Month: June 2018

Two major auto trade groups on Wednesday warned the Trump administration that imposing up to 25 percent tariffs on imported vehicles would cost hundreds of thousands of auto jobs, dramatically hike prices on vehicles and threaten industry spending on self-driving cars.

A coalition representing major foreign automakers including Toyota Motor Corp, Volkswagen AG, BMW AG and Hyundai Motor Co, said the tariffs would harm automakers and U.S. consumers. The administration in May launched an investigation into whether imported vehicles pose a national security threat and President Donald Trump has repeatedly threatened to quickly impose tariffs.

“The greatest threat to the U.S. automotive industry at this time is the possibility the administration will impose duties on imports in connection with this investigation,” wrote the Association of Global Automakers representing major foreign automakers. “Such duties would raise prices for American consumers, limit their choices, and suppress sales and U.S. production of vehicles.”

The group added: “Rather than creating jobs, these tariffs would result in the loss of hundreds of thousands of American jobs producing and selling cars, SUVs, trucks and auto parts.”

On Friday, Trump threatened to impose a 20 percent tariff on all imports of EU-assembled cars. On Tuesday, Trump said tariffs are coming soon.

“We are finishing our study of Tariffs on cars from the E.U. in that they have long taken advantage of the U.S. in the form of Trade Barriers and Tariffs. In the end it will all even out — and it won’t take very long!” Trump tweeted.

The Alliance of Automobile Manufacturers, representing General Motors Co, Ford Motor Co, Daimler AG , Toyota and others, urged the administration in separate comments filed Wednesday not to go forward.

“We believe the resulting impact of tariffs on imported vehicles and vehicle components will ultimately harm U.S. economic security and weaken our national security,” the group wrote, calling the tariffs a “mistake” and adding imposing them “could very well set a dangerous precedent that other nations could use to protect their local market from foreign competition.”

The Alliance said its analysis of 2017 auto sales data showed a 25 percent tariff on imported vehicles would result in an average price increase of $5,800, which would boost costs to American consumers by nearly $45 billion annually.

Automakers are concerned tariffs would mean less capital to spend on self-driving cars and electric vehicles.

“We are already in the midst of an intense global race to lead on electrification and automation. The increased costs associated with the proposed tariffs may result in diminishing the U.S.’ competitiveness in developing these advanced technologies,” the Alliance wrote.

Toyota said in a statement Wednesday that new tariffs “would increase the cost of every vehicle sold in the country.” The automaker said the tariffs would mean even a Toyota Camry built in Kentucky “would face $1,800 in increased costs.”

Both automotive trade groups cited a study by the Peterson Institute for International Economics that the cost to U.S. jobs from the import duties would be 195,000 jobs and could be as high as 624,000 jobs if other countries retaliate.

The German Association for Small and Medium-sized Businesses said the “pattern of rising protectionism is very likely to continue if the U.S. decide to impose tariffs on foreign automobiles and automobile parts, thus causing tremendous damage to both economies.”

Alabama Governor Kay Ivey, a state that produced nearly 1 million vehicles and 1.7 million engines built by foreign automakers last year, urged the Commerce Department not to invoke the tariffs. She said job losses from new levies could be “devastating.”

The proposed tariffs on national security grounds have been met by opposition among many Republicans in Congress.

Trump has made the tariffs a key part of his economic message and repeatedly lamented the U.S auto sector trade deficit, particularly with Germany and Japan. Some aides have suggested that the effort is a way to try to pressure Canada and Mexico into making more concessions in ongoing talks to renegotiate the North American Free Trade Agreement.

U.S. Commerce Secretary Wilbur Ross said on Thursday the department aimed to wrap up the probe by late July or August. The Commerce Department plans to hold two days of public comments in July on its investigation of auto imports.

The Commerce Department has asked if it should consider U.S. owned auto manufacturers differently than foreign automakers.

The Association of Global Automakers rejected that contention, saying its members’ American workers “are no less patriotic or willing to serve their country in a time of crisis than any other Americans.”

The group questioned national security as grounds to restrict auto imports. “America does not go to war in a Ford Fiesta,” they added.

