The last time anything quite so sensational happened in the EU, was on December 31st, 1998 when the European Commission, it would have seemed, organised a fireworks display on behalf of the single currency. Afraid though, that if they did that on the day of January 1st – or for that matter launched the euro itself on a different day entirely (entirely feasible) then there would be a very real risk that even with pro EU Belgians, few, if any would turn up for the jubilations.

And so, the ‘celebrations’ were largely disingenuous as most Belgians turned up for a new year’s eve fireworks display in the centre of Brussels and were surprised to see ‘euro’ paraphernalia already erected. What a way to start a single currency which is now paying a very heavy toll on France and more recently Germany as a miserable 1.2% growth grinds down these economies to dead-dead-slow.

But no such gloom for Britain and its celebrations on January 31st, which I would guess many will turn up to. And for good reason. Hell, they’ll even bring their own fireworks.

Yet already, ahead of speculation, there are signs even that the old argument of the very real threat of leaving the EU altogether with no ‘free trade deal’ (FTA) in one year’s time is the only way to get a decent deal with Brussels, is ringing true.

Many pundits, including myself, knew that the only way for Brussels to give the UK a fair trade deal, would be to prove to the European Commission that the British government is prepared to go it alone and crash out of the EU without even a trade deal. That threat alone, reverting to WTO rules, would be enough to put the wind up German carmakers and French food and wine suppliers as if their biggest customer suddenly is forced to put tariffs on such items, then job losses in those two countries alone will be hard for those leaders to navigate around, while banging on an anti-Brexit trade deal drum. Few Europhiles in Brussels even know that the largest consumer of champagne in the world are Brits; similarly, Britain accounts for the highest sales of BMW cars in the EU28 and so it makes little sense to carry out a petulant, antagonistic policy towards Britain when at the same time both pistols bore such large holes in both feet in two shots.

Yet the timing is interesting. Many analysts who went along with this argument of calling the EU’s bluff to get a better trade deal, including the author, believed that it would take most of this year before a panic would ensue a few weeks before a one year deadline.

But in fact, the EU is already looking and talking like a loser and Britain, now with a stronger pound and much more confidence in the markets, is looking like a winner with a UK-U.S. trade deal being thrashed out believed to finally drive the point home to Brussels that alienating the UK would be, in effect, a suicide pill. It’s the same question that both sides in the nukes arms race would argue before the Berlin Wall came down in 1989: “Ask yourself whether you’re prepared to lose a nuclear war, not if you can win one”.

What the EU needs to be doing now is working to give Boris Johnson an FTA and British fishing rights back completely and showing the rest of its 27 members that it’s big, bold and confident.

In reality, people like Guy Verhofstadt, a rampant euro-federalist who is the negotiator which the EU Commission has brought in to soften London up, is burying himself in denial and rank stupidity. Verhofstadt, a Belgian liberal who has never really got over Tony Blair blocking his bid to become EU President in 2004 (which he wouldn’t have got anyway as the powerful Christian Democrat block in the European parliament also rejected him), has to content himself with his remedial MEP job in Brussels. A former Belgian PM, he now busies himself with this churlish campaign to bash the British but isn’t convincing anyone.

A recent radio interview with the pro-EU BBC journalist Justin Webb (who used to be based in Brussels) was proof that not only is Verhofstadt increasingly isolated in his views, but that Britain’s strength on the negotiating table has grown enormously since the re-election of Boris Johnson and the departure date now set for January 31. Furthermore, the “cracks” that Webb talks about among the 27 member states who will clash over how to negotiate with Britain are already growing, making it hard to see how the Belgian liberal will even remain with this idiotic narrative, which, itself, will soon clash with Merkel and Macron.

Brussels is panicking. Its highest echelons, even those who are not such diehard federalists like Verhofstadt, know that for the EU to have a real crisis of confidence, all it would take is for Britain to survive after a hard Brexit. Just merely dealing with WTO rules would be the starter’s pistol for other wobbly EU member states to plough ahead with their plans to follow Brexit. And while the EU might survive a non eurozone member leaving – with considerable bruising – it would certainly not sustain a eurozone member looking to exit. In this latter scenario, the EU, as we know it, would collapse entirely. The old adage in Brussels from top EU officials that their real fear of the EU losing its momentum – like an old man falling off a bike and not being able to get back on – is a very real one. The faintly preposterous Mr Verhofstadt needs to be replaced with someone who actually has a guilt-edged background and first-hand experience on the private sector and how markets work as his indulgence that the EU is still calling the shots over Brexit is ludicrous. The EU is an anti-democratic beast whose only modus operandi is to impose its ideas and will on EU member states. People are waking up and realising that it is economies and markets which rule through consumerism, not regulation imposed by technocrats who are obsessed with building a federal superstate.

Even on of the EU’s leading member states (economically), which is hilariously not in the eurozone – Poland – is getting tired of being told what to do and a standing ovation of an MEP in the European parliament recently gives a clue who might be the next, after Brexit, to take the reigns.

The president had repeatedly asked his advisers about the possibility of withdrawing from the organization used, as he put it, to "screw the United States." It has been reported that the president has ordered to prepare a “United States Fair and Reciprocal Tariff Act”, or FART Act to change the nation’s trade policy. The act essentially bestows president with the power to determine any current or future tariff rates with countries outside of the WTO jurisdiction. According to news website Axios citing a source familiar with the bill, “It would be the equivalent of walking away from the WTO and our commitments there without us actually notifying our withdrawal.” This information has not been neither confirmed nor denied as yet.

So, the conflict between Trump’s protectionist policies and the open trade system protected by the WTO has come into the open. Two world wars and the Great Depression were required to create conditions for establishment of a world body to set the general rules of trade. Now the US, the country that led the global process to establish the WTO, wants to it to be dismantled.

The US has recently blocked the appointment of new judges to the WTO’s Dispute Settlement Body (DSB) or the Appellate Body. The move will impede the DSB’s ability to issue judgments. With appointments blocked, appeals will be prevented entirely by December 2019.

The president needs congressional approval to pull out but his attitude and statements are already “hollowing out the WTO from within.” Uncertainty has been created. With the organization’s Appellate Body stymied, it could forget about the WTO and do its own thing even if Congress rejects the proposal to pull out.

But if the WTO succumbs to US pressure, other members will follow suit and impose barriers to their heart content to emasculate the organization and make it redundant. The free trade order will collapse. The US president has already openly disregarded the WTO rules by imposing steel and aluminum tariffs. The policy of sanctions runs counter to the WTO fundamental principle of free trade. Parties should maintain government restraints on the movement of goods at a minimum, and if changed, the restraints should be reduced, not increased. The conditions of trade, including the level of tariffs and other, must be discussed and agreed on within a multilateral framework.

This is also the time the US is dismantling NAFTA to replace it with another agreement reached on Washington-dictated terms. Last year, the US left the Trans-Pacific Partnership (TPP), which would have covered 12 nations and about 40 percent of global gross domestic product. The talks on the Transatlantic Trade and Investment Partnership (TTIP) have been stalled since President Trump took office with little hope to revive them amid the ongoing sanctions war. The US pulled out from the Paris climate accord last summer.

In June, the US left the United Nations Human Rights Council. Last October, the US withdrew from the UN education and culture organization UNESCO. Its relationship with the United Nations is complicated. In 2017, the numbered H.R. 193 to remove all US involvement from the United Nations was introduced by Rep. Mike Rogers (R-AL3). Sen. Rand Paul (R-Ky.) has suggested that the UN should be dismantled.

