The «big seven» vs BRICS: who wins in a trade war

© RIA Novosti / Alexei Nikolskiye in Photobacterium of the Russian Federation Vladimir Putin during a meeting of the BRICS leaders at the summit in Johannesburg. July 27, 2018The «big seven» vs BRICS: who wins in a trade war© RIA Novosti / Alexei Nikolskiye the image Bank

Last week, in fact ended in the formation of two global alliances, which will in the coming years to fight for economic dominance. The first block included the EU, US, Japan and their allies, concerned about the growing power of China and Russia. The second — largest developing economy, intending to end the «unilateral world order». Why not suppose other possible scenarios and what will happen to global trade in the material RIA Novosti.

Friendship vs trump

BRICS trade war is not seen as a big problem. Anyway, judging by the documents of the summit, held last week.

In the Johannesburg Declaration 102 points, and only four on international trade. And they are not mentioned neither the United States nor Donald trump. But it is noted that all trade contradictions should be solved through the WTO.

However, politicians ‘ declarations, made before and during the summit, give a somewhat different picture. «A huge problem of the world community to fight the unilateral world order, — said the Minister of foreign Affairs Wang Yi before the event. — The BRICS have a responsibility to form a common position and to strike a joint blow to the unilateral world order».

Foreign Minister of India Sushma Swaraj stressed that BRICS is «against any particular state.» «However, if any country says about protectionism, we jointly condemn it,» she warned.

Chinese President XI Jinping urged «to create a global open economy and to oppose the policy of unilateralism and protectionism».

There is no doubt that the coordination of efforts in confronting trump’s trade policy was discussed at a closed meeting, the Chinese leader from Vladimir Putin on the sidelines of the BRICS summit.

China and Russia were among the countries hardest hit by the actions of the current administration in Washington. Against China, the Americans are going to introduce all of the new duties against Moscow — sanctions.

A new surprise from Donald

Coincidence or not, but on the opening day of the BRICS summit, Donald trump has made another sensation: at a meeting with European Commission President Jean-Claude Juncker he agreed to discuss with the European Union cancellation of customs duties in mutual trade.

«Today we agreed first of all to work together to achieve zero tariffs, zero other zero barriers and subsidies on industrial products, with the exception of the car industry, said trump. We will work to reduce barriers that impede the growth of trade and services, including chemicals, pharmaceuticals, medical products, and soybeans».

While the parties agreed to refrain from further duties, including cars and spare parts from Europe who intended to enter Washington. The European Union in response promised to increase the purchase of American liquefied natural gas and to lower trade barriers to imports of soybeans.

Observers have only to say that the White house made another rapid 180-degree turn. After 15 July, he publicly called the European Union an enemy of America in the field of trade.

Enemies of my enemy

In fact, the American President simply does not remain other variants. His tactic is to intimidate a partner, and then to offer friendship on its own terms — has not worked.

The first failure was China. In the spring, Washington has announced a record duty on Chinese goods, and then entered into negotiations with Beijing.

In the end, the Chinese agreed to increase purchases of American goods, including liquefied natural gas.

Clearly stood out the contours of a trade Alliance between the US and China, making pretty worried many politicians. Because the Union is able to subjugate the entire world trade.

However, the hawks in the us Congress buried this undertaking, it is logical reasoning that very soon the US will be in this Union a Junior partner.

Beijing showed clearly unacceptable requirement — minimize the program development of high-tech sector. And a trade war broke out with new force.

Then trump tried to force Europe to make friends with him against Russia, promising to cancel the new fee, if the Old world refuse the construction of «Nord stream — 2» and begin to buy American LNG. Germany and France angrily rejected the proposal.

After that thrust the American President made a bid to normalize relations with Russia. New «reset» with the prospect to make friends with Moscow against Beijing would be for the Washington a good lever of pressure on China, and Europe.

Again, Kissinger

According to the American magazine the Daily Beast, citing informed sources, the idea belonged to the mastodon of American policy, former US Secretary of state Henry Kissinger.

«The US and the EU to unite in the fight against China that destroyed the world trade system, — said the adviser to the President on the economy Larry Kudlow commenting on the outcome of the negotiations trump with Juncker. Head of the European Commission very clearly said that he intends to help us with the Chinese problem.»

To cobble together new alliances trying Washington. In early July, China urged the EU to joint action in the WTO against the trade policies of Donald trump. With this initiative in Brussels and Berlin were Vice-Premier of the state Council of the PRC Liu he.

Brussels did not accept the offer, suspecting that Beijing is trying to split the Western bloc. And then the main hope China has become BRICS.

The EU, in turn, in mid-July signed an economic partnership agreement with Japan. The parties intend gradually to eliminate 99 percent of duties in mutual trade.

In particular, Japan will abolish tariffs on European products — cheese, wine, pork. The EU, in turn, gradually reduces from ten percent to zero import tariffs on Japanese cars.

If USA really go to the elimination of duties in trade with Europe, they will have to enter into a similar agreement with Japan. This will result in Alliance under the control of the countries «Big seven», which will withstand the BRICS in the global trade war.

Win number

The chances of winning in this confrontation are determined by the goals set by each of the parties. The «big seven» and its satellites (Australia, South Korea and others) seek to radically slow down the growth of global influence of China, hindering the development of the Chinese economy through taxes.

At the same time they are trying to stimulate our own economy by eliminating barriers to trade with the allies. The ultimate goal of this group is formulated trump at the meeting «Big seven» in Quebec: «We should rule the world».

The goal of the BRICS countries and their allies are much more modest and therefore more realistic — to become strong enough not to play by the rules that impose the West.

The main advantage of the «Big seven» technology. But the gap may be greatly reduced as a result of the implementation of Beijing’s strategy of «Made in China 2025» aimed at developing high-tech sector.

On the other hand, the Union of developing countries is constantly attracting new partners. Note that as guests at the BRICS summit in Johannesburg was attended by presidents of Turkey, Argentina and many African countries. The number of supporters of the Alliance is steadily increasing, and a trade war is unlikely to prevent it.