The Alliance said “there is no basis to claim that auto-related imports are a threat to national security” and noted that 98 percent of U.S. auto imports came from U.S. national security allies.
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Leaders in east Africa have agreed to work together to build a single railroad and highway network to enhance integration in the region. Leaders and representatives of eight countries met in Kenya Tuesday for the 14th time to discuss the northern corridor project aimed at improving trade and tightening security.

The representatives stressed the need for better movement of people, goods and services with better joint infrastructure.

Kenya got the go-ahead to continue building its standard gauge railways to the Uganda border. Kenya is about to finish the second phase of the rail line between the cities of Nairobi and Naivasha.

Kenyan President Uhuru Kenyatta told his counterparts plans are under way to extend the line.

“Preliminary discussions for the funding of Naivasha and Kisumu sections are in progress and we expect to sign the framework agreement to the People’s Republic of China anytime this year,” he said.

Uganda and Rwanda are also planning to extend railway connections to the countries after Kenya completes its part.

The agenda included a way to improve a single customs territory by reducing the number of weigh bridges and police checks to speed up the delivery of goods in landlocked countries like Uganda, Rwanda, Burundi and South Sudan.

Kenyatta said the border post between Kenya and Uganda has been effective.

“Malaba — one stop border post total time taken at the crossing has now been substantially reduced to less than seven hours for goods traveling under [a] single customs territory,” he said.

Following oil discoveries in Kenya and Uganda, the leaders agreed to come up with a joint refinery model to facilitate the exportation of petroleum products.

“The heads of state are looking at all these corridors and how they can enhance or support each other and ease the movement between their countries, both on road networks as well as railway network and all other means of transport within the region. So the northern corridor has been very important,” said Gerrishon Ikiara, an international economic affairs lecturer at the University of Nairobi.

The southern corridor network, which connects Tanzania to Uganda, Rwanda and Burundi is also under construction.

Countries in the region are focusing on at least 16 infrastructure projects, with the goal of transforming their people socially and economically.

 
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Enslaved on a Thai fishing vessel for 11 years, Tun Lin saw his fellow workers lose their minds one after another, with one fisherman jumping into the sea to end his

life.

Some would start murmuring or laughing to themselves as they worked day and night in Indonesian waters on the cramped boat, often surviving on fish they caught and drinking water leaking from an onboard freezer.

“It was like a floating prison – actually, worse than prison,” the Burmese fisherman, who was sold into slavery, told the Thomson Reuters Foundation in Samut Sakhon, a Thai fishing hub some 40 km (25 miles) southwest of the capital Bangkok.

The 36-year-old, who was rescued in 2015 after losing four fingers and being stranded on a remote island for years without pay, is now lobbying for fishermen’s rights with the Thai and Migrant Fishers Union Group (TMFG).

Under growing consumer pressure, Thailand has introduced a raft of modern technologies since 2015 – from satellites to optical scanning and electronic payment services – to crack down on abuses in its multibillion-dollar fishing industry.

It is one of a growing number of countries using innovation to deal with modern slavery, from mobile apps in India to blockchain in Moldova, but experts warn against over-reliance on tech as a silver bullet without stronger workers’ rights.

“Technology can be a double-edged sword,” said Patima Tungpuchayakul, co-founder of the Labor Rights Promotion Network Foundation, a Thai advocacy group. “It has become an excuse the government is using to justify they have done something, but in practice they don’t use it to solve the problem.”

More than half the estimated 600,000 industry workers are migrants, often from poor neighboring countries such as Cambodia and Myanmar, United Nations (U.N.) data shows.

Tracking Devices

After the European Union threatened to ban fish exports from Thailand, and the U.S. State Department said it was failing to tackle human trafficking, the Southeast Asian country toughened up its laws and increased fines for violations.

It banned the use of workers aged below 18 and ordered fishermen to be given contracts and be paid through electronic bank transfers.

Authorities ordered Thai vessels operating outside national waters to have satellite communications for workers to contact their families or report problems at sea, plus tracking devices to spot illegal fishing.

“We are serious in law enforcement regarding human trafficking and illegal labor cases,” said Weerachon Sukhontapatipak, a Thai government spokesman. “There might not be abrupt change … it will take time.”

