2024-09-02 11:35:31
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For those of you who are on vacation in the northern hemisphere this summer, welcome back. (I get complained about being from the southern hemisphere from time to time by Brazilians, Australians, New Zealanders, etc., so this is for you: I hope you had a great winter.) Last week, far northern Canada followed the lead of the United States and welcomed us back to reality. Slamming tariffs China’s electric cars, steel and aluminum. Then came an autumn (or spring for some, I won’t say now) with people anxiously watching the US election campaign. Charted Waters It’s about Chinese investment in electric vehicles around the world. Question: If you were such a smart multilateral free trader, what would you do instead of Canada that wouldn’t violate WTO law or anger the US? Answers sent to alan.beattie@ft.com.
Contact us. Email me: alan.beattie@ft.com
Everything seems to have gone wrong since Canada joined
From a songFor those who tolerate profanity, thanks to Sam Lowe Excellent MFN Communications Got there first last week. Hello to all the Canadians reading this today on Labour Day.
Canada’s decision last week to follow the United States disappointed many in the trade community, especially Canadian Trade ProfessionalsYou can see the domestic political case: there’s an election next year. You can see the geopolitical case: there’s a lot of pressure from the United States. You can see the business case: the Canadian auto industry is tightly integrated with the North American auto supply chain. This is a A tricky judgment,and There are indeed defendersBut this looks more like capitulation to US bullying than a considered opinion.
The United States has been working to put an increasingly strong imprint on this production network. Transforming NAFTA into the U.S. Gulf Coast Agreementit tightened its auto rules of origin in the hope that the auto supply chain would not be as the great Canadian poet Leonard Cohen said Almost sangbringing you electric vehicle inputs from China.
The US would obviously prefer to slow down the adoption of electric vehicles rather than importing them from China. Given that Canada is a greener country than the US (at least under the current administration), Washington’s way is not its first choice. But it’s hard. You can choose your friends, but you can’t choose your neighbors.
Trade activists are frustrated by Canada’s approach, which does not appear to be trying to find a way to be compatible with WTO rules, such as playing games with rules on trade defense measures. Canada has traditionally prided itself on its multilateralism: A group of countries The conference to promote WTO reform, which was held in Ottawa in 2018 and is named after it, now looks a little hollow.
Ottawa has presented Beijing with a golden opportunity to burnish its reputation for multilateralism by bringing a case to the WTO, and it has a good chance of winning it. Canada is a member of the Multiparty Interim Appeal Arbitration Arrangement (MPIA), a temporary body set up by some countries to circumvent the U.S. blockade of the WTO’s official Appellate Body. So if China wins both at Phase I (the panel) and at the MPIA stage, it would appear even more hypocritical for Canada to not comply.
Let you fight him
Obviously, Washington welcomes this as proof that the US is beginning to build an anti-China trade alliance. In my view, this is a bit optimistic. Not only have other large economies already started very different EV strategies, but there is an unfortunate and unattractive asymmetry in being an ally of the US.
China has been reluctant to take the U.S. to the WTO to challenge its electric vehicle tariffs, not only because the U.S. ignores rulings it doesn’t like, but also because President Xi Jinping believes it’s wiser not to anger Washington before the election. He’s unlikely to show the same forbearance toward Canada. So Canada is left to fight alone.
Unlike NATO, the USMCA has no mutual defense clause. Following the United States’ lead is a bit like joining a platoon led by a particularly aggressive commander whose body armor is much better than yours.
The EU is probably feeling pretty irritated right now because it, unlike the US, is trying to follow through on its rules by imposing tariffs on Chinese electric vehicles on the grounds that anti-subsidy duties could hurt European carmakers. However, it is threatened with WTO litigation, and China is clearly going to take direct retaliatory measures.
Sadly, this proves that in a trade war with China, it makes them think you’ll do something crazy instead of playing by the rules. Still, the EU is unlikely to join the US in the anti-China electric car camp (although it does have more common sympathies when it comes to steel and aluminum).
Brussels has already begun working to engage China’s electric vehicle industry, slowing but not stopping imports and encouraging Chinese manufacturers to invest in Europe. Many large middle-income economies, such as Brazil and Turkey (see Charted Waters below), have done the same. Washington’s bullying has certainly made Ottawa listen. It’s not clear whether it has enough clout to expand the ranks further afield.
Charted Waters
Trade Links
Politico reports Ahead of the October decision, several Chinese electric car makers had provided the EU with guarantees of maximum import volumes or minimum prices to avoid anti-subsidy duties.
A paper Unlike the United States, the European Union is becoming increasingly dependent on imports from China, according to the Peterson Institute for International Economics. study Economists at the Federal Reserve believe the U.S. is becoming more dependent on Chinese goods indirectly through other foreign suppliers.
Writing in the Financial Times, Adam Tooze argues that the generous aid from wealthy countries to Ukraine is not commensurate with their concern for poorer countries in Africa.
Scott Lincicome of the Cato Institute believes Deregulation Instead, Kamala Harris’ anti-price gouging campaign will help keep food prices in check.
Spanish Prime Minister Pedro Sánchez has the courage to abandon Europe’s traditional hypocrisy and make a Positive case for immigration In the face of the right-wing opposition’s consistent unpleasant rhetoric.
European officials have warned Sir Keir Starmer that he needs to have a focused dialogue with the EU to reset the UK’s trading relationship with the bloc, not just with Berlin. Meanwhile, the Department for Business and Trade continues to consider signing An economically insignificant trade deal Cooperation with Israel would be a good idea.
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