Tag Archives: european

China Trade With EU

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I’m not very happy with the ‘US Trade Figures‘ post I put up last Friday. I think it’s a glorious mess. The key to the problem is that I tried to deal with two – interrelated but disinct – topics at once: the euro and China trade. So today lets ignore the euro (which has once more resumed the downwards drift, even as I write) and take a bit of a closer look at where we are – in trade terms – with China. (Btw: the planet has finally returned to its orbit, and Brad Setser has an analysis of the US trade data here).

The big item in this weekend’s news is, of course, the agreement reached with Beijing on textiles. The EU textile industry will now have three years to adapt, but since textile manufacturers don’t appear to have taken too much advantage of the ten previous years, it is hard to know whether this will serve any useful purpose. Doubly so, since it is not yet clear how the calculations will be made, and I have the distinct impression that much of the recent surge in imports will now, in effect, be consolidated.

Be that as it may, what about the broader issue?
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Hungary: New President & Debt Downgrade

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This week Hungary has a new President. The election of Laszlo Solyom as Hungary’s new President was a major setback for the governing Socialist Party (MSZP), at the same time as it was widely lauded as a victory by the right wing opposition Fidesz party. The outcome was largely the result of the behaviour of the MSZP?s junior coalition partner, the liberal leaning Free Democrats, who abstained. Katalin Szili, the MSZP choice, was regarded by Free Democrats as being far too involved with the MSZP. Only 3 votes separated the two candidates, and this reflects the current balance within the Hungarian parliament between Fidesz and MSZP ? a handful of independents and the Free Democrats in fact have the deciding votes.
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Now It’s Footwear

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The EU’s trade dispute with China risks spreading from textiles to footwear after the EU released data Wednesday which purported to show that Chinese shoe imports had surged since the end of quotas at the start of the year.

“Responding to concerns of European shoemakers, the European Commission said imports of leather shoes and textile slippers had soared nearly eight-fold in the first four months of 2005, pushing down prices on European markets by 28 percent. Shoemakers from Italy have sent more than 200 letters of complaint to the Commission in the past two weeks, according to Leonardo Soana, director general of Italy’s National Footwear Association.

They charge that China, and to a lesser extent Vietnam, are dumping leather shoes on the European market and putting shoemakers out of work.

Soana told Dow Jones Newswires that Italy’s shoe industry will present a formal complaint on June 15, alongside claims by Spain and Portugal. French, Greek and Polish industry groups will back calls the for tariffs on Chinese shoes, he said.

Looking at the list, it is pretty clear which parts of the EU are being most hit by these ‘bottom end’ imports from China, and why: they are generally the economies which are most challenged by the need to move up the value chain. That being said, and correcting slightly an earlier renminbi post, it is obviously the case that the rise of the euro against the dollar, has also been a rise against the renminbi, 40% or so in 3 years, so it is clear why there is a ‘pain barrier’ now in Europe.

However on the free trade angle, Stumbling and Mumbling has a nice quote from Scottish Economist and Philosopher David Hume which is very much to the point:

“There are few Englishmen who would not think their country absolutely ruined, were French wines sold in England so cheap and in such abundance as to supplant, in some measure, all ale, and home-brewed liquors: But would we lay aside prejudice, it would not be difficult to prove, that nothing could be more innocent, perhaps advantageous. Each new acre of vineyard planted in France, in order to supply England with wine, would make it requisite for the French to take the produce of an English acre, sown in wheat or barley, in order to subsist themselves; and it is evident, that we should thereby get command of the better commodity.“

This Is An Interesting One

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From Malta Today:

The European Commission is asking the Maltese government to explain its policy of banning journalists from immigrants? detention centres in response to a petition signed by 100 journalists and editors last February.
European Commissioner for Justice, Freedom and Security Franco Frattini told the European Parliament that the Commission was demanding information from the Maltese government about the total media ban imposed by Home Affairs Minister Tonio Borg.

Replying to parliamentary questions made by Labour MEP Joseph Muscat and H?l?ne Flautre (Greens), Frattini said he was aware of the journalists? petition and of Borg?s media ban and that he was seeking information from the government. The Commission is also aware of the conditions in immigrants? detention centres which have been the subject of much criticism from international human rights agencies and organisations.

EU Budget Reform Having Problems

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Despite all the hard work that is being put in by EU President Jean-Claude Junker, progress on the forthcoming EU budget seems like it might be agonizingly slow. In the first place Blair is in fighting mood:

“The UK rebate will remain. We will not negotiate it away. Period,”

In london the treasury seems equally determined:

“We would use the veto to preserve the rebate whenever necessary,” a Treasury spokesman told AFP. “Our rebate remains fully justified and it is not up for negotiation.”

Meanwhile, over at the European parliament:

MEPs have taken a stand on the future of EU spending as national capitals war over Brussels spending ahead of a June 16 summit of European leaders. The European Parliament has set out budget plans from 2007 to 2013 that are lower than original projections from the EU executive but higher than cost-cutting governments. The parliament backed a blueprint blueprint drawn up by German MEP Reimer B?ge by 426 votes to 140 against, with 122 abstentions. Brussels chief Jos? Manuel Barroso has welcomed the move which is ?150 billion more generous than maximum spends sought by some penny pinching national treasuries. ?The European Parliament has shown leadership and good sense by putting the policy needs of the EU first,? he said.

