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Is an EU-China trade war brewing?
Carl Bildt, former prime minister of Sweden and co-chair of the European Council on Foreign Relations, shares his perspective on European politics from Vienna, Austria
Is there a risk of a full-scale trade war between the European Union and China?
Hopefully not. But it was a decision, somewhat controversial, the other day by the EU to impose tariffs, not too high but still substantial, on electric vehicles coming from China. The US, of course, has done something similar but much higher tariffs and without much of a theoretical justification. I mean, the EU tried to ground its different decisions in analysis of the subsidies generated or given to the different Chinese car manufacturers. China will retaliate in one way or the other. But talks are going on and there's no interest in a trade war either from the EU side or from the Chinese side. And we should not forget, by the way, that for the moment, there are 100 times more cars sold by European companies in China than Chinese vehicles or cars exported to Europe.
Why is the deal between Italy and Albania on refugee centers so controversial?
Well it's been criticized by human rights groups, whether that is justified or not, it's difficult for me to judge. But the idea is for roughly 3,000 asylum seekers to Italy to be roughly 3,000 of them every month to be processed in two centers in Italy that are going to be run by and financed by Italy. We'll see how this would work out. They would be coming from primarily what they call "safe countries," and that means that the expectation is, of course, that the majority of them, or the vast majority of them, will have to be repatriated to their respective countries. It's part of the effort by X numbers of European governments to deal with the migration issue that is in very many of the countries the number one domestic policy concern at the moment.
British Chancellor of the Exchequer Rishi Sunak leaves Millbank Studios after a media interview in London, Britain, May 27, 2022.
Hard Numbers: Sinking Sunak, Mellon's millions for Trump, Israelis bearish on two-state solution, Thousands displaced in Haiti, Chinese carmakers take aim at EU
516: British Prime Minister Rishi Sunak might be on the verge of making history … and not in a good way. He could be the first sitting prime minister to lose their seat in a general election, according to a new poll, which predicts Labour could win a whopping 516 seats in Parliament. Meanwhile, the poll suggests that Sunak’s Conservative Party will win just 53 seats.
50 million: Conservative billionaire Timothy Mellon reportedly sent $50 million to Donald Trump's presidential campaign the day after the former president was convicted on 34 felony counts in his hush-money trial last month. Donations disclosed to the Federal Election Commission show that the Trump campaign raked in $68 million from donors in May. Oddly, Mellon has also been the biggest donor to independent candidate Robert Kennedy Jr.’s campaign, having donated at least $20 million to his super pac in the past.
26: Amid the ongoing Israel-Hamas war in Gaza, just 26% of Israelis think a way can be found for Israel and an independent Palestinian state to coexist peacefully, according to new polling. This is a drop from 35% who said the same last year.
580,000: Nearly 580,000 people have been displaced by gang violence in Haiti, according to the UN, which amounts to roughly 5% of the country’s population. It’s estimated that gangs control more than 80% of Port-au-Prince, the Haitian capital. The country is now awaiting the arrival of a Kenya-led international police force to battle the gangs and lend support to a governing council overseen by a prime minister who was appointed in April.
25: It’s a trade war summer!Chinese carmakers are calling for a 25% tax on large European cars over the EU’s plans to impose tariffs of up to 38% on electric vehicles made in China beginning on July 4. The US also recently moved to hit Chinese electric vehicles with higher tariffs — all the way up to a staggering 100%.
Canada's Deputy Prime Minister and Minister of Finance Chrystia Freeland takes part in a press conference in Ottawa, Canada, on Jan. 29, 2024.
Canada’s threatened tax on tech giants risks trade war
Canadian Finance Minister Chrystia Freeland plans to unveil the federal budget on April 16, a release that will be keenly watched north and south of the border. Big Tech companies, in particular, will be looking for clues about when Canada will implement its long-promised digital services tax.
Justin Trudeau’s cash-strapped Liberal government hopes to raise up to $2.5 billion over five years by imposing a 3% tax on companies like Alphabet, Meta, Uber, Amazon, and Airbnb. First promised in the 2021 budget, the Trudeau government said it would implement the tax on Jan. 1, 2024, retroactive to 2022.
Aside from raising much-needed funds, targeting tech giants has the additional benefit for Trudeau of being popular politically. His government has already whacked Alphabet and Meta with its Online News Act, forcing them to share revenues with Canadian news publishers (Meta responded by removing news links from Facebook in Canada), and its Online Harms bill, which compels social media platforms to regulate harmful content or face punitive fines.
