Can the EU afford a trade war with China?

Pascal Lamy, Director-General of the World Trade Organization (left) and Supachai Panitchpakdi, Secretary-General of UNCTAD. Discussion in Rio+20: How can trade best support sustainable development? Opportunities and costs. Evolution of the international trading system and its trends from a development perspective:  (UNCTAD photo library)

Pascal Lamy, Director-General of the World Trade Organization (left) and Supachai Panitchpakdi, Secretary-General of UNCTAD. Discussion in Rio+20: How can trade best support sustainable development? Opportunities and costs. Evolution of the international trading system and its trends from a development perspective. (  UNCTAD photo library, Sep. 26, 2012)

Last week the Chinese Ministry of Commerce announced the imposition of anti-dumping duties on two products originating from the EU and the US. Imports into China of the widely used solvents ethylene glycol monobutyl and diethylene glycol monobutyl ethers, produced by a number of European and American companies, will be penalised with anti-dumping duties ranging from 9.3% to 18.8%. This is obviously a reaction to the recent anti-dumping investigations and measures introduced by the EU and the US against very important Chinese products and companies.

“Atlantic” anti-dumping

It suffices remembering that Europe and America recently penalised two major international companies of Chinese origin. Huawei Technologies Co. and the smaller ZTE Corporation were accused by the US as being a “threat to national security”. Also, the EU has introduced investigations against both of them for dumping practices.

On top of that, more recently all of a sudden the EU recently announced that is examining the imposition of anti-dumping duties on two very important Chinese products imported in Europe, the solar panels and steel. Those products are being imported into the EU for many years under the same market conditions but the European Commission just now discovered that their selling prices contain bumping elements.

These are the most recent incidents of “Atlantic” penalisation of Chinese products. On many occasions over the past decades the European Union and the United States have being imposing anti-dumping duties on sales of a large number of products of Chinese companies. During the past five years, however, with the economic and financial crisis raging over the western economies, the EU and the US have stepped up this practice, openly aiming at unilaterally protecting their own produce and jobs.

China has changed

However, times have changed now. China is nowadays the second largest economy of the world and by far the largest creditor of the US. More than two and a half trillion of dollar denominated securities have been accumulated by China. Moreover, the EU is also expecting and praying for the Chinese contribution to solve its own credit crisis. Given all that, a trade war with China could take in the future quite different dimensions than in the past. More so in case the EU and the US anti-dumping measures are proved of being of an arbitrary character, aiming at enacting protectionist walls.

It seems that the first signs of the changing character of Chinese reactions to western unilateral trade practices are now emerging, with straight away applicable anti-dumping duties on those two solvents of EU and US origin. According to Beijing, as of tomorrow and for the next five years ethylene glycol monobutyl and diethylene glycol monobutyl ethers produced in the EU and the US and sold to China, will be levied with anti-dumping import duties ranging from 9.3% to 18.8%. No EU or US companies will be excluded from this.

A trade war would threaten global economy

Undoubtedly this development may mark a totally new era in the huge universe of economic relations between the EU and the US on the one side and China on the other. Trade between EU and China was around €500 billion last year, while the US-China commerce was a bit less than that. As for the investment flows, they reach hundreds of billions annually on both directions. In short, these investments constitute the powerhouse of the world’s economy. According to the United Nations Conferenc on Trade And Development (UNCTAD), China in 2011 accepted foreign direct investments of at least $130 billion, while the country at the same time invested $70bn abroad.

The key question remains though, if we are witnessing the beginning of a trade war between the West and China. Is there any logic in it? Unfortunately, both the EU and the US economies seem very fragile. The European Union actually is in recession as from the second half of last year. Its relations with China constitute a major hope for returning to growth in 2013.

If China chooses to wage “a trade war”, hopes for return to growth will be ruined for the export oriented Eurozone countries. Let’s hope that reason will finally prevail in Brussels and the European Commission will think twice before taking the next step in this minefield. The World Trade Organisation and the UNCTAD could offer a base to resolve the issue. With unemployment in an upwards path, ordinary working Europeans simply cannot withstand a trade war with China. Hundreds of thousands of jobs may be lost in it.

The European Sting will be following closely this issue which may lead to uncharted trade waters.

