Trade-War With China Hurts EU, Group Warns

The European Union in times of crisis cannot afford a trade-war with China, according to the Globalization Institute.

The European Commission should not introduce new duties on the import of Chinese paper, appeal the experts of the Globalization Institute. The EU announced in May the introduction of new up to 20 percent tariffs on paper imported from China.

“The actions of European Commission are a manifestation of short-sighted protectionism, and the economy and consumers would pay for it,” said Dr Tomasz Teluk, President of the Globalization Institute. “The new duty will be a disadvantage of Europe, provoking similar repercussions in the country towards which they are addressed,” he warned.

According to the Globalization Institute, the market balance is disturbed by the officials from Brussels, and it would lead to a series of interventions in international trade. It is not the first dispute between these two economies: the barriers which EU introduced before were in the textile, footwear and toys market.

Protectionism has no economical justification beside short-sighted protection of European producers against Asian competition, according to the Institute, which claims that in the longer term, however, the purchasers of imported products lose, because the access to cheaper sources of production is closed for them. Who also lose are the consumers, who will pay higher price for the paper since the introduction of the tariffs, the Institute said.

Instead of introducing prohibitive customs duties on imports of goods, the EU should change its internal policies, reducing the tax burden, enabling manufacturers to reduce costs and increase competitiveness of their products. It would be beneficial both for the European economy and consumers, the Institute claimed.

“The eminent Austrian economist Ludwig von Mises believed that protectionism is a philosophy of war. This is particularly evident in the arena of international trade,” Tomasz Teluk said, adding. “Conducting a trade war with the economy, which will soon be the largest in the world would be irrational.”

Import from China covers just the needs of less than 5 percent European paper market. Although the share of imports from Asia is small, the European Commission plans to introduce a 5-year tariffs on a variety of paper.

In support of the project there were given various reasons for that decision: the protection of forests in Asia, through the dumping and subsidizing production. In fact, the only credible justification is to protect the interests of the European paper industry lobbies, said the Globalization Institute.