The EU is following China’s trade distortions worldwide
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Hello, Brussels, and welcome to the new and improved version of the first edition of “Trade Secrets”.
From the news announced by the United States last week, we still feel backward and support in principle the World Trade Organization’s abandonment of the Covid-19 vaccine patent. The EU is extremely indignant, thinking it has emerged, looks like a bad guy, and lets everyone know. The problem is that, as the European Union, it cannot convey a very simple and completely reasonable message-it is good to talk about patents, but technology transfer and export are the main issues-it is no exaggeration. shrill And it’s weird References to Anglo-Saxons.
This ba kept trying to cover up some major news at the EU-India summit over the weekend. As the British “Financial Times” predicted last week, Brussels and Delhi launched (or technically updated) Talk about trade agreements, And ambitious ideas about cooperation in digital connectivity, geopolitics, etc., and the kind of investment treaties that have been abolished well Since the signing of the EU and China. Speaking of this, the main topic today is that the European Union is determined to carry out activities to create legal tools to deal with China’s trade distortions. The fact is that the problem is constantly changing.
Charter waters Take a look at the trade flow of the past ten years.
New answers to changing China problems
In the past few years, there has been a hum of fine-tuning around Brussels, like a high-performance engine running at high speed. The legal mind of the European Commission is to design new “autonomous” (unilateral) tools to deal with the unfair trade and investment distortions caused by China’s state capitalism that the European Union considers. (They didn’t say China, but that’s what they meant.)
Whether or not you support the basic idea of ??the campaign-free traders are skeptical-the process is impressive. Frankly speaking, we don’t want the lawyers of the Trade and Competition Council to follow us. Last week, the latest design results were shipped out of the hangar in the form of a computer room. Subsidy tool Used for foreign companies supported by countries operating in the European Union.
Assuming it is adopted, and depending on how it is used, this is important, and it brings competitive tools to international trade. In essence, it has expanded the scope of influence of the EU state aid system abroad, and foreign aid has distorted the European market. It can be applied to market competition, mergers and acquisitions and public procurement.
In the past five years or so, the latest in the list of measures that the EU has implemented or proposed to be unfavorable to China is the countervailing tool.If you want to take notes: sharpen Tools of Trade Defense (Anti-dumping and countervailing duties); these tariffs are allowed to be applied to companies subsidized by the Chinese government, but Export from another country; Tighten filter Foreign Direct Investment (FDI) for national security reasons; develop a Anti-enforcement tool (To be fair, against the Donald Trump administration), used to deal with foreign governments that act illegally; produce a Toolbox Let member states manage risk entities (Huawei) from 5G networks; prohibit imports Forced labor; And require European companies to exercise “due diligenceEliminate labor and environmental abuse in the supply chain. Quite a lot of lists.
You must admire the perseverance and ingenuity of the committee, and find ways to solve the so-called distortions one after another. You would also think that as China and the EU become closer trading partners, Brussels’ position will upset Beijing to some extent. But it is difficult to conclude that the tools of the European Union and a series of similar actions by the United States and other countries have pushed China’s growth model into a market economy. In fact, President Xi Jinping’s development is in the opposite direction.Double loopOne of the goals of the growth strategy is to use strong government intervention to improve China’s high-tech capabilities in an insulated domestic market.
why? Well, some of these explanations are political. These tools are stored in the committee, but some of them require the acquiescence of EU member states to create and/or use. For example, the power of foreign direct investment and 5G screening for national security lies at the national level: China can use carrots and sticks to provoke individual countries.
Some explanations are institutional.The ability to apply anti-dumping and countervailing duties to Chinese companies located in third countries has been tried several times (glass fiber Fabric with reinforce From Egypt and steel (From Indonesia and India), but only partially successful. Anti-dumping lawyers complained that it is difficult for the committee to initiate new cases.
Some are practical. The subsidy tool will involve complex investigations, trying to apply existing EU state aid rules to various opaque methods for China to provide funding to its companies. The threshold for action must also be set high enough to avoid deterring benign investment, especially because foreign companies trying to acquire companies in the European Union may also have to submit their own FDI notifications separately.