Advertising

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

How climate change exacerbates the refugee crisis – and what can be done about it

The three sins the EU committed in 2015

FROM THE FIELD: Argentina Preserving Pristine Forests

Antitrust: Commission opens investigation into Broadcom and sends Statement of Objections seeking to impose interim measures in TV and modem chipsets markets

These scientists are using sound waves to filter plastic fibres from washing machine wastewater

eGovernmnet for more efficiency, equality and democracy

Global aid needed for healthcare

JADE at European Business Summit 2015

Women’s rights: MEPs call for action to fight backlash against gender equality

Claude Akpokavie, Senior ILO Adviser:“Engaging in policy debates and organizing workers, are two key challenges faced by unions in Export processing zones”

India: step up reform efforts to increase quality jobs and incomes

Indonesia’s imams are joining the fight against plastic bags

More refugees being helped by family, work and study permits, finds OECD and UNHCR study

IQ scores have been falling for decades, new study finds

More urgency needed to help increasing numbers ‘locked out’, before 2030, says UN’s Bachelet

India is building a high-tech sustainable city from scratch

Brexit: MEPs concerned over reported UK registration plans for EU27 citizens

Thai cave boys spared thundershowers, highlighting extreme climate disruption: UN weather agency

Scientists just got closer to making nuclear fusion work

How Hawaii plans to be the first US state to run entirely on clean energy

Disease slashing global meat output, cereals boom, bananas under watch: FAO

Managers’ pay under fire

International Day of Cooperatives sets stage for long-standing production and consumption

Will the outcome of the UK referendum “calm” the financial markets?

Greece’s last Eurogroup or the beginning of a new solid European Union?

In tech-driven 21st century, achieving global development goals requires closing digital gender divide

COP21 Business update: Companies urge now for carbon pricing as coal is still a big issue

Atomic agency cites concerns over Iran testing sites, offers COVID-19 assistance

Europe, US and Russia haggle over Ukraine’s convulsing body; Russians and Americans press on for an all out civil war

More women and girls needed in the sciences to solve world’s biggest challenges

EC v Samsung: A whole year to compile a case

We won’t win the online security war without people power

These 5 countries plan to slash their CO2 emissions. But how will they do it?

UN recorded 64 new allegations of sexual exploitation or abuse in the past three months

Can the banking union help Eurozone counter its imminent threats?

IMF: When high yield goes boom

Heard about deepfakes? Don’t panic. Prepare

Here’s how business needs to change for a new decade

This is how Europe is helping companies and workers as the coronavirus crisis deepens

Young health workforce – a core of effective primary healthcare?

How to change the world at Davos

The influence of the multilateral agreement on migrant health

Be a part of the World Forum on Future Trends in Defence and Security

Syria: Thousands of children ‘hemmed in’ by ‘brutal and gratuitous’ spike in violence

IMF: The near-term outlook for the U.S. economy is one of strong growth and job creation

UN commission agrees roadmap on ensuring women’s social protection, mobility, safety, and access to economic opportunities

UN recognises role of sport in achieving sustainable development

We need to protect 30% of the planet by 2030. This is how we can do it

How banking with blockchain can stamp out corruption and increase financial inclusion

French Prime Minister passes Stability Program and takes his ‘café’ in Brussels this June

When is necessary understand the cultural marks in health-disease process

Yellen and Draghi tell Trump and markets not to expedite the next crisis

UN chief sends condolences to families of Malawi flood victims

Modern society has reached its limits. Society 5.0 will liberate us

‘You can and should do more’ to include people with disabilities, wheelchair-bound Syrian advocate tells Security Council in searing speech

ISIL’s ‘legacy of terror’ in Iraq: UN verifies over 200 mass graves

EU-UK future relations: “level playing field” crucial to ensure fair competition

Time to pay up: UN summit to push for development finance breakthrough

Why salaries could finally be on the way up

This is what the world’s CEOs think about the global outlook

More Stings?

Comments

  1. Very thought-provoking! On many occasions, the United States bullies the Caribbean and it will be interesting to see how they react to these events. The US hegemonic behaviour is evident in the difficulty facing Antigua as they seek to be compensated following their online gambling with the US that was heard by World trade Organisation; with regards to the US granting of sugar subsidies to their overseas territories, Puerto Rico and the US Virgin Islands.
    China is often undaunted by outsiders’ behaviour and has dealt with hegemonic powers of the western world successfully to grow its economy. I can’t see that now it has emerged so powerful that the EU and the US will win a trade war with China.

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s