It’s widely believed that the US undermines NATO credibility. It is ready to create a new economic and political bloc with the UK after it leaves the EU. The US is setting up its own defense partnership in Europe with Sweden and Finland, it is developing a special military relationship with Poland as well as is in the process of forming an Arab NATO. It strives for a closer partnership with India and Vietnam to oppose China. It has just concluded a bilateral trade agreement with Mexico, waiting for Canada to join and thus bury NAFTA. The list can go on. The United States is gradually reshaping the entire structure of its foreign policy relationships with old allies being alienated and new ones emerging to conclude separate deals.

Other nations will do likewise, forming new relationships and alliances. Getting rid of the old architecture without a definite final goal is a dangerous policy. Relationships are easy to ruin and difficult to build. The policy implies constant confrontation and use of pressure to achieve the desired results in favor of America’s interests as the administration sees them.

The US is trying to reshape the world pursuing its own selfish interests. Pressure is the tool. Diplomacy cedes place to the policy of ultimatums. Other nations with all the difference between them have to adapt to the new conditions. The world will be changing but the pattern of America’s absolute and overwhelming global domination is not guaranteed. Step by step, other countries will learn to live without the United States, leaving it isolated and by far not as influential as it strives to be. Believing in its exceptionalism and the inalienable right to press others, the US may be bringing the era of Pax Americana to a long-predicted end.

And Trump wars there are: A multi-dimensional war on China; on Iran; on Angela Merkel and the liberal Euro-élite (“worse than China”) – and  Trump’s ‘siege’ attrition of the global institutional ‘blocks’ (WTO and NATO).

The Chinese and Russian leaders have understood, and are busy digging their own trenches for a long war. And Trump too, is adjusting.  Draft legislation is being mooted to eviscerate one of Trump’s pet hates: the WTO.  He wants to end the WTO distinction between developed markets and emerging markets – and the special consideration given to the latter.  He regards this two-tier distinction as a type of liberal-style ‘affirmative action’ for states – such as China – that do not merit any special trade ‘consideration’, in his view.

Trump also has expressed his irritation at the ‘level playing field’ notion by which any advantageous tariff awarded to one state must then must be given to others.  He prefers to transact bilaterally, and differentially, with other states on trade, and on defence. (That is to say that the US defence umbrella should not be propagated generically, but in a differentiated manner, as a parcel within a wider, mercantilist and specific, bi-lateral arrangement.)

To this end, the draft legislation is expected substantially to hand the prerogative for trade tariffs to the US President and to the Executive, thus marginalising Congress.  It may also entrench more firmly the protection of national security pretext for imposing tariffs, which does exist within the WTO structure – albeit as a special category, and not as a blanket cause for scattering tariffs across the trading field.

China, on the other hand, is aware that it cannot prevail on a battlefield confined to tariffs alone (China only imports around $130 billion worth of U.S. goods, implying that it has only a limited ability to match U.S. tariffs, dollar for dollar. The U.S. however, imported $505 billion of goods from China last year, and has promised tariffs on $250 billion worth of those products). The Chinese leadership thus has already begun to recast its defences against Trump’s attempt to seize the WTO strategic heights, through signaling to the EU the serious threat posed to trade by the putative loss of the WTO terrain – and offering to form a joint strategic defence of this outpost.  (The EU, however, believe that they somehow already hold the moral, and ‘reasoned’, high ground, and are not in need of allies: the Chinese initiative was rebuffed).

So China is digging-in for a long-term struggle. Its main (first) priority is to avoid major disruption to its economy. This implies (as a second priority) pursuing deep structural changes: reducing China’s vulnerabilities to supply-chain outages or blockades for its identified ‘techno-strategic industries’, which the CCP has prioritised (IT, including 5G networks and cybersecurity; robotics; aerospace; ocean engineering; high-speed railways; new-energy vehicles; power equipment; agricultural machinery; new materials; and biomedicine).

Again (in order to preserve energy security), whilst the 400,000 bpd of crude which China imports from the US (worth some $1 billion), are not yet listed for retaliatory tariffs, the Chinese government, nonetheless, has threatened a 25% import tax on US oil imports – and Chinese importers are anticipating events: "The Chinese have to do the tit-for-tat. They have to retaliate," said John Driscoll, director of consultancy JTD Energy, adding that cutting U.S. crude imports is a means "of retaliating (against) the U.S. in a very substantial way".  Driscoll said China may even replace American oil with crude from Iran: "They (Chinese importers), are not going to be intimidated, or swayed by U.S. sanctions”. 

According to the Japan Times, in a harbinger of what's to come, an executive from China's Dongming Petrochemical Group, an independent refiner from Shandong province, said his refinery had already cancelled U.S. crude orders: "We expect the Chinese government to impose tariffs on (U.S.) crude," the unnamed executive said. "We will switch to either Middle East or West African supplies".

And Iran has introduced too, its unexpected, flanking military move into the wider field of this conflict, by threatening to slow or, ultimately stop, the passage of crude through the Strait of Hormuz – should Iranian oil exports be strangled by US secondary sanction threats.  Were Iran to tighten the Hormuz bottleneck, the possible consequences for the global economy would be such that the US would find itself under huge political pressure to resolve its stand-off with Iran, ASAP. 

As John Kemp of Reuters summed it up earlier this month: “The White House can drive Iran’s oil exports to zero, or it can have moderate U.S. gasoline prices; but it probably cannot have both.”  Iran well understands today’s difference from the 2014 episode of (the Obama) Iran sanctions, when US Shale production and the return of Libyan output, was able to compensate for the lost Iranian production. The oil market today is tight, and Iranian threats (even if hypothetical in respect to Hormuz), will of themselves unnerve a brittle market, and increase the risk premium in the oil price (one of which – the Brent benchmark which sets gasoline prices – has already risen 67% since last June).

And finally, China has begun to re-position on the dollar, widening the band in which the Yuan fluctuates – slowly it seems, detaching itself from the dollar, devaluing gently – and moving towards pegging more to the basket of China’s trading partner currencies.  This move to a more flexible Chinese exchange rate is deflationary, as Russell Napier notes, “the USD selling price of Chinese exports will likely fall, putting pressure on all those who compete with China … the USD will rise, putting pressure on all those, particularly EMs, who have borrowed USD without having USD cash flows [by which] to service those debts.”.  

But so far, the US Federal Reserve chairman’s refusal to join the monetary ‘shoring up’ of the globally deflationary dynamic (Powell in Zurich on 8 May stated explicitly that he bears no responsibility for the consequences of his monetary policy on emerging markets), implies that China’s deflation will be exported directly into the US and European economies.

What does all this mean?  For the US, it prefigures increasing pressures on  an already tapped out, and over-indebted, American consumer (consumer expenditure was absolutely flat last month); but separately, the devaluing Yuan presages a clear and present danger to the US stock market (Chinese past devaluations have stimulated market falls). “China can, and will devalue the yuan” Tom Luongo writes, and expand the People’s Bank of China’s (PBoC) balance sheet, to keep the banking system liquefied, and bail out whoever is structurally important to the banking system … China needs a rapid expansion of its money supply if the Yuan is going to be any kind of regional trade settlement currency. And what better time to do that but when the U.S. is trying to blow up the status quo between itself and the European Union which is dependent on exports?”

And what will be the consequences for China?  Growth is slowing (best realistic estimate is 4% – too low for systemic economic and social stability).  Does China then face a major crisis?  China’s economy is less vulnerable than the West to a 2008 type of banking domino implosion, given its state controlled banking system, but the personal financial sector is complex, and more susceptible to its highly leveraged investment strategies.

Does China face a social risk?  Well… Chinese state media has unleashed a full-on propaganda blitzkrieg, slamming Trump's government as a "gang of hoodlums", with [Chinese] officials vowing retaliation, while the chairman of Sinochem just become China's official leader of the anti-Trump resistance, quoting Michelle Obama's famous slogan "when they go low, we go high".  In short, social distress will be channeled into anti-American sentiment, setting us up for the next round of escalation.

So perhaps the more immediate consequence will be a major default in EMs.

