Why is French wine at the forefront of an EU-China trade war?

[Omnion 59]

BRUSSELS, Belgium — A trade war with its second-largest export market is just about the last thing the European Union needs.

Yet China and the EU are heading towards what could be a bruising tit-for-tat battle after Brussels announced this week it was slapping anti-dumping tariffs on $27 billion worth of Chinese solar panels, triggering a retaliatory threat from Beijing against European wine imports.

Fears of an escalation grew Friday with unconfirmed reports China is considering erecting barriers against luxury auto imports — with Mercedes, BMW and Ferrari among the likely targets.

"China does not want a trade war, but trade protectionism cannot but bring about a counter-attack," China’s official People's Daily newspaper warned Thursday. "A large number of European enterprises are set to suffer as a result."

With domestic demand crimped by austerity, Europe is increasingly dependent on exports to limit the impact of the recession and provide hope of recovery.

Foreign trade has been one of the rare bright spots in Europe's economic landscape. In March, the euro zone recorded a $30 billion trade surplus with the rest of the world, more than three times the level in 2012.

While part of that can be put down to falling imports as recession-hit Europeans are buying less, the EU still estimates rising exports cut the depth of the recession by a factor of four last year.

China's contribution to those figures is immense and fast-growing. EU exports to China have doubled in the past five years, reaching €190 billion ($250 billion) in 2012. Only the United States buys more European goods.

Two-way EU-China trade tops $1.3 billion every day, and it's set to keep growing.

"China’s importance as a strategic market can only increase," said the EU's trade office on its website. It points out that every year 20 million Chinese households pass the $13,500 income threshold, the trigger for middle class consumer spending. "This translates into extraordinary growth opportunities for European businesses."

So why jeopardize all that over solar panels? The EU says it's a question of principle.

"Our response is balanced, legal and justified within international trade rules and designed to prevent the situation turning fatal" to 25,000 jobs in Europe's solar panel industry, EU Trade Commissioner Karel De Gucht told reporters. "This is not protectionism. Rather it is about ensuring international trade rules also apply to Chinese companies — just like they apply to us."

De Gucht pointed out that the United States last year slapped its own punitive tariffs on Chinese solar panel products after it also found they were being dumped at below production cost.

Not everybody in Europe was happy about the decision, however. Germany — the EU's biggest exporter — had lobbied hard for De Gucht to back down, fearing a wider impact on trade relations with China.

 

[eatmyshorts 201]

Who knows but its digusting anyway, so is that German muck. New world wines are the way to go

[lickmyshorts 64]

I never could drink wine