Why Europe Should Let Trump “Win” on Trade

All the European Union needs to do is to tell the administration “you won” and drop the retaliatory measures.

The European Union says it’s ready to retaliate against new tariff measures proposed/instituted by the Trump administration. However, letting Trump “win” the trade war would be far smarter.

Trump and Tariffs

Mentioning Trump’s name in Brussels (the capital of the European Union) produces a lot of eye-rolls. Trump is not only unpopular, but he is also regarded as being uninformed at best and having malicious intent at worst. Whether or not those things are accurate is a story for another time, but the trade war debate reveals the level of self-reflection in Europe. Much is said about the tariffs imposed on European goods, and the narrative in Brussels is that the United States started the trade war, forcing the European Union to retaliate.

The fact that the European Union initiated the most important trade barriers didn’t occur to them.

On January 18, the European Union adopted a negotiating mandate for the trade talks with the United States. Brussels announced that every new tariff measure by Washington, DC, would be met with retaliatory tariffs in Europe.

EU Trade Commissioner Cecilia Malmström warned that if Trump decides to punish Europeans on trade, “we are very advanced in our internal preparations” to retaliate. “Should that happen, we are ready, it would have a very damaging effect on the negotiations,” she said.

What’s Food Got to Do with It?

Between 2010 and 2014, the US and the EU negotiated the Transatlantic Trade and Investment Partnership (TTIP). The negotiations ended after considerable public protests in Europe pressured Brussels to break-off the talks. Fear-mongering anti-free trade activists warned the public about the threat of importing goods from the United States, such as GMO foods.

However, importing goods produced to different standards than EU norms does not in the least “undermine” EU standards. Provided consumers are aware of the origin of their products, mutual recognition of standards poses no threat to anyone’s legislation.

A report by Foodwatch, a German NGO pretending to stand for consumers, also treats the idea of free trade with contempt. This is well illustrated in a chapter on Mexican trade relations on page 47. The researchers write:

In 2001 Mexico introduced a tax on all soft drinks flavoured with sweeteners other than cane sugar (e.g. with beet sugar or isoglucose, a syrup made from corn or wheat starch). The exception for drinks sweetened with cane sugar protected the country’s own sugar cane production.

They continue by explaining that such taxes are being challenged under WTO trade rules and that industry lobbyists oppose them through the claim of “a form of trade discrimination.” The EU, of course, is well-known for trade discriminatory practices aimed at protecting its own producers, including its famous ban on beef treated with the estradiol-17β hormone.These activists would oppose free trade no matter what because it increases food trade.

Such agricultural protection is always a major sticking point in trade negotiations, so it is certainly an odd point for anti-trade activists to bring up.

The report’s tenor is exemplified by this statement from one of its authors, Thomas Fritz, during the Foodwatch press conference:

Our conclusion is that due to these FTAs [Free Trade Agreements], food trade is indeed likely to grow, along with the risks posed to the consumer and the environment.

Forget concerns about democracy, judicial procedures, or even those of food standards: these activists would oppose free trade no matter what because it increases food trade. “The risk to the consumer”—what risk are we talking about? The risk of falling food prices and increased quality? The risk of expanded choice? And to what “risk” are we exposing the producers in South America to? The risk of increased production and economic prosperity?

Defy Anti-Free Trade Activists, Let Trump “Win”

What would it take for Donald Trump to “win” the trade war? In essence, Trump supports getting rid of all tariff and non-tariff barriers. All the European Union needs to do is to tell the administration “you won” and drop the previously introduced retaliatory measures. This would open the market and provide cheaper goods for European consumers and enable Trump to approach his goal of a zero-tariff basis.

But that isn’t going to happen because the notion of “winning” is as politicized in Brussels as it is during a Trump rally. So next time you receive eye rolls at the mention of the trade war in Europe, recognize that over here on the old continent, we aren’t really any better.