May 31 will go down in history as the day the US declared war on its key allies, hitting the European Union, Canada, and Mexico with aluminum and steel tariffs. This was a punch to the gut that unleashed the much-dreaded trade war. Levi’s jeans, Kentucky bourbon, Harley-Davidson motorbikes, orange juice, T-shirts, and Iowa beef are doomed to bear the brunt of retaliatory strikes. The Boeing Corp. may be among the losers.

The EU will hit back on June 20 after lodging complaints with the WTO.

On June 1, President Trump hinted he could ax the North American Free Trade Agreement (NAFTA). He would prefer separate trade deals with Mexico and Canada. Stock prices slumped as a result. It looks like NAFTA is in for the same fate as the Trans-Pacific Partnership agreement, and German Economy Minister Peter Altmaier believes that the EU, Mexico, and Canada may join together in their efforts to counter the US. Japan is likely to join the EU, asking the WTO to go to bat for it. On June 1, its finance minister. Taro Aso. used harsh language to describe US trade policy after attending the gathering of the G7 finance chiefs. According to French Finance Minister Bruno Le Maire, the June 8-9 event is going to be a meeting held in a “G6 plus one” format.

So far, the US has not acted within the framework of the WTO, citing national security interests to justify the unilateral measures it is taking. Its legal standing is on shaky ground. No doubt the EU will refer the case to that organization. The outcome is unknown. The European complaints are well-founded, but Washington enjoys strong influence there, and some countries may be willing to join the pro-US faction. The result? The WTO may end up divided, lose its clout, or even cease to exist, giving way to other groups, such as BRICS, for instance, where the US is not a member.

The US and many European nations are divided over the sanctions against Russia. The pressure being applied to coerce the allies into accepting or rejecting certain deals is provoking resistance. The American financiers who are trying to subjugate Europe through behind-the-scenes schemes are facing vigorous opposition. European gold is gradually draining out of the US Federal Reserve System’s vaults.

The amassed problems that are clouding Transatlantic solidarity have made German Chancellor Angela Merkel come to the conclusion that America’s global influence is being diminished and Europe should “take its destiny into its own hands” and stop relying on US military protection. Europe is in the process of creating its own independent means of deterrence and PESCO is the first step. New defense alliances without the US are on the agenda.

Add to that the opposition of the UK, Germany, and France to the US unilateral withdrawal from the Iran nuclear deal. There are expectations that America will face “a united European front” at the EU summit scheduled for June 28-29 in Bulgaria. Some European states, such as Germany and Austria, have expressed indignation over the flagrant US pressure to make them say no to the Nord Stream 2 pipeline that would bring cheap Russian gas to the continent. The EU-Western Balkans meeting held last month was a foretaste of the open defiance the US policy will receive at top-level international forums.

Now back to “isolation.” Whatever the formal agenda — gender equality, ocean pollution, or other issues — the divisions between America and the other members will be in the spotlight. Despite all of Canadian PM Justin Trudeau’s efforts to make the event look like a success, the US president, an outlier on everything the other summit attendees agree on, is doomed to be the odd man out. The G7 runs on a consensus basis. No atmosphere of cooperation on any issue can be fostered amid such deep rifts.

The new Italian prime minister, Giuseppe Conte, who leads a populist government that is hostile to the EU and NATO and wants the sanctions against Russia lifted with no strings attached, will hardly be the right man to contribute to what is known as Western unity.

It’s hard to say if they will agree to make any declaration, but it’s easy to predict that fault lines, even invisible ones, will open up within the G7, although there is also the strong possibility of an open breakup. After the summit is over, the need for such meetings in the future will inevitably be questioned. It’s always hard to make predictions, but it can be safely said that no such thing as Western unity exists anymore. Unlike Moscow, Washington is isolated, and no matter how hard some political circles have tried, the Russian bogeyman has failed to work as a unifying factor that can hold the G7 together in the face of the radical changes that are shaping the emerging multipolar world. 

“Back in the 1990s, Robert Rubin, a Secretary of the Treasury under Bill Clinton, was negotiating the terms under which China would be allowed into the World Trade Organization. My sources say he was basically asking for many of the exact same things Trump wants now … But in 1998, in the middle of the Monica Lewinsky scandal, Clinton wanted a “win” (Not unlike the current president.) And Rubin wasn’t delivering, holding firm on his demands for market access and guarantees on intellectual property, etc. Clinton then took the Chinese negotiations away from Rubin and gave it to Secretary of State Madeleine Albright with the instructions to get it done.

Not being a trade expert, Albright didn’t understand the underlying issues. The Chinese recognized she was playing a weak hand and held firm. To make a long story short, my sources say she effectively caved. Clinton got his “win” and we got stuck with a lousy trade deal. When Trump alleges that we got snookered in a bad trade deal, he is correct—although I wonder if he understands the history. Maybe somebody gave him the background, but it never came out in any of his speeches. That WTO access, which finally happened in 2001, let China begin capturing markets through legal means, and access US intellectual property without paying for it …

Does this make a difference now? Probably not … But it gets to the rivalry we discussed above. Is it possible for both the US and China to stay in an organization like WTO? Trump seems to doubt it, as he’s threatened to withdraw from WTO. We may someday look back at this period of a single body governing international trade as an aberration — a nice dream that was never realistic. If so, prepare for some big changes.”

This goes to the crux of one of the biggest geo-political issues facing Europe and America. Mauldin then gives us what very much the consensus view that, “despite some of his rhetoric, I don’t believe [Trump] is ideologically against trade. I think he just wants a US “win” and is flexible on what that means”. Yes, Trump quite possibly will end up doing ‘a Clinton’, but does America have a realistic alternative but to accommodate a rising China?  The world has changed since the Clinton era:  this no longer is just a matter of tussling over the terms of trade.

Xi Jinping lies at the apex of the Chinese political system. His influence now permeates at every level. He is the most powerful leader since Chairman Mao. Kevin Rudd (former PM of Australia and longtime student of China) notes, “none of this is for the faint-hearted … Xi has grown up in Chinese party politics as conducted at the highest levels. Through his father, Xi Zhongxun … he has been through a “masterclass” of not only how to survive it, but also on how to prevail within it. For these reasons, he has proven himself to be the most formidable politician of his age. He has succeeded in pre-empting, outflanking, outmanoeuvring, and then removing each of his political adversaries. The polite term for this is power consolidation. In that, he has certainly succeeded”. 

And here is the rub: the world which Xi envisions is wholly incompatible with Washington’s priorities. Xi is not only more powerful than any predecessor other than Mao, he knows it, and intends to make his mark on world history. One that equates, or even surpasses, that of Mao.

Lee Kuan Yew, who before his death in 2015, was the world’s premier China-watcher, had a pointed answer about China’s stunning trajectory over the past 40 years: “The size of China’s displacement of the world balance is such that the world must find a new balance. It is not possible to pretend that this is just another big player. This is the biggest player in the history of the world.” 

The year 2021, marks the centenary of the Chinese Communist Party’s founding, and Xi clearly intends that in 2021 China will showcase the achievements of its first centenary goals.  By then, China expects to be the most powerful economy in the world (it is already there – on a purchasing power parity basis), and an emerging world class power – both in political and military terms. According to Richard Haas, the President of the US Council for Foreign Relations, “[China’s] long-term ambition is to dismantle the U.S. alliance system in Asia, replacing it with a more benign (from Beijing’s perspective) regional security order in which it enjoys pride of place, and ideally a sphere of influence commensurate with its power”. (If anything, Haas may be understating things).

To achieve the first of the two centenary goals (the second concludes in 2049), China has one major economic, one economic/political strand, and one political/military strand of policy to the achievement of its goals.

