Economy

China, EU to form group to modernise global trade rules

China, EU to form group to modernise global trade rules

The EU and China have called Trump's actions "totally unacceptable" and an "act of extreme pressure and blackmail" respectively, and retaliated with billions of dollars worth of tariffs of their own.

The S&P 500 Index closed down 1.35%, which says many U.S. investors believe the worst case scenario won't happen with a trade war and I hope they're right but we're gambling with the former casino owner called Donald Trump. "They must play fair or they will pay tariffs!" he tweeted.

Actions such as U.S. President Donald Trump's unilateral tariff hikes in a technology dispute with Beijing show World Trade Organization rules need to keep pace with changes in business, said an European Union vice president, Jyrki Katainen.

"It is essential that we work together to tackle overcapacity in sectors such as steel and aluminium", Katainen said, specifically identifying the industries that Trump first took aim at when he embarked on a tariff war in March.

China will impose additional 25 per cent tariffs on 659 USA goods worth $50bn in response to the U.S. announcement that it will levy tariffs on Chinese imports.

President Xi Jinping's top economic adviser - said China and the European Union had agreed to defend the multilateral trading system, following talks on Monday in Beijing.

"Both sides agree to firmly oppose unilateralism and protectionism and prevent such practices from impacting the world economy or even dragging the world economy into recession", Liu He, the vice premier of China's State Council, said in a speech quoted by Japan's Kyodo news agency.

More news: Handprints found on Thai cave walls in search for missing boys

But despite their alignment against the United States trade threat, the EU and China remain at odds over issues including the lack of reciprocal access for European firms and the EU's reluctance to endorse China's Belt and Road trade and infrastructure program. "If you are in favour of multilateralism, then you have to engage seriously, for instance in reforming the WTO".

Scott Kennedy, a China economy expert at the Center for Strategic and International Studies in Washington, DC, said the new EU-China partnership was "a big deal" and risked leaving the United States isolated.

The EU wants other governments to join the group, the AP reported Katainen as saying.

China had also committed to buying 184 single-aisle A320 Airbus planes during Macron's January visit, but the deal has not been finalised.

Katainen also talked about the trade differences that the EU has had with China for some time, such as better access to the Chinese market for European companies and products, or the concerns due to the modernization programme "Made in China 2025" that included important subsidies to Chinese high-tech companies.

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