December 18

EU Spur African Growth, Instead Of Making More Bad Trade

EU Spur African Growth, Instead Of Making More Bad Trade

The European Union had entered into an old-fashioned deal with many African countries before Donald Trump won the election. After almost a decade of negotiations the Southern African Development Community. Which includes Botswana and Lesotho as well as South Africa. Namibia, South Africa, Swaziland, and South Africa, signed the Economic Partnership Agreement with the EU’s 28 member states. Mozambique will become the sixth member of this agreement once the ratification process is complete.

The EPA intend to favor African countries. According to the European Commission, never before has the EU accepted this degree of asymmetry in trade deals.

However, some African and European delegates still question the fairness the deal. This is not surprising considering that the African countries have already grant. Duty-free access through the Commission’s Everything but Arms initiative. All signatories to the agreement will be grant 100% free access by the EU to its common market. South Africa will pay customs duties on 1.3% of its exports.

It Will Work African

As a coup, the granting of free access the huge EU market is celebrate as a major step. Towards the economic growth of the countries involved. Although there are no reasons to believe that the motives behind the European Union were not sincere. It is unclear if the intend effect will be achieve.

EU has used the agreement’s rationale to promote economic growth. It is argued that the removal of duty on intermediate products such electronics and automotive parts. That are use in more specialize consumer goods manufacturing will allow for cheaper imports.

EU claims the agreement will safeguard African production activities from liberalization, and allow domestic industries to mature. South African labor unions have been vocal opponents of further trade liberalization, which has attracted particular attention to the textile industry. Both Kenya and Ethiopia, which are both promising to become established textile-producing centers, are facing various obstacles from European customers, who are perceived as more demanding in terms of lead times, order size, quality, and other issues.

Cheaper And Better Quality

The EU’s textiles, which are cheaper and better quality than those from Africa, will likely reduce trade between African countries, limit the ability of manufacturers to make more varied products, and limit industrialization. Even though South Africa has a more sophisticated and established industry, its inter-regional textile exports only 12% to 14% are of total exports.

African producers will struggle if European imports are given duty-free treatment. Local businesses won’t be able to sell their goods at competitive prices. The agreement will also limit efforts by the continent to improve the industrial value chain and produce more final consumption goods. Consequently, Africa will continue to be a constant supplier of raw materials and a poor diversified economy, contrary the EPA’s ambitions.

Divide And Conquer African

Signatory countries also run the risk of losing the ability to collect duties from imported goods, which could lead to instability in their fragile economies.

According to the most recent World Bank figures Botswana relies on these tariffs to fill 47%, Namibia 22% and Lesotho 70% of their total tax revenue at borders.

December 18

We Do Without Chinese Series Capital Expert

We Do Without Chinese Series Capital Expert

This article is from the International Economics Campaigning. Series of France’s Research Centre in International Economics (CEPII), a CEPII-La Tribune-The Conversation-Xerfi-Canal partnership. Francoise Lemoine (CEPII advisor) and Andrea Goldstein adjunct. Professor at the Catholic University of Milan, are experts in the Chinese economy. Jezabel Couppeyy-Soubeyran and Isabelle Bensidoun, CEPII economists, ask them questions.

Jezabel Couppeyy-Soubeyran, Isabelle Bensidoun: China is the second-largest international investor after the United States. How has China’s investment changed over the past years?

Francoise Lemoine, Andrea Goldstein, The foreign investment of Chinese companies (FDI). Reached nearly US$200billion in 2016, a record that is about one-sixth the total global FDI. China’s overseas investment now surpasses that of other foreign multinationals.

In the beginning, Chinese investors were focused on natural resources in Africa, and in the developing world. However, their focus has shifted to manufacturing and services in Europe and the United States.

China’s main target has been Europe, particularly France, Germany, Italy and the United Kingdom. The Chinese acquired more than twice as many assets in Europe between 2014 (EUR14billion) and 2016, (EUR35billion). No sector is left behind, from high-tech to real estate, tourism, automobiles and food to energy.

What Is The Chinese Company Looking For In These Acquisitions?

They first seek patents, brands, and know-how. This is due to the priority that was given to technological catch up in the government’s Made in China 2025 plan, which was adopt in 2015. Chinese companies want to increase their supply, even in the domestic market, where foreign brands are most sought after. They also want to meet the growing demands of a middle class that is demanding more quality, safety, and image. One example of this the Brittany-base powder milk plant, which is 100% destine for China.