Made in China 2025 is a broad industrial policy that is receiving massive state R & D funding ($232 billion in 2016), including an explicit potential dual-use integration into military innovation. Its main aim, besides improving productivity, is to make China the world’s ‘tech leader’, and for China to become 70% self-sufficient in key materials and components. This may be well-known in theory, but perhaps the move towards self-sufficiency by both China and Russia suggests something more stark. These states are moving away from the classic liberal trade model to an economic model based on autonomy, and a state-led economy (such as advocated by economists like Friedrich List, before becoming eclipsed by the prevalence of Adam Smith-ian thinking).

The second prong to policy is the famous ‘Belt and Road’ initiative linking China to Europe. The economic element however, is often deprecated in the West as ‘mere infrastructure’ – albeit on a grand scale. Its conception, rather, represents a direct swipe at the western, hyper-financialised economic model.  In a famous critical remark directed at China’s heavy reliance on western-style, debt-led growth – an anonymous author (thought to be Xi or close colleague), noted (sarcastically) the notion that big trees could be grown ‘in the air’.  Which is to say: that trees need to have roots, and to grow in the ground. Instead of the ‘virtual’, financialised ‘activity’ of the West, real economic activity stems from the real economy, with roots planted in the earth.  The ‘Belt and Road’ is just this: intended as a major catalyst to real economics.

Its political aspect, of course, is evident: It will create an immense (Remimbi) trading and influence block, and being land-based, will shift strategic power away from the western domination over sea-power to land routes over which western conventional military power is limited – just as, in the same way, it will transfer financial power away from the reserve dollar system, to the Remimbi and other currencies.

The other aspect, which has received much less notice, is how Xi has been able to mesh his objectives with those of Russia. Initially cautious towards the ‘Belt and Road’ project when Xi launched it in 2013, the Kremlin, warmed to the notion in the wake of the western coup against its interests in Ukraine, and with America’s joint project with Saudi Arabia to crash the price of oil (Saudi wanted to put pressure on Russia to abandon Assad, and the US to weaken President Putin, by weakening the rouble and government finances). 

Thus, by 2015, President Putin had pledged a linkup between Russia’s Eurasian Economic Union and China’s Silk Road Economic Belt, and two years later, Putin was the main guest of honor at the 'One Belt, One Road' summit, held in Beijing.

What is interesting is how Russia has integrated Xi’s vision into its own ‘Greater Eurasia’ thinking, conceived as the core antithesis to an American-led, financialised, world order. The Kremlin, of course, well understands that in the trade and finance realm, Russia’s position in Eurasia is much weaker than that of China. (China’s economy being eight to ten times the size of that of Russia).

Russia’s crucial strengths traditionally lie in the political-military and diplomatic domains. Hence, leaving economic initiatives to China, Moscow strives for the role of the chief architect of a Eurasian political and security architecture, a concert of major Asian powers, and energy producers.

President Putin has, in a sense, found the Russian symmetry and complementarity to Xi’s ‘road and corridor’ politics (an asymmetrical Russian balance, if you like, to Xi’s raw economic strength) in its ‘One Map; Three Regions’ politics. Bruno Maçães has written:

In October 2017, Rosneft Chief Executive Officer Igor Sechin took the unusual step of presenting a geopolitical report on the “ideals of Eurasian integration” to an audience in Verona, Italy. One of the maps projected on the screen during the presentation showed the supercontinent—what Russian circles call “Greater Eurasia”—as divided between three main regions. For Sechin, the crucial division is not between Europe and Asia, but between regions of energy consumption and regions of energy production. The former are organized on the western and eastern edges of the supercontinent: Europe, including Turkey, and the Asia Pacific, including India.

Between them we find three regions of energy production: Russia and the Arctic, the Caspian, and the Middle East. Interestingly, the map does not break these three regions apart, preferring to draw a delimitation line around all three. They are contiguous, thus forming a single bloc, at least from a purely geographic perspective.

The map, Maçães notes, “illustrates an important point about Russia’s new self-image. From the point of view of energy geopolitics, Europe and the Asia Pacific are perfectly equivalent, providing alternative sources of demand for energy resources … And, as you consider the three areas [which the map] delimits, it becomes apparent that two of them are already led and organized by a leading actor: Germany in the case of Europe; and China for the Asia Pacific”.

It is from this perspective, that Russia’s renewed interest and intervention in the Middle East must be understood. By consolidating all three energy-producing regions under its leadership, Russia can be a true equal to China in shaping the new Eurasian system. Its interests lie now more decisively in organizing a common political will for the core energy production region, than in recovering ‘old yearnings’ about being a part of Europe.

And ‘political will’ is Xi’s project too: Whereas once Mao’s Cultural Revolution tried to wipe out China’s ancient past and replace it with communism’s “new socialist man”, Xi has increasingly portrayed the party as the inheritor and successor to a 5,000-year-old Chinese empire brought low only by the marauding West, writes Graham Allison, author of Destined for War: Can America and China Escape Thucydides’s Trap?  Thus the Party has evoked past humiliations at the hands of Japan and the West “to create a sense of unity that had been fracturing, and to define a Chinese identity fundamentally at odds with American modernity”.

Finally, Xi has pledged to make China strong again. He believes that a military that is “able to fight and win wars” is essential to realizing every other component of China’s “rejuvenation”.  America has more military ‘structure’ than China, but Moscow has technologically better weapons – but China too is catching up in this respect with the West fast. The direct strategic military co-operation between China and Russia (China stood behind Russia militarily as well as politically) was evident in the recent US and UK infowar thrust – Skripal and chemical weapons in Syria – against Russia.  It acts as a deterrent against US military action undertaken against either state.

In Washington there are – in contrast to Beijing – multiple voices attempting to define how America should interact with China.  Trump has been the loudest, but ideologues are there too, calling for a fundamental re-set of the terms of trade, and of intellectual property rights. But the US military also are adamant that the US must remain the military hegemon in the Asia-Pacific region and that China cannot be allowed to push America out.  There is, though, rare unity in Washington – amongst ‘think-tankers’ and between the two main political parties – on one point, and one point alone: that China constitutes the ‘Number One’ threat to the American-led ‘rules-based’ global order … and should be cut down to size.

But what – amongst China’s objectives outlined above – is it that that the US thinks it can somehow ‘roll back’ and more substantially cut China ‘down to size’ – without going to war? 

Realistically, Xi may grant Trump enough minor concessions (i.e. on ownership and intellectual property issues) to enable Trump to claim a ‘win’ (i.e. to do ‘a Clinton’ again), and buy a few years of chilly economic peace, whilst the US continues to rack up trade and budget deficits. But ultimately, America will have to decide to accommodate to reality, or risk recession at best, or war at worst.

It will be fraught both economically and geo-politically, especially since those who claim to know Xi, seem to be convinced that aside from wanting to return China to being the ‘biggest player in the history of the world’, that Xi also aspires to the one who, finally, reunites China: including not just Xinjiang and Tibet on the mainland, but also Hong Kong and Taiwan. Can America culturally absorb the thought of ‘democratic’ Taiwan being militarily unified into China? Could it trade that for a North Korean solution?  It seems improbable.

It appears that President Trump is going to get his much-desired trade war with China. Citing the country’s harmful intellectual property and innovation policies, President Donald Trump on Thursday announced the pending imposition of tariffs on $60 billion worth of imports as well as restrictions on Chinese investment. Trump may have painted his bullseye on Beijing, but much of the pain from this opening salvo is sure to be felt closer to home. As a result of these measures consumers and businesses will be forced to pay higher costs for needed goods while the economy will be deprived of foreign capital.

Notably, this collateral damage is unlikely to be in the service of any great victory, with the Chinese providing no indication that they are prepared to do anything other than dig in their heels and retaliate in kind. Although Trump may not be able to read the trade tea leaves, Wall Street had no such difficulty, dropping over seven hundred points following the administration’s announcement.

