tariffs without also directly impacting consumers.
Back in 2016, with the Digital Single Market agenda still in its infancy, the European Commission launched its ambitious reform of telecoms regulation. The so-called European Electronic Communications Code (EECC) was presented with great fanfare and with the explicit goal of plugging Europe’s €155 billion investment gap in digital infrastructure. The ultimate aim of the proposal was to provide high speed connectivity at lower prices to European consumers, a prerequisite to ensure the political acceptability of any reform in Brussels.