1/7
EU trade commissioner Valdis Dombrovskis: “The China-EU trading relationship is very unbalanced. China is running a huge trade surplus. And the level of openness from the Chinese side is not the same as the level of openness from the EU side.”
ft.com
EU trade commissioner Valdis Dombrovskis: “The China-EU trading relationship is very unbalanced. China is running a huge trade surplus. And the level of openness from the Chinese side is not the same as the level of openness from the EU side.”
ft.com
2/7
This WTO way of thinking is not very helpful. The trade deficit the EU runs with China isn't about the relative openness of the two economies, and of course the EU thinks very differently about "relative openness" in the context of its trade surplus with the US.
This WTO way of thinking is not very helpful. The trade deficit the EU runs with China isn't about the relative openness of the two economies, and of course the EU thinks very differently about "relative openness" in the context of its trade surplus with the US.
3/7
What matters is the extent of direct and indirect subsidies to the manufacturing sector in each economy and – because these subsidies are effected through transfers from the household sector – the impact of these subsidies on repressing domestic demand.
What matters is the extent of direct and indirect subsidies to the manufacturing sector in each economy and – because these subsidies are effected through transfers from the household sector – the impact of these subsidies on repressing domestic demand.
4/7
That is why countries run surpluses. Without the effect of these subsidies on domestic demand, rising exports would be matched by rising imports. The whole point of boosting exports should be to maximize imports and social welfare, not to run surpluses.
That is why countries run surpluses. Without the effect of these subsidies on domestic demand, rising exports would be matched by rising imports. The whole point of boosting exports should be to maximize imports and social welfare, not to run surpluses.
5/7
Improving trade "openness" between China and the EU won't change much. China will still run surpluses, and the EU deficits, because of the huge supply-side support Chinese manufacturers receive, instead of the demand-side support their economy really needs.
Improving trade "openness" between China and the EU won't change much. China will still run surpluses, and the EU deficits, because of the huge supply-side support Chinese manufacturers receive, instead of the demand-side support their economy really needs.
6/7
Later in the interview, Dombrovskis accidentally recognizes this when he says: “China has benefited enormously from its WTO membership, but many of China’s practices are actually distorting that level playing field. It’s important that China is co-operating on...
Later in the interview, Dombrovskis accidentally recognizes this when he says: “China has benefited enormously from its WTO membership, but many of China’s practices are actually distorting that level playing field. It’s important that China is co-operating on...
7/7
WTO reform because it’s one of the biggest beneficiaries of WTO.”
Our current WTO-compliant system allows an enormous amount of mercantilist, trade-distorting policies, as long as these are considered industrial policies and not banned as trade policies.
WTO reform because it’s one of the biggest beneficiaries of WTO.”
Our current WTO-compliant system allows an enormous amount of mercantilist, trade-distorting policies, as long as these are considered industrial policies and not banned as trade policies.
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