So far the White House’s action has all the hallmarks of a blunder.

Even those who the move is meant to help think the administration’s approach is a mistake. A senior member of the U.S.-China Business Council—a group which represents U.S. firms doing business with China—warned earlier this week that tariffs “do more harm than good in bringing about an improvement in intellectual property protection for American companies” operating in China and that a more narrowly focused effort would be preferable.

Other groups sure to be caught in the U.S.-China crossfire have also registered their concerns with the National Retail Federation, whose members sell many products imported from China, noting that Trump’s tariffs will “punish ordinary Americans for China’s violations.”

Then there is the small matter of the retaliation that seems sure to follow. Indeed, amidst reports that the Trump administration has not provided Chinese officials with a requested to-do list of items that could de-escalate the matter, Beijing may not see any other option. If so, China faces a number of possibilities for its hit list. Perhaps the most obvious target would be farm products, which would both hit a major U.S. export and Republican-leaning voters in agricultural states. Soybeans in particular appear to be a prime candidate, with roughly one-third of those grown in the United States—approximately $14 billion worth in 2016—destined for China. Aircraft is another strong possibility, accounting for $15 billion in U.S. export revenue and inflicting bipartisan pain given Boeing production facilities in both deep blue Washington state and crimson red South Carolina.

American firms may not profit from a trade war with China, but both Airbus and Brazilian farmers have to be salivating at the prospect.

None of this is to deny that legitimate grievances with Chinese government policy exist. Beijing is among the world’s foremost practitioners of policies which force technology transfers as a condition for doing business in the country and its record of safeguarding intellectual property rights is far from stellar. Few observers would argue that these are not real and ongoing issues.

Unilateral measures, however, appear unlikely to accomplish their desired goals, with China having shown no great willingness to adopt reformist measures in response to unilateral foreign hectoring or punishment. In contrast, complaints brought through the World Trade Organization (WTO) have prompted Beijing to adopt more market-friendly policies in numerous instances. Furthermore, unlike the United States or European Union, China has never ignored WTO rulings that found its practices to be in violation of their member obligations. While it appears the Trump administration will supplement its tariffs and investment restrictions with a WTO complaint against China, the process is sure to be more fraught than would otherwise be the case given its latest moves.

Another possibility for resolving matters would be for the United States to revisit its stalled negotiations with China over the conclusion of a Bilateral Investment Treaty. Meant to address many of the issues that currently plague U.S.-China economic ties, the treaty could help not only to resolve current tensions but also serve as a venue for working through future issues that may arise.

Instead of these more low-key approaches, however, President Trump—a veteran of the entertainment industry with a flair for the dramatic—has opted for a game plan designed to burnish his tough-on-trade credentials but which lacks an exit strategy. Trump’s stated belief that trade wars are easy to win may be quickly put to the test. So far this has all the makings of a quagmire. Let’s hope the president reconsiders before it’s too late.

nationalinterest.org

Back on 27 February 2017, after already more than a month as President, he said «Nobody knew that healthcare could be so complicated», and that «I have to tell you, it's an unbelievably complex subject». For him, as someone who never had really thought about it before, this fact (the need for authentic expertise in the interests of the public, not of himself) came as an unpleasant shock — after already several weeks in the White House.

He has made clear that he’ll be happy to sign anything that Republicans in the U.S. Senate and House can have enough agreement with each other about so as to get onto his desk for him to sign into law.

The latest iteration of this is that Trump, it has recently become clear, would even be delighted to sign into law a healthcare bill that would strip away almost all regulations — almost all legal limitations — on what health insurance companies are allowed to do in the insurance policies they sell. Philip Klein, in the Washington Examiner, on the morning of Wednesday July 19^th, headlined «Trump calls Mike Lee in attempt to revive Senate healthcare bill», and reported that Trump had just spoken with Senator Lee — who along with Rand Paul is one of the Senate’s two libertarians (believers in eliminating all economic regulations) — and Klein reported there that:

Trump reached out to Lee, R-Utah, on Tuesday afternoon to take his temperature and, according to a spokesman for the senator, Lee reiterated his position that he wanted to free the market from Obamacare's regulations in an effort to drive down premiums and provide more choices.

Trump, according to the spokesman, seemed receptive.

In other words: Trump is «receptive» to eliminating almost all of the Obama regulations on the insurance policies that insurance companies can sell. Lee, who is a sincerely committed libertarian, has demanded that Obamacare be eliminated altogether before it is replaced, and the reason he has required this is that Obamacare has placed legal limitations upon the insurance policies that are allowed to be sold in the United States, and that Lee wants to get rid of all of them.

Almost everyone in Congress is either an ideologue or else corrupt, or else both (which combination is possible if corruption is acceptable within that person’s ideology). Mike Lee is specifically a libertarian ideologue, and no one has been able to corrupt him to violate his ideology, which, one can reasonably infer from this and other examples, excludes him from corruption — from selling it out.

Klein’s news-report stated, however, that Lee was willing to compromise it, just a little, if the Republicans can strip out all but the most popular Obamacare regulations:

Lee has indicated that he would be inclined to support the bill if it included a provision that he helped write with Sen. Ted Cruz, R-Texas, that would allow insurers to offer plans that do not have to abide by Obamacare's regulations as long as they offer plans that meet all of the requirements. Cruz eventually agreed to a compromise that would allow insurers to get around most of the regulations, but that maintained Obamacare's requirement that all insurers operate a single risk pool in a given state. That means that as written, insurers would be governed by two drastically different regulatory regimes within a single risk pool, which Lee determined would put upward pressure on premiums.

Lee, it is clear, believes that regulations «put upward pressure on premiums». Reduce the regulations and the cost of «premiums» would go down, he believes. But what about the costs that health insurance isn’t even covering? Just forget about that, is the attitude. The obsession is: «premiums». What a consumer gets for those premiums, most members of Congress don’t even care — they don’t think it’s their business to be involved in that. Certainly, most of the Republican ones don’t. To be involved in that would be «regulation» — and anyone who is even just partially libertarian is against «regulation». The very concept has a bad odor to them.

However, that view, libertarianism, is exactly the opposite of the true understanding not only of health care, but even of just health insurance, because all international experience has made unequivocally clear that in order to drive down even only «premiums», libertarianism is actually poison: libertarianism actually drives up both health-insurance premiums, and uncovered healthcare costs. Libertarians — even people who are only partially and not exclusively that — ignore the total picture (which includes both premiums and what’s not covered by premiums). But when premiums are being driven down by means of driving up what consumers pay out of their own pockets (i.e., by means of reducing insurance-coverage), consumers tend to put off or delay care until their healthcare-problem becomes very expensive or impossible to treat — and that’s not at all the efficient way for a healthcare-system to function. It reduces instead of increases health.

The obsession of politicians, who don’t want to draw attention to the broader picture of driving down all healthcare-costs (while increasing health), including not just «premiums» but out-of-pocket (uncovered) costs, is «premiums», but premiums don’t by any means include paying for everything in health care. See the link at the phrase, «quality of care; and the U.S. quality of care is low in comparison to other advanced nations», in this article, wherein America’s unique combination of low quality and astronomically high cost is documented and is also placed into its broader perspective so that it can also be understood, not be at all confusing. This is what public-policymaking is really all about: it’s about the entire system, if it’s public-policymaking in an authentic democracy. An incomplete view of the system — such as libertarianism demands — is toxic to the public. If politicians don’t care about the public but only about their big campaign-donors, then calling the holders of public office «Representatives» of the public is a lie, that’s not a real democracy but only a fraudulent one.

