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 Economics & Governance

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

katja.knezevic@bruegel.org

Read article More on this topic More by this author

Blog Post

The United States-Mexico-Canada free trade agreement (USMCA)

While final ratification of the USMCA (also known as Nafta 2.0) is pending, we review economists’ assessment of the agreement.

By: Silvia Merler Topic: Global Economics & Governance Date: October 22, 2018
Read article More on this topic More by this author

Opinion

How could Europe benefit from the US-China trade war?

Under pressure from the US, Beijing is set to be more open to making new allies.

By: Guntram B. Wolff Topic: Global Economics & Governance Date: October 18, 2018
Read article More on this topic More by this author

Podcast

Podcast

Backstage: The new balance of Asia-EU-US trade relations

Amid the Asia-Europe Economic Forum on the fringes of the 12th ASEM Summit, Bruegel senior fellow hosts a conversation on developing global trade relations, with guests Moonsung Kang, professor as Korea University, and Michael G. Plummer, director at SAIS Europe – Johns Hopkins University, for an episode of the Bruegel Backstage series on ‘The Sound of Economics’.

By: The Sound of Economics Topic: Global Economics & Governance Date: October 17, 2018
Read article More on this topic More by this author

Opinion

Can Eurozone Reform Help Contain Trump?

The Trump administration knows that a key source of US economic leverage is the dollar’s role as the world’s dominant reserve currency. Countering America’s disproportionate power to destabilize the global economy thus requires reducing the share of international trade conducted in dollars.

By: Jochen Andritzky Topic: Global Economics & Governance Date: October 17, 2018
Read about event

Past Event

Past Event

Policy responses for an EU-MENA shared future

In the third edition of the "Platform for Advanced & Emerging Economies Policy Dialogue" we will discuss trade flows and trade policy between Europe and MENA, integration of developing economies into global value chains, and regional energy relations.

Speakers: Karim El Aynaoui, Marek Dabrowski, Uri Dadush, Ignacio Garcia Bercero, Ettore Greco, Giuseppe Grimaldi, Badr Ikken, Joanna Konings, Said Moufti, Pier Carlo Padoan, Lia Quartapelle, Visar Sala, Nicolò Russo Perez, Nicolò Sartori, Simone Tagliapietra and Guntram B. Wolff Location: LUISS Business School Viale Pola, 12, 00198 Roma RM, Italy Date: October 11, 2018
Read article More on this topic More by this author

Opinion

Global markets’ tepid reaction to China’s new opening

China’s accession to the World Trade Organisation in 2001 was greeted with great fanfare. But near silence has greeted the recent removal by the China Banking and Insurance Regulatory Commission of caps on foreign ownership of Chinese financial institutions. For Beijing, the apparent lack of interest might be an issue of too little, too late.

By: Alicia García-Herrero Topic: Global Economics & Governance Date: October 11, 2018
Read article Download PDF More on this topic

External Publication

The EU response to US trade tariffs

The authors contributed to the new issue of 'Intereconomics - Review of European Economic Policy' with a paper on the EU's strategy for managing the trade war. The authors argue that to minimise the economic costs of the trade war and protect multilateralism, the EU's best and only response is to retaliate.

By: Maria Demertzis and Gustav Fredriksson Topic: Global Economics & Governance Date: October 11, 2018
Read article More on this topic More by this author

Opinion

Ten years after the crisis: The West’s failure pushing China towards state capitalism

When considering China’s renewed state capitalism, we should be mindful of the damage done by the 2008 financial crisis to the world's perception of Western capitalism.

By: Alicia García-Herrero Topic: Global Economics & Governance Date: October 10, 2018
Read article More on this topic More by this author

Podcast

Podcast

Backstage: Implications of the new EU-Japan trade deal

Bruegel senior fellow André Sapir welcomes Tamotsu Nakamura, dean of Kobe University’s Graduate School of Economics, and Maria Åsenius, head of cabinet to European trade commissioner Cecilia Malmström, for a discussion of the EU-Japan economic partnership in the context of heightening global trade tensions.

By: The Sound of Economics Topic: Global Economics & Governance Date: October 4, 2018
Read article Download PDF

External Publication

European Parliament

The EU - Japan Economic Partnership Agreement

This paper was requested by the European Parliament's Committee on International Trade (INTA) and analyses the EU-Japan Economic Partnership Agreement (EUJEPA).

By: André Sapir, Sonali Chowdhry and Alessio Terzi Topic: European Parliament, Global Economics & Governance, Testimonies Date: October 3, 2018
Read about event More on this topic

Past Event

Past Event

International trade and the EU-Japan Economic Partnership Agreement

This event; jointly organised by Bruegel and the Graduate School of Economics, Kobe University, will discuss the EU-Japan trade deal and asses its impact.

Speakers: Maria Åsenius, Sonali Chowdhry, Gabriel Felbermayr, Hiroo Inoue, Sébastien Jean, Yoichi Matsubayashi, Tamotsu Nakamura, Masahiro Nakata, Luis Portero, André Sapir, Alessio Terzi, Agata Wierzbowska and Guntram B. Wolff Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: October 3, 2018
Read article Download PDF More by this author

Parliamentary Testimony

Belgian Federal ParliamentCroatian Parliament

Transatlantic relations

Testimony before the Belgian Federal Parliament ( La commissions des Relations extérieures de la Chambre des représentants )

By: Maria Demertzis Topic: Belgian Federal Parliament, Croatian Parliament, Testimonies Date: September 27, 2018
Load more posts