Politico: EU and China break ultimate trade taboo to hit back at Trump

Brussels and Beijing on Wednesday launched explosive cases at the World Trade Organization, in which they will argue that Trump’s tariffs on steel and aluminum, imposed in May, cannot be justified on grounds of national security, as the White House claims. The EU and China were joined in their protest by Mexico, Norway, Russia and Canada. [...]

Whichever way the WTO rules, Pandora’s box has been opened. If it rules that national security can justify tariffs, the decision could inspire other countries to play the security card. On the other hand, if Washington finds itself backed into a corner, it could simply quit the WTO.[...]

A common position from the EU and China is a blow to many European and American officials, who had hoped that the trade war would morph into a united front against Beijing. The Trump administration has just unveiled a hardline policy on China. U.S. Vice President Mike Pence last week delivered a blistering speech against China, saying that Washington was in no rush to end the trade war and “would not change course until China changes it ways.”

The cases against the national security justification are not the first to reach WTO panels. There are two other cases still under investigation — involving Qatar and Russia — but the U.S. case is by far the most geopolitically significant. There has never been a ruling on the legitimacy of the national security defense.

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Politico: EU plays hardball with Cambodian hardman

A decision to turn the screws on Phnom Penh would mark just the fourth time the EU has implemented trade sanctions for human rights reasons — Myanmar, Belarus and Sri Lanka having been downgraded in the past. [...]

There is every sign that Hun Sen will make a public show of strength, and only make discreet concessions later. Last year, shortly after a furor over his move to declare a rival party illegal, he even publicly dared the European Union to sever the preferential trade access. “Cut it!” Hun Sen said in a speech, declaring that he would not become a “dog acting only for a bone or a piece of meat.”[...]

In total, EU tariffs would affect 40 percent of all of Cambodia’s exports, incurring a cost of $676 million, according to government estimates. In 2017, Cambodia exported €5 billion worth of goods to the EU, the vast share of which consisted of garments, footwear and agricultural products such as rice.[...]

Facing the prospect of a humiliating loss, Hun Sen declared his primary political opposition illegal and had his main rival, Kem Sokha, arrested and spirited away to a remote prison on the Vietnamese border. He has also banned over 100 other opposition members from politics, shut down independent newspapers and threatened or jailed human rights workers.

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Politico: Latin America may be where Europe’s trade luck runs out

In recent months, European Commissioner for Trade Cecilia Malmström has been on a winning streak. A major deal with Japan this summer boosted the EU’s credentials as the global leader in free trade and was the third big trophy for the commissioner, who has also concluded pacts with Canada and Vietnam. [...]

Of the two agreements, Mexico is the easier proposition as it centers on upgrading an existing agreement to include more sectors, such as processed food and financial services. Mexico’s fears about U.S. President Donald Trump’s protectionism, and his promise to build a border wall, also greatly increase the likelihood of an agreement with Brussels.

It is Mercosur that presents a far more daunting challenge. The biggest problem is that the bloc includes the farming superpowers of Argentina, Brazil, Paraguay and Uruguay, which all have strong interests in Europe. [...]

Malmström is not without influential supporters in Europe, though. The opposition from farmers is sparking frustration among big European manufacturers in sectors such as cars and machinery, who argue that their ambitions in attractive Latin American markets must not be held back by a small number of clamorous farmers. [...]

The European Parliament also wants to add a sanctions mechanism to the trade deal to enforce the implementation of strict labor, environment and anti-corruption standards — an idea that hasn’t gone down well on the Mexican side.

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Politico: Facing trade war with Trump, Europe rediscovers its swagger

rump could hardly have chosen a worse moment to threaten to slap tariffs on the European steel industry. The EU trade officials staring him down on the other side of the Atlantic are more confident and assertive than they have been in years. Catalyzed by securing political agreement on a huge trade pact with Japan, they are now relishing the prospect of a tit-for-tat trade war they think they cannot lose. [...]

When former U.S. President George W. Bush announced “temporary safeguards” against steel imports from the EU and other countries in 2002, the Commission struck back on exactly the same sort of farm goods that are back on its list now. [...]

The EU’s rediscovery of its mojo in one of its few hard-power competences is now palpable in the way that Commission President Jean-Claude Juncker is projecting Brussels on the international stage. Whether pushing China to back off from buying out prized EU technology companies or firing warning shots at Trump, there’s a newfound sense of resolve in the way the Commission carries itself. Britain’s muddled attempt to negotiate Brexit also helps make Brussels look like a steady hand. [...]

Only this week, Brussels fired a shot across America’s bows to warn that it would retaliate if Washington’s latest round of sanctions against Russia impacted European companies and energy projects. Juncker insisted he was ready to hit back within days. “America First cannot mean that Europe’s interests come last,” he stressed. [...]

The election of President Emmanuel Macron in France is also pushing the block to bolster its trade defenses against China. Macron is a leading proponent of a “Buy European” strategy and the Commission is working on legislation to help stop Chinese takeovers of the EU’s top infrastructure and energy companies. One Commission official described it as “amazing” that these sort of measures were now being discussed among the traditionally liberal free-traders of the Trade department.

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