The U.S. has both the least regulated, and the most expensive, healthcare in the world, and it’s inferior even to that in many countries where healthcare costs-per-capita are less than half as high as in the United States. Moreover, America’s healthcare also costs twice as high a percentage of GDP as in those other countries. That fact (America’s having by far the costliest, and also one of the lowest quality, healthcare-systems of all industrialized countries) is too «complicated» for the neophyte policy-thinker Trump to grab hold of (he doesn’t really care about it), or for the libertarian ideologue Mike Lee even to care at all about (since it contradicts his false theory, libertarianism); but it’s undeniably true, nonetheless: America is the corrupt laughingstock of all other countries, when it comes to healthcare. Ideologues such as Lee, and also plain psychopaths such as Trump, have made it become that way; but, still, it’s not yet enough «libertarian» to suit them. They want even more of it. (Certainly their megadonors do.)

Libertarianism is actually chaos, and that’s what America now has in its healthcare; and it’s both very expensive and very inefficient. Chaos is unregulated, but it is «unbelievably complex», because the options and sub-options in a chaotic social system regarding healthcare or anything else, are so numerous and so incompatible with one-another, so that the less regulated the system (that’s provided under the law) is, the more numerous the regulations themselves must necessarily be. There must be exceptions all over the place — and this frees up anyone who wants to get an edge on the ‘free market’, to do whatever he or she wants to do — thus it’s ‘libertarian’, such as the U.S. is famous for being: ideologically committed against socialism, no matter how democratic, how anti-authoritarian, that socialism may, in fact, be. It’s all ‘communism’ they say: Denmark has it, so does Sweden, so do many countries, but did we oppose them during the Cold War? Of course not! That type of thinking is for idiots, but plenty of them exist. And both Lee and Trump want them to wade through all those choices that, even Trump himself now admits, are «unbelievably complex». He thinks it’s «complex» for him, but not too complex for ordinary hardworking Americans to study fully and carefully enough so that they can intelligently choose the optimum insurance-policy to meet their own actuarial probability of this disease or that disease, or this type of accident, or that type of on-the-job health-risk? Really?

Trump is running into this same learning-curve when it comes to international trade; and, like with healthcare, he’s not learning.

Also on July 19th, Shane Savitsky and Jonathan Swan at Axios headlined, «Trump's own words put his trade policy in jeopardy», and they wrote:

President Trump wants to invoke a national security provision to stop the «dumping» of cheap steel into America, but trade lawyers believe Trump's public statements — and dubious legal reasoning — could expose the administration to significant legal problems.

The White House's rhetoric: The administration in April identified dumping as the impetus for Trump «standing up» for the steel and aluminum industries.

Trump last week on Air Force One: «They're dumping steel and destroying our steel industry, they've been doing it for decades, and I'm stopping it».

Why it matters: International trade experts, including NYU Law professor Robert Howse, told Axios that Trump made a big mistake by identifying «dumping» as his basis for imposing retaliatory tariffs on national security grounds. There are already laws on the books to remedy dumping, and if Trump invokes the national security provision to impose new tariffs, other nations will immediately challenge him because they're operating under a World Trade Organization agreement that has no national security exceptions… 

…The Trump administration has launched an investigation under Section 232 of the Trade Expansion Act to explore how to stop foreign countries «dumping» artificially cheap steel into the U.S. market. The Trump administration labels this a national security threat because it undermines American manufacturers. Trump's team would likely try to justify its actions to the WTO by citing Article XXI of the General Agreement on Tariffs and Trade, which allows countries to make trade decisions based on «the protection» of «essential security interests».

But the White House might never be able to use its preferred defense for steel tariffs using the GATT because the WTO already has a superseding Anti-Dumping Agreement that specifically disciplines such cases — and it doesn't allow for a dumping case based on «national security» or contain any national security exceptions. Given that the administration has been clear that dumping is a centerpiece of its Section 232 investigation, a WTO member could choose [to] bring a legal challenge under the Anti-Dumping Agreement to preempt the administration's Article XXI plan.

The approach has other problems: Trade experts view Article XXI — designed for emergencies or wartime — as a third rail in international trade law. If Trump invokes it he would threaten the WTO's legitimacy and potentially spark a global trade war. The U.S. also has domestic laws surrounding dumping that were recently expanded by Congress early last year, and White House could face a domestic legal challenge to any action against steel dumping — for example, from an auto manufacturer or a foreign exporter — before it has to face down the WTO.

What trade lawyers are asking: Is this the strategy of a nationalist administration set to paint either an international trade organization or the judicial branch as diametrically opposed to its America first policy or, similar to the roll-out of the travel ban, is the administration not prepared for the impact of the president's public statements?

This displays from Tump the same incompetency at systems-thinking that he displays in regards to healthcare. He doesn’t really »give a damn» about public policy.

The best thing that can be said about Trump as President is that, unlike his political opponent Hillary Clinton, who had an extensive track-record proving her commitment to overthrowing every head-of-state that is at all friendly toward Russia, and was so determined to do it as to be willing to bring about nuclear war between the U.S. and Russia, Trump just doesn’t care at all, except about himself and his family. He had no track-record at all in public life, and, fortunately, had no «regime-change in Syria» commitment at all (though America’s neoconservative ‘news’media still grasp at the straws of hope for him to change on that and thus for him to become even more similar to his opponent than he already is turning out to be). 

His psychopathy gives the world at least a possibility it’ll survive his term in the White House. Thus, if Clinton were the President, I’d be even less optimistic than I am, about the next few years. Furthermore, there is now the possibility of massive political gridlock in Washington. That could be a great relief. Sometimes, incompetency in a person is a gift to be treasured, to ward off that person’s becoming really dangerous — or, at least, more dangerous than he/she would otherwise be. But, of course, the same would have been true regarding Mrs. Clinton. And, either way, it was a con, not a functioning democracy. That’s the first thing to understand about America, regardless who won the White House. 

UPDATE: Just as this article was being completed, on the evening of July 19th, the neoconservative Washington Post headlined the most important breaking news story thus far in Trump’s Presidency, «Trump ends covert CIA program to arm anti-Assad rebels in Syria, a move sought by Moscow», and reported, «President Trump has decided to end the CIA’s covert program to arm and train moderate Syrian rebels battling the government of Bashar al-Assad, a move long sought by Russia, according to U.S. officials. The program was a central plank of a policy begun by the Obama administration in 2013 to put pressure on Assad to step aside, but even its backers have questioned its efficacy since Russia deployed forces in Syria two years later». Obama Administration officials, and other neocons, were quoted there saying such things as, »This is a force that we can’t afford to completely abandon… If they are ending the aid to the rebels altogether, then that is a huge strategic mistake». These ‘moderate’ ‘rebels’, as the U.S. regime and its ’news’media called them, were overwhelmingly jihadists, whom Obama had been using as cheap boots-on-the-ground — proxies for far costlier American corpses — so as to overthrow Assad and install a pro-Saud Islamic Sharia-law regime to run Syria instead; Hillary Clinton had been intent upon finishing that job — even if it would mean war against Russia. This action by Trump is a sea-change for the better. It is a heroic act by a U.S. President whom the U.S. aristocracy have been trying to oust (in favor of the committed neoconservative Mike Pence) so as to overthrow Assad and any other head-of-state who is allied with Russia. Maybe Trump is learning something important, after all. And maybe he is starting to care, finally, about the welfare of the American public. The present observer, at any rate, is again in a wait-and-see mode, about him.

The next day the EUobserver in Brussels reported that the EU does not have a unified stance on whether to grant China market economy status. The United Kingdom, Netherlands, Finland, Sweden and Denmark, and Germany are all in favor. The strongest opposition to granting China the status of a market economy is found in Italy. 

But meanwhile Beijing is intently watching as two transoceanic partnerships – one in the Pacific and another in the Atlantic – are being created. The Americans are spearheading the formation of these two giant integrative blocs, and they are doing so on one hand in order to strengthen their own global trade position, and on the other – to prevent China, Russia, and other large, non-Western countries from bolstering their situations in a similar manner.