Thailand is also rolling out an ambitious plan, using iris, facial and fingerprint scans to record fishermen’s identities to make sure they are on the boats they are registered with and help inspectors spot trafficking victims.

Rights groups meanwhile have tried to use satellites to pinpoint the location of ships that remain at sea for long periods, potentially indicating enslavement.

But human trafficking expert Benjamin Smith said using satellites to tackle slavery at sea was not easy unless there is a lead on where to track in the vast ocean.

“I think people underestimate the size of the ocean and the ability to pinpoint where something as small as a boat is,” Smith from the U.N. Office on Drugs and Crime (UNODC) said. “If you have good information, intelligence, then satellite images can be good … It has to be a small part of a much bigger effort.”

Smith also highlighted difficulties prosecuting cross-border trafficking cases and maritime police funding shortages, adding that continued consumer pressure on firms to clean up their supply chains could be a potent force to help end slavery.

“That’s probably the best way you can start,” he said.

Good News

Fishermen remain at risk of forced labor and the wages of some continue to be withheld, the International Labor Organization (ILO) said in March.

To combat slavery, firms must improve workers’ lives, rather than cutting labor costs and recruiting informally to meet demand for cheaper goods, experts say.

“Smaller owners are getting squeezed, and still rely on brokers and agents, who dupe workers and keep them ignorant of their rights and conditions on the boat,” said Sunai Phasuk, a researcher with lobby group Human Rights Watch in Bangkok.

Workers are set to become more vocal with the May launch of the Fishers’ Rights Network, which aims to combat abuses, backed by the world’s largest canned tuna producer, Thai Union, and the International Transport Workers’ Federation (ITF).

“Without enforceable rights at the workplace and the strength that comes from being represented by a union, labor rights violations and the mistreatment will continue,” said Johnny Hansen, chairman of ITF’s fisheries section.

Thailand’s ratification this month of the ILO protocol on forced labor also offers hope. It is the first Asian country to promise to combat all forms of the crime, including trafficking, and to protect and compensate victims.

“We have … committed to changing the law to allow workers to form unions, so we can work together to solve the problems,” said Thanaporn Sriyakul, an advisor to the deputy prime minister. “But the process is long, and it will take time.”

Thailand has also pledged to ratify two other conventions on collective bargaining and the right to organize, which campaigners say would better protect seafood workers.

This would be good news for Lin’s fishermen’s group, which has helped rescue more than 60 people since 2015, but has no legal status as Thai law does not permit fisher unions, leading rights advocates to use other terms, like workers’ groups.

“There are still lots of victims, and I want to help them,” Lin said. “As fishermen who have suffered in a similar manner, we understand each other’s needs and are able to help better.”
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Warming waters have reduced the harvest of Alaska’s prized Copper River salmon to just a small fraction of last year’s harvest, Alaska biologists say.

The runs of Copper River salmon were so low that the Alaska Department of Fish and Game shut down the commercial harvest last month, halting what is usually a three-month season after less than two weeks. Earlier this month, the department also shut down most of the harvest that residents along the river conduct to feed their families.

The total commercial harvest for Alaska’s marquee Copper River salmon this year after it was halted at the end of May was about 32,000 fish, the Alaska Department of Fish and Game reported. That compares with the department’s pre-season forecast of over 1.2 million and an average annual harvest of over 1.4 million fish in the prior decade.

State biologists blame warming in the Gulf of Alaska for the diminished run of Copper River salmon, prized for its rich flavor, high oil content and deep-red color.

The fish spend most of their lives in the ocean, and those waters were 3 to 5 degrees Celsius (5 to 9 degrees Fahrenheit) warmer than normal, thanks to a warm and persistent North Pacific water mass that climate scientists have dubbed “the Blob,” along with other factors, said Mark Somerville, a biologist with the Alaska Department of Fish and Game.

Warmer temperatures caused the metabolism of the fish to speed up, Somerville said. “They need more food for maintenance,” he said. “At the same time, their food source was diminished.”

Other important salmon runs are also struggling, including those in the Kenai River — a world-famous sport fishing site — and along Kodiak Island. Others have had good numbers, though the returning fish are noticeably reduced in size, Somerville said.