Originally published at https://fee.org/articles/why-europe-should-let-trump-win-on-trade/

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About Bill Wirtz

Bill Wirtz is policy analyst for the Consumer Choice Center, based in Brussels, Belgium. Originally from Luxembourg, his articles have appeared across the world in English, French, German, and Luxembourgish. He is Editor-in-Chief of Speak Freely, the blog of European Students for Liberty, a contributing editor for the Freedom Today Network and a regular contributor for the Foundation for Economic Education (FEE). He blogs regularly on his website in four languages.

How protectionism hinders progress

Imagine you’ve been on the team with the same people for decades, growing rice let’s say. You are well aware of the capabilities of your colleagues, and you are on good terms with your boss. More importantly, you have developed a working schedule for yourself, and have been sticking to it deliberately – repeating the same tasks day by day without attempting to improve the quality of their performance. You have been doing fine, just like everyone else on your team. 

One morning, your boss announces that there is a new employee or group of employees from abroad joining the team. Naturally, every well-established tribe is suspicious or even hostile towards newcomers, especially if it’s not accustomed to dealing with changes. You and your colleagues will, therefore, try to find a way to persuade your boss to change their mind. After all, why hire someone new, or why alter anything at all, if you and your consumers are doing fine? 

On their first day, the newcomers carefully examine your workplace and conclude that your team’s productivity and attitudes are completely outdated and have been far behind world progress for years. Added to that, they find out that the prices you charge are much higher than those in countries where they come from, and that your consumers are of course unaware of that. Their impression is that your boss has been consistently covering for you in order to “protect” you from competition. They are determined to change it: they suggest more innovation, lower prices to the benefit of consumers, and the elimination of the fine mentality. 

After careful consideration, your boss chooses to implement their recommendation of competition. They get excited about taking your industry to the next level and about the variety of choices they can offer to their consumers with the help of the new model. However, the chances of you and your colleagues getting fired are high.

Now, let me translate this into politics and tell you that the boss is the government, and they are choosing free trade over protectionism. You are, therefore, going to blame the policy of free trade for the loss of your job. But is that really so?

In 1942, Austrian political economist Joseph Schumpeter explained: “The opening up of new markets, foreign, or domestic … revolutionises the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of creative destruction is the essential fact about capitalism.”

However merciless it may sound, creative destruction underlines every stage of progress in every sphere of our life. We wouldn’t be able to enjoy Apple products or companies like Uber and Airbnb if they hadn’t succeeded in disrupted the established order of the time.

Most importantly, even though these businesses are on top of the tide right now, there will inevitably come the moment when they will get swept away by that very tide if they stop innovating – just as libraries are being replaced by Wikipedia, bookshops by Kindle, traditional taxis by Uber, and all sorts of driving cars by Google driverless cars. There are people behind these developments who have lost their jobs and who tried to oppose progress as much as possible – people who called for protection?

Progress has harsh means at its disposal, but let’s be honest, now that civilisation has progressed so far, can we all agree that the benefits of it are much higher than the costs? A hint: you’re reading this on your phone, tablet, or a laptop.

Plainly speaking, progress is any kind of development pursuing a better outcome than the existing order. Free trade, therefore, is another expression of progress, and that’s why it’s opposed by industries that stopped innovating long ago and are afraid of getting wiped out. These industries do fine thanks to government subsidies, tariffs, or quotas. 

The issue with free trade, as with every progress-oriented initiative, is that it’s difficult to draw a clear line between short-run costs and long-run gains. The short-run costs do include the destruction of some jobs. As mentioned earlier, progress comes at a price.

Let’s look at the manufacturing industry, which is usually the loudest in anti-free trade debates. Most of the job losses in manufacturing, according to Michael J. Hicks and Srikant Devaraj, didn’t come directly from the abolishments of import restrictions, but from progress in another closely related area: technology. According to the findings of the report, only 13 per cent of job losses in the US manufacturing industry from 2000 to 2010 were caused by international trade. 

Speaking of the long-run gains, while the employment in the manufacturing industry dropped, the number of full-time employees in the US has increased by almost 20 million people since 1991. Moreover, GDP went up as well.

