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

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

How to build a more resilient and inclusive global system

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

Amazon indigenous groups want to create a nature sanctuary the size of Mexico

UN’s Grandi slams ‘toxic language of politics’ aimed at refugees, migrants

New Syria fighting represents ‘giant powder keg’, warns aid veteran, as he leaves UN stage

Facebook wins EU approval for WhatsApp acquisition; just a sign of the times

Eurozone 2013: Where to?

“A Junior Enterprise is run only by students.. there are no professors or managers that can help you solve your problems”

The success story of a Chinese investment in the Greek port of Piraeus

These are the countries best prepared for the fight against cancer

Latin America’s cities are ready to take off. But their infrastructure is failing them

6th Edition of India m2m + iot Forum 2019 concluded, in association with The European Sting

Seven trends shaping the future of the mining and metals industry

The miserables and the untouchables of the economic crisis

These five exercise trends will help society and your health

Spending another 3 billion euros on Turkey feels better than admitting EU’s failure

European Commission and four online marketplaces sign a Product Safety Pledge to remove dangerous products

The great challenge of the 21st century is learning to consume less. This is how we can do it

‘Still time’ to stop a ‘bloody battle’ for Libya’s capital, insists Guterres

Four ways Europe can become a global innovation leader

Why Eurozone’s problems may end in a few months

Civil society organisations disenchanted with “Youth Guarantee”

International Day of the Midwife: 5 things you should know

Financial Transaction Tax: More money for future bank bailouts?

A Sting Exclusive: “Climate change and youth inaction: oblivion or nonchalance?”, AIESEC wonders from Brussels

4 bold new ways New York is going clean and green

UN recognises role of sport in achieving sustainable development

Finland, Switzerland and New Zealand lead the way at teaching skills for the future

Theresa May in search of a magic plan to invoke Article 50 and start Brexit negotiations now

Mind the (gender) gap: why we should stand together on inclusion

A Sting Exclusive: “China is Making Good Stories not Bad Ones”, Ambassador Yang highlights from Brussels

Merkel had it her way with the refugees & immigrants but can Greece and Turkey deliver?

India is failing 175 million of its young people. Here’s the solution

Mediterranean migrant drownings should spur greater action by European countries, urge UN agencies

Here are three key ways that data analytics can improve the workplace

Who is culpable in the EU for Ukraine’s defection to Russia?

‘Continue working together’ UN chief urges DR Congo, as country heads to polls

Can China deal with climate change without the U.S.?

How cities can lead the way in bridging the global housing gap

Is ECB helping Germany to buy cheaply the rest of Europe?

COP24: A million lives could be saved by 2050 through climate action, UN health agency reveals

UN chief welcomes Taliban’s temporary truce announcement, encourages all parties to embrace ‘Afghan-owned peace’

The 28 EU leaders care more about fiscal orthodoxy than effectively fighting youth unemployment

How Finland is fighting fake news – in the classroom

UN food agency appeals for access to key storage facility amid fight for Hudaydah

Why artificial intelligence is learning emotional intelligence

EU Directive makes haircut on uncovered deposits a standard in bank bail-ins

From Russia with love: Brussels and Moscow close to an agreement on Ukraine’s gas supplies

Seize the opportunities of digital technology to improve well-being but also address the risks

When will Eurozone’s unemployment rate stop being Europe’s worst nightmare?

FROM THE FIELD: Weather reports come to aid of Uganda’s farmers

The secret weapon in the fight for sustainability? The humble barcode

Terrorism diverts resources from ‘much-needed’ development to ‘costly’ security, warns UN envoy for Central Africa

Crime and drugs in West and Central Africa: Security Council highlights ‘new alarming trends’

MEPs call on EU countries to end precarious employment practices

MEPs cap prices of calls within EU and approve emergency alert system

Recession: the best argument for growth

There is a forgotten solution to climate change that we must invest in – nature

Tsipras imposes more austerity on insolvent Greece; plans to win new early election soon

Immigrant integration policies have improved but challenges remain

Satellites and data are going to help us phase out fossil fuels. Here’s how

What the Corn Laws tell us about Brexit Britain

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