Let Battle Be Joined

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Well, things are shaping up nicely for a ‘healthy debate of the underlying issues’ on 16/17 June. Chirac and Schr?der have pronounced: the ratification process must continue, Jean-Claude Juncker is warning that failure to reach a budget deal at the summit would “turn the big European difficulties into a big European crisis“, and Peter Mandelson forsees a historic opportunity for Tony Blair. Mandelson is quoted as saying:

“Tony Blair could carry on for another three years now that he has been given a “fresh calling” to resolve Europe’s crisis, his old ally Peter Mandelson claimed last night.

Mr Mandelson said the French and Dutch rejection of the European Union constitution handed Mr Blair another chance to secure his legacy as Prime Minister“.

What does all this mean? Well, according to France’s Le Figaro:

“Si Londres gagne, c’est la victoire de l’Europe lib?rale, ? l’anglo-saxonne, aussi ?largie que possible, un grand march? contr?l? au strict minimum par Bruxelles. Si Berlin l’emporte, c’est la victoire de l’Europe politique, libre-?changiste, mais surtout f?d?rale, avec une d?fense, une diplomatie, et une monnaie commune. Dans l’Europe b?tarde du trait? de Nice, tous les Etats membres n’ont pas encore choisi leur camp. La crise va les obliger ? tomber les masques.”

“”If London wins [the ratification dispute] it is a victory for liberal, Anglo-Saxon Europe, enlarged as much as possible, a giant market, with regulation from Brussels kept to a strict minimum. If It is Berlin that carries the day, it’s victory for the Political vision of Europe, free-trade, but especially federal, with a common defence, diplomacy, and a common money. In the ‘bastard’ Europe born of Nice treaty, all members states have not yet chosen their camp. The crisis will force everyone to take off their masks.”

Of course there is a third party here: the Commission. What Barroso will undoubtedly be working for is a pragmatic, workable compromise.

“Mr Barroso urged the French leader and his colleagues to “turn a crisis into an opportunity” and argued: “It is vital that we use the present moment to forge a new consensus.”

He warned Europe not to indulge in a “blame game” or an “ideological rift” between supporters of free markets and those who believe in government intervention. What was needed, Mr Barroso said, was “an intelligent synthesis between the market and the state, which can help Europe win and not lose in the face of globalisation”.”

Heeding Henry.

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Joschka Fischer, the German foreign minister, may be coming out of the dog house – if only conceptually.

After even the left leaning German daily taz recently began publishing political obituaries for the man who more than anyone represents the political maturing (or not) of the generation of ’68 (following the affair about problematic political guidelines leading to criminal exploitation of German visa policies in Eastern Europe and in light of the looming federal election that will likely lead to a government without a Green party participation), Mr Fischer may have decided that it might be worthwhile to spend his remaining time in office not just by campaigning for a permanent German seat in the UN security council but by heeding Henry Farrell’s advice about the opportunities of a dieing European constitution and going back to his own foreign policy ‘roots’: In May 2000, he used a speech at Berlin’s Humboldt University to sketch out his ideas for ever closer union, “From Confederacy to Federation” (pdf available).
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‘Euro Overvalued’

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The euro is apparently overvalued. Actually I happen to agree, but today this opion comes to us from a most surprising person: Luxembourg Prime Minister Jean-Claude Juncker, at this point in time President of the European Union. Now I am surprised by this, since he is neither Economics commisioner, nor spokesperson for the ECB, so I am not clear why it is he feels himself compelled to express an opinion.

Really this just highlights the fact that the institutional labyrinth we have created is such that not even those who administer it have sufficient clarity about who is responsible for what. In theory his press conference was about the forthcoming budget negotiations, but judging by what he said, I’m not clear he got round to reading that memo from Barroso about maintaining a sense of calm.

Luxembourg Prime Minister Jean-Claude Juncker, who holds the European Union presidency, warned on Friday that failure to agree on a new long-term EU budget this month would turn a political problem into a full-blown crisis.

Juncker, who also chairs euro zone finance ministers, said the single currency shared by 12 EU countries had been weakened by the “No” votes to the European constitution in France and the Netherlands but was still overvalued compared to the dollar.

“A failure on the financial perspective (budget) would turn the big European difficulties (after the referendums) into a big European crisis,” he told a news conference.

“As a result of the referendums, the euro is weakened. What helps the economy for the moment could in the long term become a burden,” he said, adding: “I think the euro is overvalued in relation to the dollar.”

He also informed the press that he would resign as PM if, as expected, the Luxembourg referendum voted ‘no’ on July 10. Anybody seen an actual Luxembourg poll recently?

‘Those Politicians’

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Last Monday I had some ironing to do. Then I remembered that television still has one advantage over surfer-blogging: you can do the ironing at the same time. Of course the upcoming referendum was on several channels. I could not stand more than 20 minutes of it though (neither the ironing nor the tv). The various program presenters seemed to want to make it look like this was a political *debate as usual*, or so it seemed. National politicians dominated the guest lists. And most of them did what we expect from them nowadays: instead of seriously and conscientiously considering arguments, the majority of them seemed more intent on achieving a high score in something resembling a high-school debating-contest. Television comes in handy here.

In fact one of these *debates* was actually organized like a contest. Six politicians were invited. On every issue two of them went into a direct confrontation and the 6-minute sessions were immediately followed by a ‘flash vote’. And the winner is…
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Twenty Twenty Vision

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The press this morning are busily assimilating the result of yesterday’s Netherlands referendum. The FT reports on a survey by Dutch polling organisation Interview-NSS, which identified up to twenty different issues which influenced the no vote.

Top of the list the list was a fear that the Netherlands would lose influence in a Europe that would favour large countries.
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