The Brief, powered by Amazon Web Services (AWS) – Fixing globalisation’s Chinese sin

The Brief is EURACTIV's evening newsletter

Global trade is in peril like never before. Over the past weeks, the world has entered a full-fledged trade war involving the largest economies (the US, China and the EU) on more than one front.

Regional disputes are not uncommon (there is an ongoing blockade against Qatar imposed by UAE and other Arab countries) and this generation witnessed how Japan and the US bitterly fought to become the ‘tech’ power in the 90s.

Global trade is often praised as a force of good that spreads wealth across the planet and wipes out poverty for hundreds of millions of people. So why is it under attack now?

The reason is precisely to do with this unbalanced outcome. China has become the main beneficiary of globalisation, as almost 800 million of its citizens have come out of poverty over the last three decades.

But the country succeeded in doing that not only by reforming its economy and opening its markets. Chinese authorities heavily supported their companies with subsidies and favoured unbalanced ties with their Western partners.

Beijing’s public support for steel factories was unproductive – as it sustained ‘zombie’ plants –  and it also dumped global prices due to overproduction.

And while Chinese firms could freely buy European know-how and advance their development, European investors faced numerous restrictions to operate in the attractive market of the Middle Kingdom.

Partly due to these ‘unfair’ practices, pundits warned, globalisation has failed to deliver on its original promise of increasing the wealth of citizens not only in developing but also in developed nations.

Protests against free trade agreements in Europe were a warning signal for EU leaders to amend the course. They promised that trade deals would be fairer and more transparent, and actions would be taken to improve market access to China, to protect Europe’s strategic sectors and to tackle steel overcapacity.

Europe and the US agreed on the diagnosis, but they disagreed about the solution.

Across the Atlantic, Donald Trump arrived in the White House promising to strong-arm China.

The US president announced tariffs on US imports of steel and aluminium, even though only a small percentage comes from China. This week, he announced 25% tariffs on a list of 1,300 products worth $50 billion to retaliate against China’s intellectual property practices.

China responded with its own countermeasures aiming to cause a similar economic damage.

As the situation escalates between the two largest economies, Europe is struggling to remain the guarantor of the multilateral framework, namely the World Trade Organisation. The bloc still believes that dialogue with China could bear fruit, either on the steel overcapacity or the dispute over technology and innovation practices.

But the European Commission is prepared to step up its response by limiting Chinese firms’ access to Europe and taking the country to the WTO.

At stake is not only today’s promise of a fairer globalisation, but a digital future dominated by fewer nations.

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The Roundup

Portugal got an astonishing 103% of its energy needs from renewable sources in March, leading many to wonder if a proposed 27% EU-wide target for 2030 really is the best we can do. The climate needs help, can carbon-capture-storage really get the job done?

Vladimir Putin hopes a high-level meeting today can resolve the mess caused by the Salisbury nerve agent attack. The freshly-re-elected president was busy yesterday helping his Turkish counterpart lay the first concrete for Anatolia’s first nuclear power plant.

Belgium decided last week that its plans to ditch atomic power by 2025 will indeed go ahead. Environmental activists rejoiced and, in a separate case, are taking energy giant Shell to court, claiming its climate record is worthy of prosecution.

Europe’s love of soy, cocoa and palm oil is still wreaking havoc in developing countries. The continent’s sugar companies are now struggling to survive in a quota-free world.

NGOs claim that the International Maritime Organisation needs better governance. Travellers yesterday were probably thinking the same about air traffic controllers and France’s railway operator as computer chaos and strikes caused chaos, respectively.

Fresh from Cristiano Ronaldo breaking Juventus hearts in Turin, the Commission has stuck the boot into Italy as well, in this tweet on cohesion policy and the upcoming World Cup. Brutal.

Look out for…

Check your mains-connected electric clocks and see if they are keeping the right time or not. Grid operators think they are finally back on track after a bizarre spat between Kosovo and Serbia robbed us of up to six minutes.

Views are the author’s


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