Are There Any Concerns About Series This Activism?

Yes, quite a few. Particular concern is express about the state-owned enterprises which can use as political pressure instruments. Europeans are concerned about the possibility that the Chinese could control major infrastructure such as electricity generation and distribution or sensitive technologies.

If these companies plan to move production to China’s domestic markets, which have weak social protections and low standards of labour rights, there is a risk of devastation to the European industrial system.

Finally, there is outrage over the asymmetry between the European market, which is open to Chinese companies, and the difficult-to-penetrate Chinese market. While Chinese investment in Europe is booming, Europe’s stagnating in China are due to Chinese investors.

What Is The Secret To This Series Anxiety?

At the moment, tensions are mainly between China and Germany. Berlin stopped the purchase of two diamonds in the German high-tech industry sector: Aixtron, a semiconductor equipment manufacturer, as well as a subsidiary of Osram, the lighting company.

Nothing has been comparable in France. Chinese acquisitions grew exponentially after Dongfeng Motors purchased 14% of French multinational automobile manufacturer PSA in 2014. In 2014, sovereign wealth fund China Investment Corporation bought 30% French utility GDF Sueez. 2015 saw the acquisition of Club Med, Toulouse airport and Louvre Hotels groups in France.

We saw last year the growth of Chinese capital in hotels (Accor Hotel) and leisure property Pierre & Vacances as well as the acquisition a majority stake of the SMCP fashion group (Sandro Maje, Claudie Pierlot). These operations met with mix feelings. They sometimes provoked the attention of the authorities.

December 18

Presidency Be A Disaster For The Global Economy

Presidency Be A Disaster For The Global Economy

The unexpected victory of Donald Trump in the US presidential election is a crucial moment for the global economy. A global market still recovering from the 2008 financial crisis is evident by weak international investment, low commodity prices, low consumer confidence, falling business and consumer confidence, rising household and household debts, and historically low rates of interest.

Trump’s win will not reverse this trend. In fact, his economic policies, if they are implemented, will slow global growth, trade, and investment and could trigger trade and currency wars. Here’s why. Trump’s macroeconomic agenda promises radical reforms. First, trade protectionionism but also changes in immigration policy which will impact the US labor market.

His trade policy seeks reverse decades of liberalization. It begins with a withdrawal of the Trans-Pacific Partnership (TPP), currently before Congress. A renegotiation (or possible withdrawal) from the North American Free Trade Agreement with Canada and Mexico. China is also labeled as a currency manipulator and a 45% tariff on Chinese imports to the US. He also demanded a tariff of 35% on products imported by US companies who outsource production to Mexico.

Trade Economy Protectionism

Global trade and the US economy will be affected by aggressive trade protectionionism. Moody’s Analytics’s modeling suggests that the proposed tariffs on Chinese goods and Mexican goods would raise their prices by 15%, and overall US consumer prices by 3%. This will reduce household disposable income, consumer desire, and domestic economic activity

Trump’s immigration agenda, which includes tightening quotas as well as sending illegal immigrants home to their homelands, would increase inflationary pressures. These policies would reduce labour mobility and potentially lead to shortages on an already tight labour market.

The Fed would tighten its monetary policy to reduce inflation and wage pressures. However, this could have negative consequences on interest rates and housing affordability. This would also impact the ability of American households and businesses to purchase consumer goods and sustain their spending.

International Impacts

Mexico and China would suffer even more, as the US is their largest trading partner. China would see its exports drop, which would further exacerbate already steep declines in export volumes caused by the slow global economy. China’s exports were down 7.3% even before Trump’s election. This leaves Beijing dependent on domestic growth for economic activity.

A further drop in Chinese exports could lead to a contraction of Chinese economic activity, which could have severe consequences, including a global recession, as volatility, economic uncertainty, and trade volumes fall, and investor confidence declines.

The Chinese authorities would have difficulty managing the economic downturn, given the large increase in debts to the public and private sectors. In a context where the export sector is still an important source for employment, there are concerns about political stability.

Mexico would also adversely affect. Mexico’s exports to America are more valuable than those of its 15 closest trading partners. The US’s retrenchment could have a negative impact on Mexican businesses, reduce profits and possibly lead to a recession. This would also have negative consequences for Latin American countries exporting to Mexico.