But one of the most difficult problems is that the establishment of tools usually lags behind the development of China’s trade and growth models for several years. While strengthening European trade defense tools against Chinese exports, Beijing has built industrial capabilities abroad through the “Belt and Road” initiative.Then, just as the European Union began to impose these tariffs on Chinese companies outside China, Beijing Rethink “One Belt One Road” initiative and reduce its risk exposure abroad.Subsidy tools come a few years after Chinese FDI entered the EU begin to drop Many European governments have become Drunk With China.You can now reasonably argue about the EU need more Rather than reducing China’s foreign direct investment.
As the China-EU Comprehensive Investment Agreement shows, China is Not so interested In terms of gaining market access in Europe, it is much better than ensuring European inward investment in intellectual property-intensive fields such as electric vehicles. We can guess what it is. The agreement has provisions to prevent forced technology transfer. The EU has filed a lawsuit on this issue in the WTO, but winning dispute settlement cases instead of using unilateral tools is a slow and uncertain business.
This is not a desperate piece of advice: Assuming this is a good idea, China’s exports and investment to the EU are still substantial. However, the EU’s criticism of the latest stage of China’s development (dominance of developed markets through strong government support and geopolitical arms trade) will be more difficult to resolve than before. That was before we discussed human rights issues.
In future newsletters, we will study the EU’s countervailing measures more deeply: there are many things to check. For the time being, we only need to talk about the many arduous legal projects in progress, but the equipment produced looks outdated.
This is your comprehensive understanding of global trade.Data from CPB Netherlands Bureau of Economic Policy AnalysisTrack the trade flow of the past ten years and show two things.
First of all, this is good news (at least for those who are passionate about globalization). Since the first few months of the flu pandemic, the recovery has been remarkable, and the current traffic has reached the level before Covid.
We think this is not done frequently enough. Although the shortage of semiconductor chips and high transportation costs often make headlines (including “Trade Secrets”, we admit), it should be ensured that there is such a strong rebound in the past three quarters, which has brought global manufacturing and logistics Many honors.
The bad news is that broader geopolitical tensions clearly affected the crowds on the eve of the pandemic. We don’t think these tensions will disappear anytime soon, so even if we manage to control Covid, we hope that growth will stagnate. Claire Jones
Welcome to our new “Trade Links” section, which summarizes the best content we have encountered in the past few days.
today’s Must read From the European international political and economic center, it covers the impact of fundamental changes in technology on trade, which transform manufacturing giants such as Volkswagen into software developers. It is well written and has some great charts to support the following: In terms of trade and technology, the present is the future.
We strongly recommend This “Financial Times”, Which discussed in depth why the world’s top vaccine manufacturer India Serum Institute is in trouble. One reason is that it is at the end of the vaccine trade war.It is also worth seeing Big reading Andrew Hill’s speech explained why the service industry in the UK has been hit hard by Brexit. This is a big deal. And-like Lionel Barber, who was an aboriginal in the diocese, notes -Considering that the service industry accounts for 80% of UK output, this is a story that few people talk about. As the economies on both sides of the Taiwan Strait begin to reopen, this situation is expected to change, and the worries of the service industry will become increasingly prominent.
This morning Version The excellent EuroExpress newsletter of the British Financial Times focuses on the transatlantic dispute over vaccine exemptions. Mehreen Khan concluded that this will not help poor countries that desperately need more prodding. For those interested in European policy and politics beyond trade, Register here The daily guide to advance the development of the European agenda is open to premium subscribers at 7 am (CET) Monday to Friday.Nikkei Asian Review Watching ($-Subscription required) Why did bureaucratic cowardice lead to the decline of Japan’s pharmaceutical industry and make Japan dependent on foreign vaccine supplies?For lovers of chip stories (who isn’t?), Nikkei digs how is it South Korean electronics group Samsung (Samsung) has lost its lead over Taiwanese chip maker Taiwan Semiconductor Manufacturing Company (TSMC).
In other places International Economic Law and Policy Blog Ask if the U.S. Unable to reach consensus Exempt the vaccine. (There are also some interesting suggestions, which can be read further in the comments.) The Economist of the Week Delve into the topic ($) Vaccine donation. Although Covax has donated nearly 50 million vaccines, it is still far from reaching its goal. One of the reasons for this tragedy is the tragedy that occurred in India. At the same time, China has distributed 13.4 million doses of vaccine to 45 different countries/regions, while India has provided more than 10 million doses of vaccine. Alan Beattie and Claire Jones
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