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Good morning and welcome back to POLITICO Pro Morning Trade. Thank god it’s Friday — that’s not only how MEPs and assistants feel after an intensive Strasbourg plenary week, but also the Pro Morning Trade team after we’ve been eagerly preparing in-depth reports for the big launch of POLITICO Pro Trade Monday. We are looking forward to your continued reading!
And a news note from across the pond: U.S. President Barack Obama endorsed Democratic presidential hopeful Hillary Clinton, while Bernie Sanders said he would do everything he can to stop Republican candidate Donald Trump in what seems to be the most trade-centric American election in a while. Late Thursday, Brussels time, Sanders tweeted that “frankly, much of our economic and trade policy is a disgrace, designed to benefit the wealthy few at the expense of the average worker.”
MERKEL LOWERS EXPECTATIONS FOR TTIP: Speaking at an event of the German electronics sector association this week, German Chancellor Angela Merkel said that “on the one hand we must see our job as developing an ambitious agreement … on the other hand we must not ratchet up expectations too high.” Merkel added that the planned trade deal with the U.S. would only be endorsed if it is beneficial for the EU. According to Reuters, Merkel made a more urgent note later at an event organized by her conservative Christian Democratic Union: “We have to make progress quickly,” she said, confirming her commitment to the trade pact. Reuters (via Euronews): http://bit.ly/1PiYLTY
FRENCH TRADE MINISTER TALKS GI’S WITH THE ENEMY: French Trade Minister Matthias Fekl picked the heartland of U.S. wine producers, California’s Napa Valley, to promote the EU’s concept of geographical indications. Meeting a designation of origin association for wine, which gathered 19 “appellations” of wine such as Bordeaux, Bourgogne or Champagne, Fekl pointed out how important the name protection is for all EU trade agreements, including the planned Transatlantic Trade and Investment Partnership. Non-spoiler alert: The U.S. has little appetite for introducing geographical indications on its soil. But, according to a press release, at least the American winemakers present at the meeting with Fekl supported what the minister was saying. Press release (in French): http://bit.ly/25P6Klb
BREXIT CORNER — 12 DAYS TO GO:
— UK trade deficit falls after record rise in exports: As a present for George Osborne ahead of the EU referendum, new figures show that British exports in the last year grew mainly due to trading with the EU, with a major increase of 10.3 percent, while non EU-exports rose only by 1.9 percent. It also eases concerns after last month’s figures showed Britain’s trade deficit with other EU countries was running at a record high. The Guardian: http://bit.ly/1sxtCr9
— Blair and Major: Brexit could threaten peace in Northern Ireland: Former British Prime Ministers John Major and Tony Blair warned that a Brexit might fracture the U.K., as Britain’s peace settlement with Northern Ireland could be threatened if they leave the EU. They added that leaving would likely lead to a second Scottish referendum. POLITICO: http://politi.co/1TXFh9A
— Tory MP switches sides: Senior Tory MP Sarah Wollaston renounced her support for the Leave campaign, saying she no longer feels “comfortable” campaigning for a Brexit. The head of the U.K. House of Commons health committee cited her main concern with the campaign is a claim that a Brexit would allow the U.K. to spend an additional £350 million per week on the National Health Service, which she says “simply isn’t true.” More on POLITICO: http://politi.co/1ZBS8ls
— Think tank says Brexit would hit poorer families hardest: A report from the National Institute of Economic and Social Research said that low-income households would be disproportionately affected by a Brexit, estimating that in a worst-case scenario, the households could receive £5,500 less per year in tax credits and benefit payments in 2020. The estimates assume that welfare spending would be slashed to adjust to the new economic climate. Full report: http://bit.ly/21aamuJ
— Recruiters say Brexit has already caused job losses: In a poll, recruiter Randstad U.K. found that 17 percent of 340 professionals polled had already frozen hiring, with 25 percent turning to short-term contracts. While firms such as CBI estimated that a Brexit could cost a million jobs, Dean of the London Business School Andrew Likierman said that the recruiting slowdown “is having an impact right now.” The Independent: http://ind.pn/25Nqqtg
