“America’s global trade war has finally arrived at the WTO.
Seven countries — including Mexico, Canada and the European Union — are disputing U.S. tariffs on foreign steel and aluminum at a meeting of the World Trade Organization in Geneva on Monday. China is asking the international trade body to review the tariffs on roughly half its exports to the United States. The U.S. is fighting back with complaints about Chinese counter-tariffs.
Rarely has the WTO faced so many disputes about a handful of actions, experts say. But President Donald Trump’s pursuit of protectionist trade policies has stoked nationalism around the globe. His disregard for international rules of the road has forced other countries to sidestep the system as well. And the WTO is struggling to keep up with the changing tides.
Seven countries — including Mexico, Canada and the European Union — are disputing U.S. tariffs on foreign steel and aluminum at a meeting of the World Trade Organization in Geneva on Monday. China is asking the international trade body to review the tariffs on roughly half its exports to the United States. The U.S. is fighting back with complaints about Chinese counter-tariffs….
President Donald Trump’s pursuit of protectionist trade policies has stoked nationalism around the globe. His disregard for international rules of the road has forced other countries to sidestep the system as well. And the WTO is struggling to keep up with the changing tides…
Monday’s closed-door meeting of the WTO’s dispute settlement body was the first time countries were collectively able to confront each other and air their grievances over the Trump tariffs. Statements released afterward suggested the discussion got heated…
“It’s getting kind of messy,” said Robert McDougall, a senior fellow at the Centre for International Governance Innovation and a former Canadian delegate to the trade body. The WTO “is under stress, and its relevance is challenged. It administers rules that are out of date.”
“…Some fear Monday’s meeting could end up backfiring, leading not to resolution but to inflamed tensions. The United States appears to have made little progress in direct negotiations over the steel and aluminum tariffs, for example. Canada and Mexico had hoped to reach an agreement before signing a new trilateral trade agreement next month. But so far, talks do not appear to have gotten off the ground.
““The worry is that after the meeting there may be a flood of new protectionist measures and it could trigger a reaction, depending on how the discussions go,” said Anahita Thoms, a partner at the law firm Baker & McKenzie who specializes in trade.”
“China guided the yuan to its weakest official level in a decade on Tuesday—a move that could fuel expectations of a further, self-reinforcing slide…
“The recent slide has reignited speculation about whether further weakness could spark capital flight…”
“The moves in mainland Chinese stocks came after the country’s securities regulator said it would improve market liquidity and guide more long-term capital into the market… “From the currency point of view, this simply means that fiscal policy is, you know, more expansionary. And of course, this raises a bit of concern… that China’s fiscal deficit will widen further. So, again, this adds one more line to the growing list of negatives for the currency,” said Koon How Heng, head of markets strategy at United Overseas Bank.”
“China is considering cutting the tax levied on car purchases by half to revive its flagging automotive market.
“The National Development and Reform Commission, China’s top economic-planning body, is proposing to cut the purchase tax to 5% from 10% on vehicles with engines no bigger than 1.6 liters, Bloomberg reported on Monday, citing people familiar with the matter.”
“[The Korean] financial regulator had revealed a market stabilizing plan to inject some 500 billion won ($440 billion) into the stock market. Only hours after the policy announcement, however, the country’s bourse nose-dived… The fact that the government’s continued efforts for market revitalization had come to no avail triggered anxiety that the latest stock market plunge may hint at a prolonged economic downturn.”
“Mr Sirisena appointed former strongman Mahinda Rajapaksa, who ruled between 2005 and 2015, as the country’s new prime minister. On Saturday, Mr Sirisena suspended Parliament. “We should settle this through Parliament,” Mr Jayasuriya told reporters in the central district of Kandy. “If we take it out to the streets, there will be bloodshed.” The upheaval ushers in a new period of political uncertainty in Sri Lanka, which saw economic growth last year hit the slowest pace since 2001.”