In Alaska, where wild salmon is iconic, Copper River fish hold a special status.

Their high oil content is linked to their ultra-long migration route from the ocean to their glacier-fed spawning grounds. They are the first fresh Alaska salmon to hit the market each year. Copper River salmon have sold for $75 a pound.

Chris Bryant, executive chef for WildFin American Grill, a group of Seattle-area seafood restaurants, worries about trends for Alaska salmon beyond the Copper River.

“The fish are smaller, which makes it harder for chefs to get a good yield on it and put it on the plate,” he said.
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International efforts to make it easier for garment workers in India to speak out against sexual harassment, dangerous working conditions and abuses are failing, campaigners said Tuesday.

The U.S.-based certifying agency Social Accountability International (SAI) and Britain’s Ethical Trading Initiative (ETI) — an alliance of unions, firms and charities — are not enforcing procedures they set up to protect workers, they said.

“The organizations are violating the rules of the mechanisms they created by not taking time-bound action against complaints that come up,” said S. James Victor, director of Serene Secular Social Service Society, which works to empower garment workers.

“They are far removed from ground reality. The fact is that every day a worker continues to face workplace harassment in the spinning mills and garment factories of Tamil Nadu.”

From clothing stores to supermarkets, major brands are facing rising consumer pressure to improve conditions along their global supply chains, render them slavery-free and ensure fair wages.

Poor regulation

Many of the 1,500 mills in Tamil Nadu state — the largest hub in India’s $40 billion-a-year textile and garment industry — operate informally with poor regulation and few formal grievance mechanisms for workers, most of whom are women, campaigners say.

“Workers are being victimized, harassed, and managements are literally going after them for raising any complaint,” said Sujata Mody of the Garment and Fashion Workers Union, which has about 3,000 active members. “The issue could be about a toilet break, sick leave or sexual harassment. No complaint is tolerated or redressed.”

Following reports that girls as young as 14 were lured from rural areas to work long hours in mills and factories without contracts, and often held in company-run hostels, global rights groups have tried to improve accountability.

Manufacturers who comply with voluntary labor standards introduced by SAI receive certification, with 300 certified factories employing about 64,000 workers in south India, according to SAI senior director Rochelle Zaid.

But forced labor, sexual harassment and repression of unions is not being properly addressed, Dutch advocacy groups India Committee of the Netherlands (ICN) and the Center for Research on Multinational Corporations (SOMO) said last week.

After the charities complained about abuses at two SAI-certified mills, one lost its certification after a 20-month procedure but the other continued to operate, they said.

More unannounced audits

SAI is constantly upgrading its program based on feedback, has increased the number of unannounced audits and improved accountability to ensure timely response to complaints, Zaid told the Thomson Reuters Foundation in emailed comments.

But trade union president Mody said that workers’ committees set up to handle complaints internally do not work.

“It is only on paper,” she said. “We have at least 10 written complaints of sexual harassment pending before the Tamil Nadu government,” she added, referring to cases brought by workers in SAI-certified factories.

ICN and the U.K.-based Homeworkers Worldwide rights group also said their complaints to the ETI about forced labor in British supermarket supply chains were investigated slowly, workers were not consulted and no plan was made to address issues raised.

“When handling complaints, ETI seeks to promote engagement and reach practical collaborative solutions,” an ETI spokesman, who declined to be named, said in emailed comments.
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President Donald Trump on Tuesday endorsed U.S. Treasury Secretary Steven Mnuchin’s measured approach to restricting Chinese investments in U.S. technology companies, saying a strengthened merger security review committee could protect sensitive American technologies.

Trump, in remarks to reporters at the White House, said the approach would target all countries, not just China, echoing comments from Mnuchin on Monday amid a fierce internal debate over the scope of investment restrictions due to be unveiled Friday.

“It’s not just Chinese” investment, Trump told reporters when asked about the administration’s plans.

Mnuchin and White House trade adviser Peter Navarro sent mixed signals on Monday about the Chinese investment restrictions, ordered by Trump on May 29. Mnuchin said they would apply to “all countries that are trying to steal our technology,” while Navarro said they would be focused specifically on China.

