Past Event

Trade war trinity: analysis of global consequences

Analysis of the long-term impact of the trade war and its three key players: EU, US, and China.

Date: June 28, 2018, 12:30 pm Topic: Global economy and trade

audio & video recordings

summary

The event started with a presentation by Alicia García-Herrero, who highlighted that the US is aiming at containing China with a variety of measures, including trade tariffs. The US mainly targeted high-end products, while China low-end ones. She argued that the US wants to hurt China’s high-tech sector while protecting its consumers, whereas China cannot afford targeting high-end products, especially aircraft. She also pointed out that the US is limiting China’s ability to invest there and buy technology, and that it would be hard for the US to be a threat to China on tax competition.
Focusing on direct impact, she argued that Europe could become the key loser of a trade deal between the US and China, as China would probably divert imports in the EU (a key competitor of several US products). Instead, the EU could gain in relative terms, if China and the US continue with their trade war. Gains in the Chinese market would mostly be related to the motor vehicles sector, while gains in the US market would be more broad-based and larger.
She argued that this is only true if the EU does not take sides. However, for the EU to move away from a one-sided position anchored on the transatlantic alliance, China should offer enough, as the EU still has more to gain from US trade relations than from China’s. She concluded that China may be willing to engage in conversations with the EU about market access and reciprocity, now that the US is acting to contain its rise.
Ignasi Guardans remarked that US actions seem to be driven by political considerations as much as by trade issues, making it difficult to make predictions. He then analysed some major issues, starting from the use of Section 232 for steel and aluminium, as well as potentially for cars. He noted than from a policy perspective, the concept of economic security is very broad and could be stretched, allowing the use of this law to impose restrictions.
He mentioned the US announcement of potential higher duties on Spanish olives (motivated by the argument of below fair value sales, as a result of subsidies). He argued that this could be seen as a direct attack at the EU’s CAP, and that it can potentially become a major issue. Moreover, he focused on the reinforcement of the US CFIUS, aimed at restricting incoming investment (probably affecting EU investments in start-ups). He also mentions the possibility of a tax against Chinese investment.
Finally, he highlighted the conflict at the WTO on the Appellate Body of the dispute settlement panel. The US would not support any re-appointment, affecting the functioning of the body by reducing the number of its members.
Carl Hamilton suggested that perhaps an ambition of the US administration is to undermine the international multilateral system, and to withdraw from all arrangements.
He called for a clearer separation of security and trade issues, and for American institutions to be more protective of the US Constitution and for the Congress to verify more effectively that laws are enforced with original interpretation.
Moreover, he argued that protectionist measures neglect the importance of domino effects due to the increased international fragmentation of production in global value chains.
The discussion highlighted several issues including, among others, the importance for the EU of being united and relatively quick in reaction to global trade issues (also looking at domestic policy along with external policy) and other potential opportunities for the EU (e.g., shifting trade in agricultural products to China).

event materials

Presentation by Alicia Garcia-Herrero

 

Schedule

Jun 28, 2018

12:30-13:00

Check-in and lunch

13:00-14:00

Conversation

Alicia García-Herrero, Senior Fellow

Ignasi Guardans, Partner in the Brussels office of K&L Gates

Carl B Hamilton, Special Adviser on Trade Policy to Commissioner Malmström and Professor, University of Stockholm

14:00-14:30

Q&A

14:30

End

Speakers

Alicia García-Herrero

Senior Fellow

Ignasi Guardans

Partner in the Brussels office of K&L Gates

Carl B Hamilton

Special Adviser on Trade Policy to Commissioner Malmström and Professor, University of Stockholm

Location & Contact

Bruegel, Rue de la Charité 33, 1210 Brussels

Katja Knezevic

[email protected]

Read about event More on this topic
 

Upcoming Event

May
18
14:30

Is China’s private sector advancing or retreating?

A look into the Chinese private sector.

Speakers: Reinhard Bütikofer, Nicolas Véron and Alicia García-Herrero Topic: Global economy and trade Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Read about event
 

Upcoming Event

May
19
15:00

Three data realms: Managing the divergence between the EU, the US and China in the digital sphere

Major economies are addressing the challenges brought by digital trade in different ways, resulting in diverging regulatory regimes. How should we view these divergences and best deal with them?

Speakers: Susan Ariel Aaronson, Henry Gao, Esa Kaunistola and Niclas Poitiers Topic: Digital economy and innovation, Global economy and trade Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Read article More on this topic More by this author
 

Podcast

Podcast

The cost of China's dynamic zero-COVID policy

What does zero-COVID mean for both China and the global economy?

By: The Sound of Economics Topic: Global economy and trade Date: May 11, 2022
Read about event More on this topic
 

Past Event

Past Event

What is in store for Euro area economies?

ECB Executive Board Member Philip Lane discusses the outlook for Euro area economies.

Speakers: Maria Demertzis and Philip Lane Topic: European governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: May 5, 2022
Read article More on this topic More by this author
 

Podcast

Podcast

Global trade Down Under

A conversation on the global trading landscape.

By: The Sound of Economics Topic: Global economy and trade Date: May 4, 2022
Read about event More on this topic
 

Past Event

Past Event

COVID-19 and the shift to working from home: differences between the US and the EU

What changes has working from home brought on for workers and societies, and how can policy catch up?

Speakers: Jose Maria Barrero, Mamta Kapur, J. Scott Marcus and Laura Nurski Topic: Inclusive growth Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: April 28, 2022
Read about event More on this topic
 

Past Event

Past Event

From viruses to wars: recent disruptions to global trade and value chains

How have events in recent years impacted global trade and value chains and how can we strengthen these against future disruptions?

Speakers: Dalia Marin, Adil Mohommad and André Sapir Topic: Global economy and trade Date: April 27, 2022
Read about event More on this topic
 

Past Event

Past Event

War in Ukraine: What is the effect on Central and Eastern Europe?

How is the war in Ukraine affecting the countries in the central and eastern parts of Europe, the countries that are closest to the ongoing conflict?

Speakers: Beata Javorcik and Guntram B. Wolff Topic: European governance Date: April 26, 2022
Read article More on this topic More by this author
 

Opinion

China’s Covid policy to be year’s largest economic shock

Beijing’s ‘dynamic zero-Covid’ policy could devastate the domestic economy, but the effects will also be felt globally.

By: Alicia García-Herrero Topic: Global economy and trade Date: April 26, 2022
Read article More on this topic
 

Blog Post

The decoupling of Russia: European vulnerabilities in the high-tech sector

Although Russia bears the brunt of Western high-tech sanctions, the European Union will face challenges in sectors where it relies on Russian and Ukrainian commodities and technologies.

By: Monika Grzegorczyk, J. Scott Marcus, Niclas Poitiers and Pauline Weil Topic: Global economy and trade Date: April 12, 2022
Read article More by this author
 

Podcast

Podcast

What to expect from China's innovation drive?

How much has China progressed technologically?

By: The Sound of Economics Topic: Digital economy and innovation, Global economy and trade Date: April 6, 2022
Read article More on this topic
 

Blog Post

Is the private sector retreating in China? Not among its largest companies

Though private ownership does not free companies from the pervasive influence of the Communist Party, China’s private and state sectors are not equivalent; China’s largest firms are growing faster than their state-owned counterparts.

By: Tianlei Huang and Nicolas Véron Topic: Global economy and trade Date: April 5, 2022
Load more posts