On the bring of a trade war?

My column in Mindanao Daily.

I asked this question already several times in my previous columns. What's good for the goose is good for the gander. Fact is, the European Union fears divisions as China woos Eastern European nations.

As the world prepares to tackle trade tensions and tit-for-tat tariffs, the summit between leaders of China and Central and Eastern European nations offers a chance for Beijing to present itself as a free trade champion.

Yes, China's Li Keqiang pushes trade with Eastern Europe amid EU concerns. The Chinese premier is meeting with leaders from Central and Eastern European countries at a summit in Sofia as he aims to boost Beijing's trade interests in the region. But let's face it:  Li cannot afford to offend the European Union.
   
The Chinese Prime  seeks to expand business and trade ties with Central and Eastern European countries at a summit in the Bulgarian capital yesterday. But Li must reassure the European Union that Beijing is not trying to divide the 28-nation European bloc.

Li's participation in the seventh "16+1" summit coincides with an escalating trade row with the United States. Last Friday, the US and China slapped tariffs on $34 billion (€29 billion) worth of the other's imports.

China also threatened it could launch "the biggest trade war in history." Well, is the world really at the brink or are well all already in the middle of all mess?

China, which seeks the EU's support in its trade battles with US President Donald Trump, has thus been careful in its dealing with Central and Eastern European nations.

"The 16+1 cooperation is by no means a geopolitical platform. Some say such cooperation may separate the EU, but this is not true," Li told a joint press conference on last Friday with Bulgarian Prime Minister Boyko Borissov.

"We hope that through our cooperation, we will improve the development of all countries involved and help them better integrate into the European integration process," said Li, who will visit Germany after the summit.

The 16+1 summit brings together China and 16 Central and Eastern European countries (CEEC), including 11 EU member states.

Besides China, the 16 countries that participate in the summit include EU members Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia, as well as non-EU states Albania, Bosnia and Herzegovina, Macedonia, Montenegro and Serbia.

Ever since its launch in 2012, the format has been viewed by Western critics as an instrument for Beijing to divide and undermine the EU by dangling the CEE states closer trade and investment opportunities with China.

But analysts say that in Sofia, the Chinese premier will try to avoid issues that might irk western capitals and the European Commission in Brussels. Let's hope and pray for it.

"I think that Premier Li Keqiang will adopt a low profile on the issues that might infringe on community affairs of the EU this time around," Francois Godement, director of Asia and China program at the European Council of Foreign Relations, told Reuters news agency.

Despite the substantial rise in Chinese investment in CEE nations in recent years, the region accounts for less than 10 percent of total Chinese money inflows into Europe. Most Chinese investment still goes to Western European countries like the United Kingdom, Germany, France and Italy.

The EU and the United States, meanwhile, account for around 90 percent of investment flows to the CEE region, highlighting their far greater importance to the region.

Interesting is to know more about the question if  China is  on course with 'Made in China 2025' amid trade row with US? China –really a free trade champion?

With Trump adopting protectionist trade and economic policies, China is increasingly positioning itself as a proponent of free trade.

Li said on Saturday that Beijing will stay on the path of economic reform, and would be more flexible about allowing foreign products to enter its domestic market.

"For foreign products which meet Chinese consumer needs, we will open the door wider to them to come into the Chinese market," he told the 16+1 summit participants. "We will lower overall import tariffs to the Chinese market," adding that his country would uphold free trade agreements.

Again: regarding this topic, my today's column can only end up with 'TO BE CONTINUED'!

Trade War or Not?

TRADE WAR OR NOT?

European Union foreign policy chief Federica Mogherini doesn't want to use the word "war" when speaking about EU-US relations. It's true that the EU has to defend its interests, she says, "but we're not at war with anyone."

Fine. But fact is, the EU caught between desire for retaliation and calm. No wonder! The EU doesn't want to just put up with Donald Trump's higher import tariffs and is mulling retaliatory measures. But German firms, in particular, fear that no one would profit from an escalation of the situation. And that's indeed true.