Progress has a cost, and people swept off by its tide are generally unable to accept the benefits of free trade. However, while attempting to protect one group of people and focusing exclusively on short-run costs, protectionism is only functioning to prevent progress. Does any reasonable consumer want to be protected from lower prices and a greater diversity of products?

However, free trade has something for everyone. With market dynamics increasing, the disruption brought by free trade brings in countless opportunities to find our place in a brave, new world. It’s high time we learned to welcome new competitive team members, not seek protection from their ambitions. Maybe then we won’t just settle for fine, we will strive for greatness.

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About Maria Chaplia

EU duties on goods from Southeast Asia as a Post-Brexit trade opportunity

Where the EU is walking the plank, the UK should be able to recognise and seize post-Brexit opportunities.

On 6 November, the Italian government asked the European Commission to apply the “safeguard clause” on rice imports from Cambodia and Myanmar in order to protect Italian rice growers. Protectionist measures against southeast Asian countries are not a novelty and have been vehemently backed up by France, Spain, Greece, Portugal, Hungary and Romania.

The EU ‘safeguard clause’ hurts consumers across the EU bloc

Under the ‘safeguard clause’ enshrined in the Treaty of Rome, when imports from a third country jeopardise the trade balance of an EU Member State, it can ask to ‘remedy the situation’, otherwise to introduce trade barriers.

Such interventions pursue a single aim: to protect a specific group from competition. However, whilst taking the producer side protectionism hurts consumers who are the main beneficiaries of free trade.

The Association of Southeast Asian Nations (ASEAN) is the third largest trading partner of the EU. In 2017, co-operation with the ASEAN resulted in the output of more than € 227,3 billion in goods. As part of this economic engagement, the European Union has been actively trading with both Myanmar and Cambodia and therefore using the agricultural imports, in particular rice, to feed up the EU market.

Should the EU choose to act at the whim of Italian rice growers, it will strip consumers all across the bloc of the opportunity to enjoy a great supply of rice and consequently a favourable pricing.

Post-Brexit UK freely trades with Southeast Asia and not only

As of now the UK has a trade deficit with Southeast Asia. In 2016, UK exports in goods and services to Southeast Asia estimated £13.6 billion and UK imports from the region amounted to £18.8 billion.

While it is of no surprise that Singapore as a former UK colony leads the region, Cambodia and Myanmar, which are next in the queue for the EU trade barriers, are important trade partners as well. In 2016, the UK imported £0,9bn in goods and services from Cambodia and £0,2bn from Myanmar.

Even though trade relations between the UK and Southeast Asia countries make up only for a small fraction of a crucially important economic engagement with the EU, they serve as a significant trade field to explore.

Some of potential co-operation channels are bilateral and multilateral free trade agreements between the UK and ASEAN countries. Moreover, once the UK has put the wind back in its sails and left the EU Single Market and the Customs Union, it will also be able to abolish all import tariffs on the goods it doesn’t produce, most of which belong to the agricultural segment, including rice.

Brexit therefore represents a momentous opportunity which has a propensity to change the history of world trade and pivot if away from protectionism. By exiting the EU, the UK is not only saving its consumers from detrimental outcomes of the EU’s protectionism, but also gets a chance to foster its co-operation with Southeast countries and reclaim its heritage as a trading nation.

Originally published at https://www.vocaleurope.eu/eu-duties-on-goods-from-southeast-asia-as-a-post-brexit-trade-opportunity/?fbclid=IwAR2_Z4zLar4ImfsUouDknBAET4Vy7T7Sa-zhikFwG3yXM2xbO1u5bqNBBiY

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About Maria Chaplia

How EU Protectionism opens doors for Post-Brexit Trade

While the EU is walking the plank on international trade, the UK is very well positioned to recognise and seize post-Brexit opportunities.