The restrictions are being developed to help put pressure on China to address the administration’s complaints that it has misappropriated U.S. intellectual property through joint-venture requirements, unfair licensing policies and state-backed acquisitions of U.S. technology firms.

Enhanced reviews

Mnuchin would prefer to use new tools associated with pending legislation to enhance security reviews of transactions by the Committee on Foreign Investments in the United States (CFIUS), some administration officials have said.

A government official told Reuters on Sunday that Treasury had been working on a proposal to ban acquisitions of U.S. firms with “industrially significant technology” by companies with at least 25 percent Chinese ownership.

Asked about the pending restrictions at a White House meeting with Republican lawmakers on Tuesday, Trump said: “We have the greatest technology in the world. People copy it. And they steal it, but we have the great scientists, we have the great brains and we have to protect that and we’re going to protect it and that’s what we’re doing.

“And that can be done through CFIUS. We have a lot of things we can do it through and we’re working that out,” he said.

Prior to the meeting, Mnuchin was seen by reporters in the West Wing of the White House. A Treasury spokesman did not respond to a Reuters request for comment.

The U.S. House of Representatives passed legislation on Tuesday to strengthen the authority of CFIUS by a 400-2 vote, with many similarities to a Senate-passed bill. Both versions would expand CFIUS reviews to minority stakes in U.S. companies and investments that may reveal information on critical infrastructure to foreign governments.

​Signs of Fed shift

Trump’s intensifying list of trade disputes with China, the European Union, Canada and Mexico showed signs of influencing Federal Reserve policy on Tuesday. Atlanta Fed President Raphael Bostic said in Birmingham, Alabama, that increased tensions could cause him to oppose a fourth rate increase this year.

Trump said earlier on Twitter that his administration was “finishing up” its study of tariffs on U.S. car imports, suggesting that he would take action soon.

The Alliance of Automobile Manufacturers, a trade group, said it would file written comments in the study warning that a 25 percent tariff on imported passenger vehicles would cost American consumers $45 billion annually, or $5,800 per vehicle.

Tariffs of 25 percent on an initial $34 billion worth of Chinese imports are due to take effect on July 6, with a further $16 billion undergoing a vetting process for activation later this summer.

Should China follow through on its vow to retaliate in equal measure with tariffs on U.S. soybeans, cars and other goods, Trump has threatened to impose 10 percent tariffs on a further $400 billion worth of Chinese goods.

A Reuters analysis of the tariff lists found that most of the Chinese products targeted thus far are classified as intermediate or capital goods — avoiding a direct tax on voters — but many consumer goods have been caught up in the net, and will be targeted in future rounds.

Trump on Tuesday also threatened Harley-Davidson with higher taxes if it proceeded with a plan to move some production out of the United States to avoid the EU’s retaliatory tariffs on American motorcycles.
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Daniel Baud is a veteran of Route 66, who fondly recalls riding the iconic highway spanning a large swath of the United States saddled on his motorcycle. Sporting a snowy goatee and a leather jacket speckled with American memorabilia, he speaks reverently about his vehicle of choice. 

“I’ve dreamt of having a Harley-Davidson ever since I was a kid,” Baud said. “For me, it’s about liberty.”

Baud might fit comfortably into an upscale Hells Angels club. But the aging biker is not from Paris, Texas, but rather the French capital.

On a recent morning, he gathered with other Paris-area enthusiasts to plot out their next trip — to Prague. The lure of the open road has been transplanted from America’s heartland to Eastern Europe.

Now, as a transatlantic trade dispute deepens, Harleys, as the motorcycles are called, are a symbol of both what divides and what unites Europe and the United States.

“The French in general seem to have an overwhelming passion and enthusiasm for American culture,” said Richard Clairefond, co-director of the Harley-Davidson Bastille dealership in Paris, where Baud’s club meets most weekends. “And the Harley just kind of rolls up into that experience.”

In the crosshairs

At the moment, however, the motorcycle is better known for being in the crosshairs of a growing divide between Brussels and Washington. After the Trump administration introduced tariffs on European steel and aluminum imports, the European Union riposted, slapping taxes on a long list of U.S. products, including peanut butter, orange juice — and Harley-Davidsons.