While being off to Manila due to several events (Philippine Independence Day is just around the corner!), I got this in mind: Is Trump's Korea policy calculated chaos? As the US scrambles to reorganize a summit with North Korea, positive outcomes are far from certain. Rather than a calculated strategy, the Trump administration's disorganized diplomacy is leaving the world in suspense. Latest news on my desk: June 12 is final for the Trump-Kim meeting. Who knows?

   

Fact is also: the European Commission is hopping mad, and it's ready to fight back. For its president, Jean-Claude Juncker, the higher US tariffs are "protectionism, simple as that." The US, he says, leaves the EU with no other choice than to initiate a WTO case. However, a ruling by the world trade body is likely to take months.

Also, US President Donald Trump has already signaled his country would withdraw from the World Trade Organization, should it side with the EU in its ruling. In other words, Europeans shouldn't pin too much hope on the WTO.

Juncker said the EU executive would come up with an adequate response nonetheless, as retaliatory measures such as higher EU import duties on US products had been prepared ahead of the US decision. Among the American items to be targeted would be ships and other products made with steel, whiskey, peanut butter, Harley-Davidsons and Levi's jeans worth €2.8 billion ($3.27 billion).

That's far less than the EU steel and aluminum exports to the US - worth €6.4 billion annually - which are affected by the Trump administration's decision. EU countertariffs could only be implemented after June 20, and it's unclear whether they will come at all. The bloc's member states will have to come to a joint decision, but positions currently differ widely.

Higher US tariffs on cars would be a blow to Germany's auto industry. That's for sure!

Of course, some EU states are not affected at all. Good for them. The managing director of the Federation of German Wholesale, Foreign Trade and Services (BGA), Gerhard Handke, told Reuters that not all EU member countries were affected by the higher tariffs to the same extent. He said there are nations that do not export steel or aluminum to the US at all. Handke argues that those nations are not interested in retaliation. Fine, but where is the spirit of an UNITED Europe? Yes, I know. It's gone already - as many Europe critics voiced out.

By contrast, Germany is hit hardest. "Against this background, keeping the EU's ranks closed despite different national interests among the 27 members will be a tall order," Handke commented.

Instead of coming up with comprehensive realiatory mesasures, he suggests the EU keep negotiating with the US.  He fears that otherwise there may be a devastating, psychologically induced impact on the market alongside the damage that businesses stand to incur.

The head of Germany's steel and metalworking industry group WSM, Christian Vietmeyer, doesn't beat about the bush. "Any EU response that could lead to a further escalation and more trade barries would do even more damage — Brussels should stay calm," he said.

German carmaker Volkswagen agrees that a spiral of sanctions and countersanctions would see no winners in the end. Donald Trump has already threatened to impose higher import tariffs on cars, which would deal a serious blow to Europe's powerhouse.

So, trade war or not? And please accept by apologizes for using the term "war".

Bernd Lange, who heads the European Parliament's INTA trade committee, is trying to combine a certain readiness to compromise with what he believes is the need to counter Trump's latest move with determination and resolve.

"Trump is attempting to blackmail us, and that's why we have to initiate an adequate response without provoking further escalation," he told German public radio. He suggested the EU should also raise import tariffs, but not to the same extent as the Trump administration. And that's what will most likely happen next.

Lange criticized German Economy Minister Peter Altmaier, who he said wanted to strike a deal with Donald Trump at all costs. "But no, we shouldn't negotiate a dirty deal under duress."

Altmaier himself said people should remain level-headed. He told German public broadcaster ARD (the first German TV channel after WWII) he hoped a process of contemplation would kick in in the US given that many goods would become more expensive there with the imposition of higher import duties. The minister added that people should not be fooled by Trump's threats toward German carmakers, calling on Europeans to stand and act together and possibly teaming up with Canada and Mexico, which have already announced countermeasures.

But not eveyone is willing to stay calm and treat the trade spat as a purely economic conflict. French President Emmanuel Macron took a look back in history. "Economic nationalism leads to war, and that's exactly what happened in the 1930s," he said. Gabriel Felbermayr, the director of the ifo Center for International Economics, sees "a Cold War in EU-US trade relations" on the horizon. Strong words, indeed!