On 6 November, Italy’s government asked the European Commission to apply the “safeguard clause” on rice imports from Cambodia and Myanmar in order to protect Italian rice growers. Protectionist measures against southeast Asian countries are not new and have been vehemently backed up by France, Spain, Greece, Portugal, Hungary and Romania.

The EU ‘safeguard clause’ hurts consumers across the EU bloc

Under the safeguard clause enshrined in the Treaty of Rome, when imports from a third country jeopardise the trade balance of an EU Member State, it can ask the European Commission to ‘remedy the situation’, or introduce trade barriers.

Such interventions have a single aim: to protect a specific group or class from competition. But by endorsing protectionism for the producers, it serves to  hurt consumers who are otherwise the main beneficiaries of free trade.

The Association of Southeast Asian Nations (ASEAN) is the third largest trading partner of the EU. In 2017, trade with the ASEAN resulted in the output of more than € 227,3 billion in goods. As part of this economic engagement, the European Union has been actively cooperating with both Myanmar and Cambodia and therefore using the agricultural imports, in particular rice, to feed the EU market.

Should the EU choose to act at the whim of Italian rice growers, it will strip consumers across the bloc of the opportunity to enjoy a great supply of rice and consequently favourable prices.

Post-Brexit UK could freely trade with Southeast Asia and many others

As of now, the UK has a trade deficit with Southeast Asia. In 2016, UK exports in goods and services to Southeast Asia estimated £13.6 billion and UK imports from the region amounted to £18.8 billion.

While it is of no surprise that Singapore as a former UK colony leads the region, Cambodia and Myanmar, next in the queue for the EU trade barriers, are important trade partners as well. In 2016, the UK imported £0,9bn in goods and services from Cambodia and £0,2bn from Myanmar.

Even though trade relations between the UK and Southeast Asia countries make up only for a small fraction of a crucially important economic engagement with the EU, they serve as a significant trade field to explore and examine.

Some of the potential cooperation channels are bilateral and multilateral free trade agreements between the UK and ASEAN countries. Moreover, once the UK has put the wind back in its sails and left the EU Single Market and the Customs Union, it will also be able to abolish all import tariffs on the goods it doesn’t produce, most of which exist in agriculture, including rice.

Brexit, therefore, represents a momentous opportunity that has a propensity to change the history of world trade and move the needle away from protectionism. By exiting the EU, the UK is not only saving its consumers from detrimental outcomes of the EU’s protectionism but also allows it to foster its cooperation with Southeast Asian countries and reclaim its heritage as a prime trading nation.

Originally published at https://www.speakfreely.today/2018/11/09/eu-protectionism-opens-doors-post-brexit-trade/?fbclid=IwAR1mq7XxBwI1tInq9KAcQcZRra-dydNltnDntk4Tof4T3Ss4mGJs6BFYq68

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About Maria Chaplia

European customers would suffer from proposed EU rice duties

FOOD AND DRINK INTERNATIONAL: The Italian government has asked the European Commission to employ the safeguard clause on rice imports from Cambodia and Myanmar in order to “protect Italian rice growers”.

However, Luca Bertoletti, European Affairs Manager of the Consumer Choice Centre, criticised the request and said that it’s time the European Union stopped pushing forward protectionism.

“The reasoning behind trade barriers is to protect a specific industry – in this case Italian rice growers – from competition,” he said.

“What’s usually overlooked though is that whilst taking the producer side, protectionist policies end up causing a great harm to consumers who get stripped of the opportunity to enjoy the benefits of free trade.

“The Italian government is simply asking to limit the affordability of rice.”

He added: “The Association of South East Asian Nations (ASEAN) is the third largest trading partner of the EU. In 2017, co-operation with the ASEAN resulted in the output of more than € 227,3 billion in goods.

“As part of this economic engagement, the European Union has  been actively trading with both Myanmar and Cambodia and therefore using the agricultural imports, in particular rice, to feed up the EU market.

“Before employing another protectionist measure, the European Commission should ask itself whether it wants to ensure European consumers are able to enjoy a great supply of rice and consequently a favourable pricing or whether it is the unwillingness of one group to compete which matters more.”