The Americans are especially worried about a stronger China. By creating the Trans-Pacific Partnership (TPP), Washington hopes to shut China out of markets in the neighboring countries where Beijing does much of its trade (Japan, South Korea, Taiwan, Australia, New Zealand, Vietnam, Singapore, and the Philippines).

How is Europe a more important trading partner for China than America?

With the help of the Transatlantic Partnership (TTIP), Washington wants to wrest the European Union (an alliance of 28 countries) away from China. Yet for China the EU is just as important a trading partner as the US. Although the European Union and the US share first and second place in terms of their overall volume of trade with China, Europe is a much more significant import partner for China than America.

When it comes to the European Union’s foreign trade, China also takes top honors (it is the biggest source of imports and second biggest destination for exports). In terms of their total trade with the EU, China and the US are pretty evenly matched.

Europeans are good at math and understand that the creation of the TTIP will provide them with only ephemeral benefits. The increase in exports headed for the US, the creation of additional jobs, the improvement in the trade balance of a unified Europe – these are the empty dreams upon which Washington is basing its propaganda. But the loss of China as a trading partner, plus the resulting unavoidable, direct economic toll, is something quite real. In particular, China surpasses all other EU partners in purchases of machinery and equipment.

China supports Europe’s leadership in the production of many kinds of advanced technical products and keeps European machine-building companies busy. Although officials in Brussels are doing all they can to prepare a draft agreement to establish the TTIP in 2016 and then get it signed, there is powerful opposition to this partnership in many European countries. The European business community is retaining its tight grip on China.

What lurks behind the academic dispute about the «market» or «non-market» nature of China’s economy?

The EU currently has 68 anti-dumping measures in effect, 51 of which are levied against Chinese goods. These duties can exceed 65% and are imposed on a wide range of products, ranging from steel to solar panels.

The rationale for these anti-dumping duties is that Beijing is violating the principle of «fair competition» by providing state support to its exporters. Government officials claim that this is a «non-market» economy, which gives them an excuse to levy higher import duties on Chinese goods.

On Jan. 13 of this year, the authorized representatives of the EU countries discussed whether to grant China market economy status, a move they seemed inclined to support. Back on Dec. 11, 2001, when the WTO’s Protocol on the Accession of the People’s Republic of China was signed, China was given up to 15 years to restructure and create a «market» economy. Thus Beijing is hoping to win recognition by Dec. 11, 2016 from its leading trading partner – the European Union – of the Chinese economy’s market qualities. And then the practice of imposing anti-dumping duties on Chinese goods will be abandoned.

But this will be a difficult year for China. It is possible that the government will instead have to increase its support of many sectors of the nation’s economy. Beijing will try to couple this with a simultaneous surge of activity on the diplomatic front. The media is also suggesting that China could ramp up the scale of its investments in the European economy, as payment for the decision that China needs.

The outcome of the meeting in Brussels on Jan. 13 has clearly alarmed Washington. It saw Europe’s expected recognition of the market nature of the Chinese economy as a significant risk to the creation of the TTIP. Not to mention the fact that such a decision could deal a blow to US exports to Europe. Back in December, the Financial Times reported that Washington had taken preemptive action – strongly «warning» Brussels not to grant China market economy status.

At the end of the last decade the Americans verbally recognized the market nature of the Chinese economy. However, this was never legally documented, and from time to time, the US has introduced countervailing duties against many Chinese goods. Additional duties have been assessed on many types of products coming from China, including solar panels, wind-powered generators, coated paper, steel sinks, citric acid, various types of pipes including products for the oil industry, aluminum wire and extrusions, etc. Between 2007 and 2012, the US Dept. of Commerce introduced countervailing duties on Chinese goods 17 times. Over $7 billion of the products subjected to additional tariffs are exported each year on average. In 2012 China was forced to appeal to the WTO court to get Washington to revoke the unreasonable trade barriers. In 2014, the WTO court ruled in Beijing’s favor. The WTO decision states that Washington could not legally prove that the Chinese exporters are state agencies. For this reason, the so-called countervailing duties could not be imposed against those companies. In other words, the WTO court essentially recognized that China has a market economy.

This entire story is very reminiscent of the events surrounding the decision to grant the yuan reserve currency status. In early 2015, Washington issued a stern warning that the yuan would not be awarded such status. But on Nov. 30, 2015 the International Monetary Fund decided to include the yuan in its basket of reserve currencies.

For the rest of the year the issue of the status of the Chinese economy (is it «market» or «non-market»?) will dominate the relationships between China and the EU and the US and the EU. If China wins its new status during that period, it will find it easy to challenge the US grip on the European market and then become the EU’s biggest trading partner. However, this will only happen if Washington is unable to foist the transatlantic partnership agreement upon Europe. If China is not awarded the official status of «market economy» by December 2016, this will raise the tricky question of the legal basis for China’s remaining in the WTO. Time will be the decisive factor here.

Events of recent days prove that the trade conflicts between Beijing and the West have become more inflamed. On April 18 the ministers and trade officials of more than 30 countries gathered for a meeting organized by Belgium and the OECD. At the meeting they discussed the problem of overcapacity in the global steel industry, which is triggering a drop in prices for ferrous metals and doing serious damage to steel businesses in Western Europe and the US. China took part in the meeting but was raked over the coals by representatives of the West, who demanded that Beijing reduce its capacity and stop subsidizing its ferrous metal industry. The US delegation was responsible for the loudest accusations at the meeting. It is crystal clear that Washington is trying to scrape together a unified Western front to fight China’s «non-market» trade expansion. So far nothing is working. But as the fateful date of Dec. 11, 2016 nears, the trade conflicts between China and the West will only heat up, and the US will pour oil on that fire trying to undermine trade relations between Europe and China.

UPDATE. It became known that on May 12 the European Parliament voted overwhelmingly against granting China the market economy status. Once again, the non-market status of Chinese economy can be used as a weapon by trade protectionists.

These are the 12 nations:

Australia

Brunei

Canada

Chile

Japan

Malaysia

Mexico

New Zealand

Peru

Singapore

United States

Vietnam

Everyone who has seen the agreement (the negotiators for those international corporations, and their politicians) has signed a form promising:

“to treat negotiating texts and other documents exchanged in the course of the negotiations as confidential government information,” and “that these confidentiality requirements shall apply for four years after entry into force of the TPP.”

The reason why the publics in these ‘democratic’ countries will not know until four years have passed under those secret terms, what their government had signed to, is that their government will have signed to allow international corporations to sue their government (those taxpayers themselves) for potentially crippling sums, not in a court of law in a democracy to which the public had elected the judges or had elected the people who had appointed the judges, but instead in a panel of, typically, three ‘arbitrators,’ who will be selected in accord with something called the “ICSID Convention”; and “the ICSID Convention provides that the majority of arbitrators should not be the nationals of the parties having dispute” — in other words: most of the arbitrators will be foreigners; all but one of the arbitrators will be chosen by international corporations; and, even the one arbitrator who isn’t, won’t necessarily be chosen by one’s own country; but, in any case, no more than one of the arbitrators can possibly be selected by one’s own country. If the non-corporate arbitrator happens to be selected by a foreign country, then one’s own country will not possibly be represented at all in these proceedings, which might set fines that will cripple the sued nation, and that might enormously enrich the suing international corporation. This will not necessarily mean that the fine, if any, will be higher than it ought to be, but simply that there is no democratic accountability in the process of determining what, if any, fine will be imposed upon the sued country.

Furthermore, the decisions that are reached in these panels, unlike court decisions which may be appealed to a higher court, cannot be appealed (53.1 in the ICSID Convention).

Furthermore, in this TPP contract, no nation will possess the right to sue any international corporation — the right to sue is alotted only to international corporations, and they may, in these proceedings, sue only a national government.

