12 August 2016 / Italian News agency ANSA published an article on the consequences on EU-US relations of the ambiguous EU position on trade with China. The English translation is below.
After the US firm refusal to grant MES to China, which Beijing wants very much, the EU Commission is working on a compromise solution, which is likely to lead to a "Waterloo disguised as a European victory". And the consequences could be very bad in the relations between the two sides of the Atlantic, just now that Hillary Clinton isplanning a slowdown on free trade: European exports to the US could suffer.
In the long run, a break of the long commercial relationship between Bruxelles and Washington might cause the US to stop its engagement on two vital fronts, "to the east on the borders with Russia, and the Middle East." This was stated by Alberto Forchielli, an Italian financier and economist always travelling between China, the US and Europe, who is also founder and managing partner of Mandarin Capital, taking European Enterprises to China and vice versa.
A privileged point of view on a tough negotiation which is taking place mostly concealed, that on the 'dumping' Chinese trade, the worldwide invasion of very cheap Chinese products which put the steel industry on its knees, just to mention one sector. An issue that will define the future attitude towards Beijing and its overproduction capacity, which is contributing to the current deflationary phase in much of the West and which is not likely to stop - according to Forchielli.
The US position is clear. The election campaign, both by Trump and by Clinton or Sanders, has put aside Free Trade Agreements on the Atlantic and Pacific sides. While Trump promises war on free trade to the victims of Detroit crisis, Clinton and Sanders share on the same line. The US refusal to grant MES to China (with duties removal on its highly state-subsided export)has already been decided, according to Forchielli.
In spite of enormous US pressure, of Brexit (Britain in the EU was the most favorable to MES to China), and of the European Parliament's vote last May against the 'market economy status', the EU Commission is adopting a "coward"compromise solution, by removing the definition of the market and non-market economy," in order not to offend China, Forchielli explained on the phone. In return, the EU would reserve the possibility of imposing duties on the imports from China basing on a complex mechanism (repealing the 'lesser duty rule') and would aim to negotiate with Beijing large cuts to its overproduction.
But Forchielli thinks this is a "naive" hypothesis ("it is impossible to limit Chinese overproduction, with plants located in 23 different provinces: they will say yes and then disregard the commitments"). A fig leaf to cover what would be a de facto European yield. Although Italy shares the US position (where some hope for Ilva Taranto is also at stake)- Forchielli says, in the end "it all depends on Angela Merkel." The Chancellor is cautious with Beijing, but this is likely to further increase the "American contempt for quarrelsome and inconclusive Europe, where Germany is not engaging in fiscal expansion, has a huge trade surplus and does not want to spend any money on financing NATO and European defense. One more problem in Brussels hot summer, which is going to be really thrilling in the next few months (the EU Council will have to decide within December) (ANSA).