A service of the

Current Forum: Troubled World Trade Order

The EU's Response to a Challenging World Trade Regime

It only takes a quick glance at today's headlines to see that the world trade regime is changing rapidly. Due in large part to the "America First" policy of the current US administration, the last 18 months have borne witness to what some fear may erupt into a full-blown global trade war between the US and much of the rest of the world. The EU can take a leading role in preserving the multilateral system if it responds to unprovoked aggression swiftly. Given its belief in multilateralism as well as its commitment to social and environmental standards, the EU must insist upon the preservation of a rules and value-based system.

Open Access Now

Intereconomics September/October 2016

All articles in the issue 5 from 2016 are now freely and permanently available. Read the Forum on The Post-Brexit European Union and a range of other interesting articles, e.g. The Political Effects of Ageing on Inflation or Weak Investment Poses a Threat to Industry in Europe.

Figure of the Month

Hard Brexit first order tariff cost, by EU27 country

This figure from Michael Hüther’s  article "If Nothing is Achieved: Who Pays for the Brexit?" from our current issue shows the first order effects of a hard brexit on the EU27-countries.

 

Forum

China’s “Socialist Market Economy”: A Systemic Trade Issue

EU/China trade relations are intense and rewarding as well as problematic, depending on one’s perspective.The "socialist market economy with Chinese characteristics" as Jacques Pelkmanns calls it, has turned into a systemic trade and investment issue both bilaterally and multilaterally. "The hope that WTO membership would eventually transform China into a market economy with distortions that would gradually become tolerable and nego­tiable has not been borne out."

Forum

Triage? Assessing the EU’s Modernisation Proposals for the WTO

Simon Evenett evaluates the European Commission's proposal to modernise the World Trade Organization (WTO) in July 2018. The three elements of that proposal differ in their specificity perhaps reflecting the urgency with which different threats are unfolding to the world trading system. The proposals identify proximate rather than root causes of the current malaise and give the impression that a World War I style triage of the rules-based trading system is ultimately being contemplated.

Forum

What Should be the EU's Approach to Global Trade?

A global player like the EU must adequately respond to US unilateral actions and not give in to threats in order to preserve its credibility, write Annette Bongardt and Francisco Torres in their Forum article. In choosing how to respond, the EU needs to reaffirm its belief in multilateralism as well as its commitment to social and environmental standards and therefore must insist upon the preservation of a rules and value-based system.

Quote of the Month

The European Response to a Challenging Global Trade Regime

By breaking protocol, the US president has gained substantial bargaining power, because he puts himself in a situation in which he actually has to implement his threats if the negotiation counterparts do not confirm in order to save face on the domestic and global stages.

From Dealing with Donald Trump by Gabriel Felbermayr

Forum

The EU Response to US Trade Tariffs

"The rhetoric, and more recently also actions, of the current US administration on trade and the global multilateral system are a real threat to the process of globalisation.," write Maria Demertzis and Gustav Frederiksson. "While the costs are not immediate, they will materialise and they will be hard to revert." The authors use game theory to examine the potential EU responses to US tariffs and the likelihood they will acheive the desired outcome.

Forum

Revitalising Multilateral Trade Governance

The global trade regime has helped to enable a large number of countries to expand their participation in world trade with associated reductions in prices, increased consumer choice and higher productivity. The concomitant rebalancing of global income shares and competitive pressures emanating from emerging economies, especially China, is generating challenges for the trading system. Bernard Hoekman says this is reflected in a broader ‘backlash against globalisation’ in high income countries. The recent unilateral imposition of trade restrictions by the US on the steel and aluminium imports of many countries and retaliatory responses is a notable example of these tensions.