WATCH: Caught in Trade Spat, Harley-Davidson Bridges Transatlantic Divides

Now, the Wisconsin-based motorcycle manufacturer is also feeling the heat at home. President Donald Trump vowed Tuesday that it would be “taxed like never before” after the company announced it would move part of its operations overseas — it hasn’t said where — to avoid the European tariff hike.

French Economy Minister Bruno Le Maire had a different take.

“Anything that creates jobs in Europe goes in the right direction,” Le Maire told members of the Anglo-American Press Association of Paris in an interview. “We don’t want a trade war, but we will defend ourselves. We aren’t the aggressors, but the aggressed.” 

Even as he described “excellent” personal relations with Trump administration counterparts, Le Maire also defended Brussels’ apparent efforts to tax products from mostly Republican states ahead of U.S. congressional elections in November.

“It’s legitimate to use the means we have to make Mr. Trump understand we don’t accept his decision” to tax European metals exports, he said. “And if the sanctions hit Republican states and it makes Republicans understand that their decision is unacceptable, so much the better.”

For the Bastille Harley club, however, the sharpening dispute is being met with a somewhat Gallic shrug.

“It’s politics, that’s all. It’s a mistake on both sides,” said the club’s vice president, Patrick Sarfati, who believes European Harley fans will continue to buy the bike even at a higher price.

Baud is similarly philosophical.

“It’s too bad, but we can’t do anything about it,” he said. “But it won’t stop us from buying our Harleys.” 

Dilemma mirrored in Europe

In some ways, Harley-Davidson’s dilemma is matched by the one faced by some European companies. They’ve been threatened with separate U.S. sanctions for doing business with Iran following Trump’s decision to withdraw from the nuclear agreement. A growing number are pulling out of Iran, and Economy Minister Le Maire acknowledged that for the moment, European governments had little means of reversing the trend. 

“For the moment, our requests remain unanswered,” he said of discussions with Washington.

France, in particular, is no stranger to rocky transatlantic relations — and the euros lost as a result. In 2003, French opposition to the U.S.-led war in Iraq led to a “freedom fries” retaliation by an irate U.S. Congress, and an American boycott of iconic products like brie and camembert.

Jean-Pierre Raffarin, who was French prime minister at the time, is happy that Europe today is fighting for its principles.

“Maybe it’s Europe’s luck to have Mr. Trump,” he said in an interview. “Because it finds new unity in this adversity, and maybe this will allow it to react strongly.”

Experts say the U.S., for now, is in a position of strength, particularly given its booming economy, although it is confronted by multiple trade disputes. The EU, by contrast, is economically weaker, and splintered by political divisions over issues such as migration and closer economic unity.

Still, the former head of the World Trade Organization, Pascal Lamy, is confident, for the moment, that free trade will win in the long term.

“My own sense is that we’ve reached a stage of globalization that will make de-globalization extremely unlikely” unless protectionist and populist parties strengthen further, Lamy said in recent remarks to Anglophone reporters.

Harley-Davidson’s eventual reprieve from EU sanctions, following its production shift, will help maintain business, said Clairefond of the Bastille motorcycle store — especially when it comes to newer riders with less loyalty and financial means than those in the bikers club.

But he is less upbeat about the broader standoff.

“I think anytime you have a trade war, there’s bound to be winners and losers,” Clairefond said. “But more losers in the end.” 
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U.S. President Donald Trump accused motorcycle maker Harley-Davidson Inc on Tuesday of using trade tensions over tariffs as an excuse to move production for European customers overseas.

“Early this year Harley-Davidson said they would move much of their plant operations in Kansas City to Thailand. That was long before Tariffs were announced. Hence, they were just using Tariffs/Trade War as an excuse,” Trump said on Twitter.

“When I had Harley-Davidson officials over to the White House, I chided them about tariffs in other countries, like India, being too high. Companies are now coming back to America.

“Harley must know that they won’t be able to sell back into U.S. without paying a big tax!”

Harley-Davidson representatives did not immediately return a request for comment.

The company decided to build the Thailand plant last year after Trump pulled out from the Trans-Pacific Partnership, which would have lowered import tariffs on its bikes in some of the fastest-growing motorcycle markets in Asia.

