Trump’s new trade war

WHEN China’s President Xi Jinping last week opened Beijing’s Daxing International, the world’s biggest airport, ahead of the 70th anniversary celebrations of the Chinese communist party’s coming to power, commentators overlooked one interesting fact. This was that the majority of the civilian airliners that began to use Daxing, was made abroad, predominantly in the United States and Europe.

It seems more than certain that in the-not too distant future this will change with newly-developed Chinese aircraft being bought and operated successfully by airlines around the world. But for the moment, the market is dominated by the two giants and deadly rivals, Boeing and Airbus.

The US has just won a World Trade Organization judgment that the European consortium, which owns Airbus, had been subsidizing the planemaker in contravention of WTO rules. In response President Trump has imposed $7.5 billion of tariffs on a wide range of EU exports to America, all of which have had their duties increased by ten percent. Under WTO regulations the tariff could have been increased by up to one hundred percent.

The reason for the US president’s uncharacteristically measured response to the WTO decision is that Airbus has in its turn lodged a complaint with the trade organization alleging that Boeing and other American planemakers themselves enjoy hidden government subsidies. These come about in part through inflated defense contracts handed out by Washington.

In the meantime Brussels is considering what levies it can impose on US goods and services by way of retaliation. Whatever they come up with may well be deemed illegal by the WTO, but the wheels of world trade arbitration have always ground slow. It could be several years before a ruling is handed down, by which time, a trade peace could very well have broken out.

It may be wondered why Trump, already deeply involved in his trade confrontation with Beijing, should choose to open a second front in his commercial wars. Part of the explanation may lie in the gathering European push-back against the US dominance of the internet and the gargantuan amounts of data US firms such as Google, Amazon, Facebook, Twitter, Apple and Microsoft have amassed on their users throughout the EU.

The Eurocrats in Brussels have become increasingly sensitive to the long-term implications of this commercial treasure trove of personal information on European citizens. That sensitivity is the greater because there has been no successful European company to challenge the Americans’ worldwide internet hegemony, outside of China. Control of these petabytes of data, coupled with powerful algorithms that can analyze and manipulate them, represents a threat to the EU’s own position as a powerful, independent trading bloc.

The WTO has yet to address the dominance of data by one country over others. It has been argued that it would be a mare’s nest to try and sort out. But nevertheless, with almost unbelievable amounts of information already becoming a highly desirable and tradable asset, it would seem clear that some effort in this direction must be made. Until then, trade wars will continue in their more traditional mold with rivals exchanging bitter and angry accusations of hidden and unfair subsidies, when in truth most states are guilty in one way or another.