Most of these panels will consist of three arbitrators. The ICSID states (37.2.b): “Where the parties do not agree upon the number of arbitrators and the method of their appointment, the Tribunal shall consist of three arbitrators, one arbitrator appointed by each party and the third, who shall be the president of the Tribunal, appointed by agreement of the parties.” So: two of the panel-members will be private, one will be the sued government, and the third will be some individual whom both of the other two arbitrators believe will be acceptable. That choice of the third person will be crucial, and will introduce an unpredictable element, which likely will determine the outcome. There is no resemblance in this to decisions that are made in a court of law in a democratic country. Each and every case will therefore be more like a coin-toss. However, since corporations cannot be sued in these proceedings, the weight can only be against the signatory nations themselves, which have chosen, through secret and undemocratic process, to submit themselves permanently to this form of international corporate tyranny.

The purpose of these arbitration panels isn’t specifically to enrich international corporations at the expense of a sued nation’s taxpayers. (Though it certainly does that.) It’s not mainly a means directly to provide yet another source of income to stockholders. It is instead to terrorize legislators and regulatory agencies within each member nation, to issue only laws and regulations that are no stricter in limiting what the international corporation is allowed to do under the (secret) terms of the TPP, than the maximum requirement that is set forth in the TPP agreement. What those requirements are in the TPP is what will be kept secret for four years. For example: there might be a requirement to place no more than a certain standard for the safety of drugs, chemicals, foods, or other products; so that, if the sued nation issues a stricter safety-standard, than that, then the nation’s taxpayers will have to pay to any suing international corporation, a fine for violating that suing corporation’s ‘rights’ under the TPP agreement, as interpreted by these arbitrators.

TPP, in any member-nation that signs it, will, basically, set in stone how strict each given standard can be; and, if subsequent scientific findings concerning that standard turn out to indicate that the standard should have been stricter (for example, that CO₂ emissions should be even less than previously thought), then that’s just unfortunate, but modifying the standard will be virtually impossible, because it would require renegotiating the TPP, with all of the participating countries.

In short: laws and regulations restraining corporations, will be crippled, essentially permanently, within the TPP area, if TPP gets signed. The benefits to stockholders in international corporations will be that TPP will terrorize member-nations not to raise any given safety, labor, or environmental standard, in addition to (of course) the fine awarded, which the taxpayers of the charged country will pay to the given corporation for the alleged trangression of the terms (which, at least for four years, are secret) of the TTP.

Here is how the Nobel-winning economist Joseph Stiglitz, put this:

Imagine what would have happened if these provisions had been in place when the lethal effects of asbestos were discovered. Rather than shutting down manufacturers and forcing them to compensate those who had been harmed, under ISDS, governments would have had to pay the manufacturers not to kill their citizens. Taxpayers would have been hit twice – first to pay for the health damage caused by asbestos, and then to compensate manufacturers for their lost profits when the government stepped in to regulate a dangerous product.

Increasing a regulation will present that type of Hobson’s choice to any nation that has signed such an agreement.

Furthermore, the vast majority — over 70% — of ICSID appointments of arbitrators, the decisions that likely will control the outcomes in these cases, are appointments that are made by people from “developed” countries; fewer than 30% are by individuals from “developing” ones. (See footnote 23 here.) Consequently, for example, Peruvians are far likelier to be exploited under the TPP than Canadians or Americans are.

Also, ICSID arbitrators are a more closed, tightly-knit, group of people than are arbitrators in other types of economic disputes such as WTO cases; and, whereas WTO arbitrators tend to come from government, ICSID arbitrators tend to come from the private sector. So: this system works for more concentrated economic power, the benefits of which will go to stockholders in the developed world, and the losses from which will go to consumers, taxpayers, and especially to the residents in underdeveloped countries. (Of course, the higher pollution and the more toxic foods etc. will diminish lives in all  of the participating countries.)

Additionally, ICSID arbitrators are paid an average of $200,000 per case, whereas WTO arbitrators get paid only 20% as much if they’re from the private sector, and zero if they’re government officials; so, the profits from arbitrating in the ICSID system are far higher — yet another example of privatizing the benefits.

What will make this treaty — and, if they also get passed, then also Obama’s proposed TTIP treaty with Atlantic nations, and also Obama’s TISA treaty regarding financial and other services — “the most criminal treaties in history,” will be not only the collapse of democratic national sovereignty regarding these regulatory and legal matters, but, also, the huge size of the market-area that’s to be corrupted in this systematic treacherous (profoundly anti-democratic) fashion, which privatzes ‘justice’ in ways that will funnel wealth from the many to the very few.

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Investigative historian Eric Zuesse is the author, most recently, of  They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of  CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.

German Poultry Association’s decision to cut costs by allowing genetically modified soy use in poultry industry could become a dangerous precedent not only for the national food market, but also for Berlin’s trade partners outside the EU. The Association’s backslide into GMO support is an important decision point, as Germany is one of the EU's largest poultry meat producers. In 2013, Germany produced about 1.4 million tons of poultry meat (out of total EU production of about 12.5 million tons). Germany is also one of the EU's largest users of soybeans and soybean meal, importing for all uses (feed, biofuels, etc.) about 6.8 million tons of soybeans and products in 2013. German chicken and turkey farmers annually use about 4.1 million tons of animal feed, of which soy meal is a key protein component.

Poultry companies Wiesenhof and Rothkoetter import soybeans for business use from Latin America (Brazil and Argentina). In order to defend its pro-GMO stance German Poultry Association noted that imports of non-GMO soybeans are no longer reliable since Brazil will reportedly cut supplies by 50 percent in 2014. Why did it happen in the first place?

Executive director of the Brazilian Association of Non-Genetically Modified Grain Producers (ABRANGE) Ricardo Tatesuzi de Sousa says Monsanto and other «frankenfood» producers are abusing their economic power by removing non-GMO soybean seeds from the market. According to ABRANGE statistics, after Monsanto’s attack on organic seeds, Brazil’s non-GMO soybean production has decreased in the past year from 45 % to 40 % due to the seed shortage. German poultry industry is following the trend set by transnational corporations in the developing world. Interestingly, in 2013 Monsanto had to withdraw bids to grow more GMO seed crops in Europe since Germany said ‘no’ to the GMO giant.

Reasons behind the partial lifting of GMO ban were based solely on business calculations. Wiesenhof and Rothkoetter have been lobbying for genetically modified soy use in poultry operation since February, 2014. Now German health safety regulations are waived to support heavily subsidized European farming industry.

The EU agricultural sector is ineffective and extremely costly. Almost 40% of the total EU budget is still spent on the Common Agricultural Policy. In some countries political battles for agricultural subsidies take grotesque forms. For example, in March French farmers were so enraged at Brussels’ policy that they stormed into Paris' iconic Louvre museum with a herd of sheep, Euronews reported.

Unlike the French «sheep storming», German poultry lobbyists follow Monsanto’s footsteps and prefer discreet corporate diplomacy. While biotech proponents and critics clash in media disputes on German TV, non-organic producers try to maximize profits in a crisis-stricken market. Willing or not, European consumers will be their guinea pigs. Idea to lift GMO ban met a relatively weak anti-GMO backlash by organized German consumers. Only one organization – the German Association of Green Farmers – tried to raise public awareness of untested GMO use in poultry production.

Considering the current state of relations between the West and its BRICS partners, global bio-safety fears are well-grounded and easy to understand. The U.S. under the first Bush administration flooded CIS countries with cheap American chicken of poor quality, known as «Bush legs». Today German civic society couldn’t stop the biotech lobby from «field tests» on EU citizens. It is naïve to think that transnational corporations will not try to use BRICS and the Customs Union food markets as a testing ground for new genetically modified poultry products. The World Trade Organization procedures may be used to sneak through sovereign phytosanitary certification rules.