Freeland says the digital tax is a “matter of fairness,” given that tech giants have been booking their profits in low-tax jurisdictions.
A move by OECD countries to implement a global minimum corporate tax rate of 15% has gained traction, but US opposition persuaded a majority to vote for a year-long delay last summer. Freeland said she preferred a multilateral approach but that Canada is prepared to move forward alone.
US trade representative Katherine Tai has warned that the Biden administration considers the tax discriminatory and will retaliate with tariffs.
A letter from Senate Finance Committee chair Ron Wyden (D-Ore.) and Ranking Member Mike Crapo (R-Idaho) in October said that any retaliatory steps would have bipartisan support.
Those threats seem to have registered with Freeland. In her fall economic statement, she removed the Jan. 1 deadline, while introducing legislation that would allow the federal government to implement the tax later. The budget may indicate whether Canada still plans to go it alone and risk Washington’s wrath, or wait for a new multilateral effort.
Crisis at the WTO: Fixing a broken dispute system
The appeals body of the World Trade Organization (WTO) is like the Supreme Court for global trade. But it’s fundamentally broken: it hasn’t been able to hear any cases or issue decisions since 2019.
The US has blocked new appointments of WTO appeals judges under the Obama, Trump and Biden administrations, complaining that the organization’s rules have hurt US jobs and industry while it lets China protect its massive domestic market from foreign competition. Until WTO reform happens, the US says, it will block any new judges from sitting on the appeals bench.
Without a minimum of three appeals judges, the WTO can’t resolve disputes. And that’s a major problem for the world’s only international organization dealing with the rules of trade between nations. But there may be hope in sight.
On GZERO World with Ian Bremmer, WTO Director-General Ngozi Okonjo-Iweala said she is hopeful the dispute settlement impasse will be resolved by the WTO's 13th Ministerial Conference (MC13) in February 2024.
“[The United States] are not the only ones who have problems with the system. Developing countries also find it difficult to access,” Okonjo-Iweala says, “So let’s take all these complaints, reform system, and make it useful for everyone.”
Watch the full interview: World trade at risk without globalization, warns WTO chief Ngozi Okonjo-Iweala
Catch GZERO World with Ian Bremmer every week at gzeromedia.com/gzeroworld or on US public television. Check local listings.
Ottawa, Washington at odds over digital tax plan
The Canadian government has outlined its plans for a digital services tax, which will hit online retailers and social media platforms with a 3% tax on Canadian revenue.
Trouble is, the Liberals’ tax battle with tech titans poses a threat to the carefully laid international plans of their political allies in Washington, according to a Politico report.
The Biden administration is worried that this could change the dynamics in OECD negotiations on a global digital service tax. The OECD is leading talks with more than 130 nations that want a portion of the profits made by US tech companies in their countries to stay within their borders. The US managed to postpone the taxes until at least 2025 but worries that other countries may follow Canada’s lead and move forward unilaterally.
Business groups in Canada and the United States have loudly objected to Canada’s plan, and Washington has threatened to seek redress if Canada proceeds, although it is not clear that the measure would be captured under USMCA, a trade deal between the US, Canada, and Mexico, rules since large Canadian companies would likely also be required to pay.
Treasury Secretary Janet Yellen is reportedly lobbying Canadian Deputy Prime Minister Chrystia Freeland to drop her plans, but Freeland – who played a key role in negotiating the USMCA and has deep connections in Washington – has insisted Canada must proceed. The tax is expected to come into force by January of next year.
Australian businesses forced to adjust as China trade curbs bite
SYDNEY - Outside the small town of Quambatook on the grain-rich land of south-east Australia, Mr Brett Hosking runs a barley and wheat farm that has belonged to his family for about 110 years.
Australia calls for clarity from China over embargo reports
SYDNEY/BEIJING • Australia's Trade Minister yesterday called for greater clarity from China over reports that an embargo could hit a slew of industries by the end of the week and further escalate tensions between the two countries.
China's global ambitions & plummeting relationship with the US
"US/China relations have been plummeting. Pretty much everything is getting worse," Ian Bremmer tells viewers in this week's episode of GZERO World. In this commentary on the current state of play between the two global powerhouses, Bremmer breaks down the chess game that could be leading to a new Cold War: Travel between the two sides is restricted. Trade and tech competition abound. Beijing is consolidating control over Hong Kong and threatening Taiwan, while its internment of Uighurs has grown more severe. Meanwhile, Europe and developing nations alike are left with a very difficult choice.