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About Luca Bertoletti

Luca graduated with a degree in Political Science from the University of Milan in December 2014. He worked as a Business Economics Analyst for the Italian magazine TheFielder in Milan and as Think Thank Coordinator for the Austrian Economics Center in Vienna.

He is a fellow of Competere Institute in Rome, a columnist for Atlantico Quotidiano, and he sits on the scientific board of New Direction Italia. He has been featured in the New York Times, Radio RAI, RAI 1, El Economista, The National and many other newspapers.

Proposed EU duties on rice would hurt European consumers, says #ConsumerChoiceCenter

EU REPORTER: The Italian government asked the European Commission to employ the safeguard clause on rice imports from Cambodia and Myanmar in order to protect Italian rice growers.

European Affairs Manager of the Consumer Choice Center Luca Bertoletti criticized the request and said that it’s time the European Union stopped pushing forward protectionism.

“The reasoning behind trade barriers is to protect a specific industry – in this case Italian rice growers – from competition. What’s usually overlooked though is that whilst taking the producer side, protectionist policies end up causing a great harm to consumers who get stripped of the opportunity to enjoy the benefits of free trade. The Italian government is simply asking to limit the affordability of rice,” said Bertoletti.

“The Association of South East Asian Nations (ASEAN) is the third largest trading partner of the EU. In 2017, co-operation with the ASEAN resulted in the output of more than € 227,3 billion in goods. As part of this economic engagement, the European Union has  been actively trading with both Myanmar and Cambodia and therefore using the agricultural imports, in particular rice, to feed up the EU market.

“Before employing another protectionist measure, the European Commission should ask itself whether it wants to ensure European consumers are able to enjoy a great supply of rice and consequently a favourable pricing or whether it is the unwillingness of one group to compete which matters more,” Bertoletti concluded.

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About Luca Bertoletti

Luca graduated with a degree in Political Science from the University of Milan in December 2014. He worked as a Business Economics Analyst for the Italian magazine TheFielder in Milan and as Think Thank Coordinator for the Austrian Economics Center in Vienna.

He is a fellow of Competere Institute in Rome, a columnist for Atlantico Quotidiano, and he sits on the scientific board of New Direction Italia. He has been featured in the New York Times, Radio RAI, RAI 1, El Economista, The National and many other newspapers.

Sorry Mr. Trump, we’re not “Chinese propaganda” on trade

WASHINGTON, D.C. – This week, President Donald Trump took to Twitter to denounce several articles in the Des Moines Register as Chinese “propaganda ads” because of the facts presented on trade and tariffs.

Included was an article written by the Consumer Choice Center that revealed the impact of tariffs on communities in North and South Carolina, which could affect up to 150,000 jobs in the chemicals, transportation equipment, and machinery industries that rely on exports, more than 36 percent of them in the Charlotte area.

“There is no Chinese conspiracy on trade. The real conspiracy is against the American people, who suffer when tariffs are enacted and goods are made more expensive,” said Yaël Ossowski, deputy director of the Consumer Choice Center, a consumer advocacy group located in Washington, D.C.

“The fact that the president would characterize factual analysis on the impact on workers and consumers as ‘Chinese propaganda’ reveals that this trade war has not been thought out. Ordinary men and women across America have to pay higher prices for products when tariffs are enacted in order to offset the imposed taxes. Tariffs are taxes, plain and simple.

“Pointing out the economic lunacy of enacting a trade war that will impact small and medium-sized businesses across the country, including the employees in those firms and at firms that rely on them, is vital and necessary, and the Consumer Choice Center will never cease from doing so,” said Ossowski.

“That’s why we launched the #freetrade4us campaign, and why we are seeing such great response from the consumers we represent who have already signed our petition for more free trade, not less.

“We hope the president reverses his policies on trade and tariffs and allows American businesses and consumers to enjoy low prices and free trade that can make everyone more prosperous.”