Harley-Davidson said on Monday it would move production of motorcycles shipped to the EU from the United States to its international facilities and forecast the trading bloc’s tariffs would cost the company $90 million to $100 million a year.

The Trump administration imposed tariffs on imports of European steel and aluminum earlier this month, and in response, the European Union began charging import duties of 25 percent on a range of U.S. products including big motorcycles like Harley’s on June 22.

Trump responded angrily to the Harley-Davidson’s announcement on Monday, saying he has fought hard for the 115-year-old Milwaukee-based company and was surprised by its plans, which he described as waving the “White Flag.”

“I fought hard for them and ultimately they will not pay tariffs selling into the E.U., which has hurt us badly on trade, down $151 Billion. Taxes just a Harley excuse – be patient!” Trump said in a post on Twitter on Monday night.

Harley-Davidson, the dominant player in the heavyweight U.S. motorcycle market, said it would not pass on any retail or wholesale price increases in the EU and instead focus on shifting some U.S. production.

 
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As Washington and Beijing teeter on the brink of a possible trade war, the European Union and China have agreed to launch a working group to promote reform at the World Trade Organization. The move is part of an effort to upgrade the global trade system’s toolbox and ward off growing threats to the multilateral trade system and body.

According to a top EU official, the reform group would look at ways to modernize regulations and address the problem of state subsidies and other unfair trade practices.

How willing a participant Beijing will be in that effort is unclear as most of the EU’s proposed upgrades are connected to unfair trade measures, practices and policies that exist in China. The same concerns are driving the administration of President Donald Trump to press forward with the possible threat of heavy tariffs on some $34 billion in Chinese goods.

The Trump administration announced Monday that it is also mulling restrictions on foreign investments in technology. 

European Union Vice President Jyrki Katainen admits that the effort to try and promote reform of WTO rules will not be easy. He said it would take time and that China would have different views on priorities. 

But, Katainen added that if nothing is done, “the environment for multilateral trade will vanish.”

State media in China has portrayed Monday’s meetings with EU officials, a high-level dialogue ahead of next month’s EU-China summit, as the two teaming up to combat “unilateralism and protectionism” and promote globalization and protecting the global economy.

The European Union wants the reform effort to address issues such as industrial subsidies and unfair trade practices such as the forced transfer of technology in exchange for market access. 

“The two issues together are some of the reasons why, not the only reasons but some of the reasons why the president of the United States is taking unilateral action,” Katainen said, adding that the issue instead has to be solved in an orderly manner.

The basic idea is to update the WTO so that it is better suited to the current realities of the modern world, he said.

“The EU is not siding with any party or any country, the only thing we are siding with is rules-based trade,” Katainen said.

Chinese state media have portrayed the effort as a sign that Washington’s trade actions are creating a united front between the EU and China. A report in the Beijing-based newspaper Global Times called the joint effort to combat “unilateralism” and “protectionism” a “clear rebuttal of punitive U.S. tariffs on European and Chinese goods” and defense of the “multilateral trade system.” 

A report in the China Daily highlighted how trade frictions were bolstering closer trade ties between the EU and China. 

At the release of a survey on the business climate in China last week, the head of a top European businesses lobby noted that some companies, perhaps one or two, have already seen benefits from the ongoing trade dispute. 

Mats Harborn, president of the European Chamber of Commerce, said that it was not possible to tell if that is a trend but added that trade tensions are not good for business. 

“We don’t want companies to benefit from this trade war, we would like to see that we are all competing on a level playing field in China,” Harborn said.

In remarks following meetings with Katainen on Monday, Vice Premier Liu He did not mention the reform working group proposal for the WTO specifically. He did say that both countries agreed to pay attention to market access issues facing businesses on both sides and that they agreed to “reform the multi-lateral trade system and keep it advancing with the times.”

At a so-called “press conference” with Katainen, where journalists were not allowed to ask questions, Liu said “unilateralism and trade protectionism” was on the rise and that the European Union and China agreed to prevent such practices from impacting the world economy or dragging it into recession. 

Monday’s high-level dialogue was held in preparation for the EU-China Summit, which will be held next month on July 16-17th. During that meeting the two are looking to move forward a Comprehensive Agreement on Investment and to exchange market access offers. 
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