EU Economy: Germany and EU urged to take advantage of US protectionism

Germany is looking to take advantage of trade opportunities in Asia and South America from the United States turning protectionist.

After President Donald Trump withdrew the US from the Trans-Pacific Partnership trade deal, Germany’s Vice-Chancellor and Economy Minister Sigmar Gabriel said Trump is shutting doors which can open for other countries.

Gabriel, addressing an energy industry summit in Berlin on Tuesday, said: “Of course, if the US president starts a trade conflict – I don’t want to call it ‘trade war’ – with the Association of Southeast Asian Nations and with China. Of course, we in Europe should tell the ASEAN states and also China and India: ‘We have no interest in a trade conflict, we want to be fair partners’ – and we have to ask China to reciprocate – but we should take advantage of the opportunities that open up.”

Of Trump he said: “He will run a protectionist and nationalist programme, and we cannot respond in the same way. We need to act by becoming more competitive, investing in our infrastructure, in digitalisation, in education, we simply need to get better. And we need to look for partners who want to achieve those things with us and I believe they exist. When someone shuts doors – and he is shutting doors – others open somewhere else, that I am sure of.”

Earlier in an interview with the Handelsblatt newspaper, Gabriel pointed out that just 10 percent of German exports go to the US, while 60 percent go to other countries in Europe which shows where its economic interests lie.

“Germany should act with self-confidence and not be fearful or servile,” he said, given that it is a “highly successful, technologically advanced export nation with many hard-working people and smart companies.”

"US Trade barriers “doomed to fail”

The European Union’s partners have thrown more energy into trade talks with the bloc since Donald Trump’s election, the EU’s trade chief said on Tuesday, warning that those backing trade barriers were “doomed to fail”.

EU Trade Commissioner Cecilia Malmstrom said EU-US trade negotiations were “firmly in the freezer” and that, while the United States was the EU’s most important partner, there was a long list of countries wanting to deal with the 28-nation bloc.

“If anything, since November, we have seen many of our partners throw more energy and more resources at their negotiations with the EU,” she told a conference at the Bruegel economic think tank in Brussels.

Trade was essential for employment – with some 31 million European jobs dependent on exports – and was a way to spread good values and standards across the globe and to lift people in developing countries out of poverty, Malmstrom said.

Most countries, she said, still shared the same vision, believing in the benefits of open trade and investments.

“Those who, in the 21st century, think that we can become great again by rebuilding borders, reimposing trade barriers, restricting people’s freedom to move, are doomed to fail,” she said in what also appeared to be a dig at Britain’s vote to leave the European Union. 

China could potentially also replace the US as the EU's major trading partner.

Read more: Germany and EU urged to take advantage of US protectionism | Euronews

EU gains from "Jekyll and Hyde" trade tactics with China - study shows

The European Union's best strategy for boosting exports to China is a "Jekyll and Hyde" trade policy, blending diplomatic overtures with tough legal action against dumping and protectionism, a study published on Monday said.

The finding suggests that China is likely to be the subject of more EU trade disputes at the World Trade Organization and that more Chinese exports will be hit with punitive duties if the EU suspects unfair trade practices.

Trade with China, which is pinning future economic growth on the development of its own consumer market, could be a tonic for Europe's economy, which is struggling to recover from years of financial crisis.

The study, "What's holding back EU exports to China?", by economists at the University of St Gallen in Switzerland, led by Simon Evenett, found China's "murky protectionism" had been effective in slowing EU imports into China, but EU states could fight back.

It found that EU member states that have called for more antidumping investigations of Chinese exports appear to have their own exports to China treated more leniently by Beijing - meaning complaining reaps rewards.

Read more: EU gains from "Jekyll and Hyde" trade tactics with China - study - Yahoo! Finance

Free Trade or Protectionism?

Classical Liberal philosopher John Stuart Mill astutely observed in the last century that "Trade barriers are chiefly injurious to the countries imposing them." It is true today as it was then, for the following reasons:

LOST JOBS: Protectionist laws raise taxes (tariffs) on imported goods and/or impose limits (quotas) on the amount of goods governments permit to enter into a country. They are laws that not only restrict the choice of consumer goods, but also contribute greatly both to the cost of goods and to the cost of doing business. So under "protectionism" you end up poorer, with less money for buying other things you want and need. Moreover, protectionist laws that reduce consumer spending power actually end up destroying jobs. In the USA, for example, according to the US Department of Labor's own statistics, "protectionism" destroys eight jobs in the general economy for every one saved in a protected industry.
HIGHER PRICES: Japanese consumers pay five times the world price for rice because of import restrictions protecting Japanese farmers. European consumers pay dearly for EC restrictions on food imports and heavy taxes for domestic farm subsidies. American consumers also suffer from the same double burden, paying six times the world price for sugar because of trade restrictions (to give but one example). The US Semiconductor Trade Pact, which pressured Japanese producers to cut back production of computer memory chips, caused an acute worldwide shortage of these widely used parts. Prices quadrupled and companies using these components in the production of electronic consumer goods, in various countries around the world, were badly hurt.
HIGHER TAXES: Protectionist laws not only force you to pay more taxes on imported goods, but also raise your general taxes as well. This is because governments invariably expand their Customs Department bureaucracies to force compliance with their new rounds of trade restrictions (or in the case of NAFTA, trade regulations). These bureaucrats must be paid. There is also the expense of more red tape and paperwork for trading companies and more harassment of individual travelers passing through the borders.
THE DEBT CRISIS: Western Banks are owed hundreds of billions of dollars by Eastern European and Third World countries. Trade restrictions by Western governments, however, have cut off Western markets for these countries, making it virtually impossible for them to earn the hard currencies necessary to repay their loans. This increases the very real possibility of a collapse of the world banking system.

 When the government of Country "A" puts up trade barriers against the goods of Country "B", the government of Country "B" will naturally retaliate by erecting trade barriers against the goods of Country "A". The result? A trade war in which both sides lose. But all too often a depressed economy is not the only negative outcome of a trade war.

Note EU-Digest: Free trade yes but it must be fair trade where everyone is protected against greed by one party or the other. 


Read more: SIL -- Free Trade or Protectionism?

YahooNews: EU leaders reject protectionism - by Ilona Wissenbach and Marcin Grajewski

For the complete report from YahooNews click on this link

EU leaders reject protectionism - by Ilona Wissenbach and Marcin Grajewski

European Union leaders rejected protectionism on Sunday to prevent a new "iron curtain" dividing the 27-nation bloc into rich and poor halves during the global economic crisis. At a summit called to bridge differences over how to handle the crisis, leaders made a new commitment to the EU's single market -- a response to concerns that any protectionist moves to prop up national industries would undermine EU unity. They did not agree on any regional aid package to the whole of central and eastern Europe after opposition from German Chancellor Angela Merkel.

Hungary called last week for rules on entering the 16-nation euro zone should be relaxed to help others to enjoy the exchange rate stability it offers. But Luxembourg Prime Minister Jean-Claude Juncker, who chairs the group of euro zone countries, ruled this out. "I don't think we can change the accession criteria to the euro overnight. This is not feasible," Juncker told reporters.