EUROPEAN PARLIAMENT REPORT ANALYZES FUTURE OF EU-CHILE TRADE: The newly published report concludes that although the EU-Chile Association Agreement has no inherent flaws, it could be improved relative to newer deals, specifically regarding sustainable development and government procurement. Specific demands are expected from the Chilean side concerning fisheries and EU rules of origin, while the EU would hope to adapt the agreement to match current market needs. The authors expect a future revision to be ambitious on both sides, and recommend modeling aspects of the agreement after current deals such as CETA and TTIP. Full report: http://bit.ly/1WGfHvu
EU COURT RULES AGAINST ANTI-DUMPING DUTY ON US ETHANOL: The EU General Court has ruled that the EU’s anti-dumping duty on U.S. ethanol is invalid, delivering a major victory to U.S. industry. The 9.5 percent duty (http://bit.ly/28obWim) will remain in place pending an appeal from the European Commission, which has about two months to do so, the Renewable Fuels Association and Growth Energy said in a joint press release. More on POLITICO Pro: http://politi.co/1XcDbs1
WHAT WOULD HAPPEN IF THE EU GRANTED MARKET ECONOMY STATUS TO CHINA? Granting China market economy status could require the United States, the European Union and other major economies to lower anti-dumping duties on as much as $100 billion in Chinese exports, Chad Bown, a senior fellow with the Peterson Institute for International Economics, writes in a two-part series for the Peterson Institute for International economics. What’s more, if the U.S. and others balk at making the change, the World Trade Organization could allow China to impose retaliatory duties on as much as $1 billion to $10 billion in imports from its trading partners to compensate for the amount of lost trade it has suffered, wrote Bown, a former World Bank economist.
Seven percent of China’s exports to the G20 major economies, or roughly $100 billion worth, were subject to anti-dumping duties or other “temporary tariff barriers” at the end of 2013. The United States accounted for about $43.2 billion of the total, the European Union about $27.8 billion and India about $17 billion, Bown said. China says the terms of its WTO entry require members to stop treating it as a non-market economy by Dec. 11 of this year, but the United States and many other nations are balking at that. Part 1: http://bit.ly/1til73Z; part 2: http://bit.ly/1VN3sw6
MALMSTRÖM — NO PLANS TO MEASURE IMPACT OF TRANS-PACIFIC DEAL ON EU: The European Commission is keeping an eye on the ratification of the Trans-Pacific Partnership and its potential impact, but has no plans to study the deal’s effects on Europe’s economy and trade relations, Trade Commissioner Cecilia Malmström said in a recent letter.
Against the backdrop of changing developments and newly concluded EU trade deals until then, “the Commission is not conducting a specific study on the impact of the TPP on the EU economy at present,” Malmström said in an answer to a parliamentary inquiry by MEP Sorin Moisă. More on POLITICO Pro: http://politi.co/1YbvBgD
MEPs CALL ON COMMISSION TO HALT UNFAIR COMPETITION ON RAIL EQUIPMENT IMPORTS: The European Parliament called on the Commission to craft “a coherent EU trade strategy” to respond to a surge of low-cost EU imports of rail supplies from countries outside the EU, primarily China. The focus on rail equipment shows a growing concern for unfair competition. Press release: http://bit.ly/1UpE0aQ
EU TRADE IN SERVICES ROSE AGAIN IN 2015: EU services exports rose to €811.2 billion in 2015, a 5.7 percent increase since 2014, according to a Commission report released Thursday. In addition, services imports also increased to €660.5 billion, a 8.9 percent jump since 2014. From 2010 to 2015, international trade in services has grown twice as much as international trade in goods. More on POLITICO Pro: http://politi.co/22UGWSW
— Nigeria’s March oil output fell to its lowest level in a year: Nigerian crude oil production has dropped to its lowest monthly level since records began in April 2015, according to data from the Nigerian National Petroleum Corporation. Monthly report: http://bit.ly/1PiUaB8
— Opinion: China should shut down zombie business to help the economy: China knows that it has to shut down steel mills, coal mines and other industrial units, the New York Times argues, but is reluctant to do so out of pure fear to throw millions of workers on the street. http://nyti.ms/1YgkTpj
— Japan brings South Korea to World Trade Organization court over valves dispute: The Japanese government asked the WTO to form a panel to oversee a dispute involving anti-dumping duties imposed by South Korea on Japanese pneumatic valves. More from Japan Times: http://s.nikkei.com/28nPDsR