“At the end of August, leading ratings agency Moody’s downgraded 18 banks and two finance companies in Turkey. According to the agency, the downgrades “primarily reflect a substantial increase in the risk of a downside scenario, where a further negative shift in investor sentiment could lead to a curtailing of wholesale funding”. Moody’s also observed that Turkey’s operating environment “has deteriorated beyond its previous expectations” and expects it to continue doing so.”
“The liquidity situation is still a source of major concern. President Omar al-Bashir fired Sudan’s Foreign Minister Ibrahim Ghandour on 19 April after he said that Sudanese diplomats abroad had been unpaid for months…
“On 8 September, al-Bashir sacked his entire cabinet and reduced government ministries from 31 to 21.”
“Inflation and prices are on the rise, there is a shortage of foreign exchange and supplies of fuel, food and pharmaceuticals are drying up.
“The opposition is calling for a transitional government to resolve the worsening economic and political crisis hitting Zimbabwe. President Emmerson Mnangagwa is increasingly under pressure to act swiftly.”
“South African cities are facing a financial crisis, and it is lower income households bearing the burden of revenue shortfalls in local municipalities, prompting calls for an overhaul of the country’s intergovernmental fiscal framework. The 2018 State of the Cities Report, by the South African Cities Network, highlighted the rampant inequality in urban areas, evidenced by the higher proportion of income paid by poorer households towards municipal rates than their wealthier counterparts.”
“Italy’s economy minister is studying possible measures to support the country’s banks if needed, a government source said on Monday, in a sign of concern within the ruling coalition over the impact of rising debt yields on lenders.”
“German bond yields rose on Monday after Chancellor Angela Merkel said she would not seek re-election as party chairwoman and that her fourth term as chancellor would be her last…
“…while Italian yields fell on relief at an unchanged ratings verdict from S&P.”
“A key gauge of the UK money supply is flashing early warning signs of a sharp economic slowdown and a loan squeeze in 2019… A full-blown slump would play havoc with the borrowing and spending… The growth rate of the ‘broad’ monetary aggregate known as M4x has been slowing for over two years. It has suddenly dropped to stall speed over recent months. “This is a classic warning sign of trouble. M4x is a leading indicator for the real economy and asset prices some three to six months ahead…””
“A fall in borrowing for car finance sparked a slowdown in consumer credit growth last month, Bank of England figures show… Explaining factors behind the slowdown, the Bank said: ‘New borrowing for car finance fell sharply, consistent with very weak car registration numbers in September.’ It comes after figures showed sales of new cars plunged by 20 per cent in September, a month that is traditionally a bumper one for cars with new number plates.”
“Last week Australia’s stock market could not avoid a worldwide panicked selloff of stocks that saw local shareholders endure huge losses for five days. The 169-year-old insurer AMP lost nearly 25% of its value in a single day. Bullock said the stability of Australia’s financial system could be upset in this environment, and roiling markets were not the only risk. Australia’s highly indebted households posed another risk, she said.”
“In the case of Canada, the risks come from a combination of falling house prices, rising interest rates and weaker credit growth… Morgan Stanley estimates that household debt in the 10 largest developed economies has surged to 160 per cent of income from 98 per cent over the past two decades.”
“Inflation in the United States rose steadily last month, leaving the Federal Reserve on track to raise interest rates again in December… The PCE index, published by the commerce department, measures the monthly change in the cost of a basket of goods and services, excluding food and energy, which are prone to sharp swings. It is watched closely because it has a strong influence on interest rate-setting decisions by the federal open market committee, which sets monetary policy…”
“The Federal Reserve is expected this week to vote on standards that would change the way big banks are regulated, according to a Dow Jones report… The moves are expected to be voted on Wednesday and come as Congress looks to loosing the reins on banking regulation following the post-financial crisis reforms.”
“The federal government will issue $1.34 trillion in new debt during 2018, according to a new Treasury Department projection. The debt issuance represents a 146% jump from 2017 and the highest amount of new debt issued since 2010… The primary drivers of new debt issuance are the GOP tax law and the bipartisan budget agreement.”