***CCC Deputy Director Yaël Ossowski is available to speak with accredited media on consumer regulations and consumer choice issues. Please send media inquiries HERE.***

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The CCC represents consumers in over 100 countries across the globe. We closely monitor regulatory trends in Ottawa, Washington, Brussels, Geneva and other hotspots of regulation and inform and activate consumers to fight for #ConsumerChoice. Learn more at consumerchoicecenter.org.

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About Yaël Ossowski

Yaël Ossowski is a journalist, activist, and writer. He's currently deputy director at the Consumer Choice Center, and senior development officer for Students For Liberty. He was previously a national investigative reporter and chief Spanish translator at Watchdog.org, and worked at newspapers and television stations across the country. He received a Master’s Degree in Philosophy, Politics, Economics (PPE) at the CEVRO Institute in Prague. Born in Québec and raised in the southern United States, he currently lives in Vienna, Austria.

Cherry-picking is reality of the single market

TIMES OF LONDON: As Frederik Roeder of the free-market think tank Centre for Consumer Choice told me, the national governments are busy “cherry-picking” the proposals. Nobody is claiming that this is outrageous behaviour.

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About Fred Roeder

Fred Roder has been working in the field of grassroots activism for over eight years. He is a Health Economist from Germany and has worked in healthcare reform and market access in North America, Europe, and several former Soviet Republics. One of his passions is to analyze how disruptive industries and technologies allow consumers more choice at a lower cost.

Fred is very interested in consumer choice and regulatory trends in the following industries: FMCG, Sharing Economy, Airlines.

In 2014 he organized a protest in Berlin advocating for competition in the Taxi market.

Fred has traveled to 100 countries and is looking forward to visiting the other half of the world’s countries.

Among many op-eds and media appearances, he has been published in the Frankfurter Allgemeine Zeitung, Wirtschaftswoche, Die Welt, the BBC, SunTV, ABC Portland News, Montreal Gazette, Handelsblatt, Huffington Post Germany, CityAM. L’Agefi, and The Guardian.

Since 2012 he serves as an Associated Researcher at the Montreal Economic Institute.

Trump’s Free Trade Suggestion remains Unheard

SPEAK FREELY: During European Commission president Jean-Claude Juncker’s visit to Washington D.C, Donald Trump once again suggested a tariff-and subsidy-free trade area between the European Union and the United States. Yet, the American president continues to fall on deaf ears, for reasons that tell more about the EU than it does about ominous ‘Trumpism’.

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About Bill Wirtz

Bill Wirtz is policy analyst for the Consumer Choice Center, based in Brussels, Belgium.

Originally from Luxembourg, his articles have appeared across the world in English, French, German, and Luxembourgish.

He is Editor-in-Chief of Speak Freely, the blog of European Students for Liberty, a contributing editor for the Freedom Today Network and a regular contributor for the Foundation for Economic Education (FEE).

He blogs regularly on his website in four languages.

How the Carolinas could suffer from Trump’s tariffs

CHARLOTTE OBSERVER: In the last election and on the global stage, President Donald Trump talked tough on trade. It’s us versus them and we’re losing, he says. Put simply, he views the current trade deficit, when we import more from a country than we export to it, as detrimental to American jobs. Since January, that trade deficit is $264.4 billion.

Our biggest trading partners, China, Canada, Mexico, and Japan have been able to sell more to us than we’ve sold to them, and that has left us worse off, says Trump. Tariffs, taxes placed on specific products that enter our country, will help balance that.

But that isn’t true.

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About Yaël Ossowski

Yaël Ossowski is a journalist, activist, and writer. He's currently deputy director at the Consumer Choice Center, and senior development officer for Students For Liberty. He was previously a national investigative reporter and chief Spanish translator at Watchdog.org, and worked at newspapers and television stations across the country. He received a Master’s Degree in Philosophy, Politics, Economics (PPE) at the CEVRO Institute in Prague. Born in Québec and raised in the southern United States, he currently lives in Vienna, Austria.

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