U.S. and Mexico Reach Agreement on Sugar Dispute

June 5, 2017  |  No Comments  |  by Nicole àBeckett  |  Blog

U.S. and Mexico have reached an agreement in the dispute over sugar trade today, according to sources (Reuters). The agreement will prevent a trade war in which the U.S. would have imposed steep tariffs on Mexican sugar imports and Mexico would have responded with equal tariffs on U.S. high-fructose corn syrup.

Details of the agreement are not yet public, but sources indicate the deal was made to benefit both countries. According to the Juan Cortina Gallardo, the president of Mexico’s sugar chamber, the managing of the sugar agreement will set a precedent for how further negotiations will play out (The New York Times). Since NAFTA was first negotiated in the early 1990s, the sugar industry has been the most contentious issue in U.S.-Mexico trade relations.

The current agreement will modify a 2014 agreement in which quotas and a price floor on Mexican sugar acted as an alternative solution to antidumping and antisubsidy duties. U.S. sugar companies had argued that the agreement was not doing enough to counter “unfairly subsidized” Mexican sugar companies, who could sell sugar in the U.S. at a price domestic companies could not compete with.

Stay up to date with the details of the agreement and other international trade news by following Mercatura Global on Twitter.

Political Leaders Defend Globalization at World Economic Forum in Davos

January 18, 2017  |  No Comments  |  by Nicole àBeckett  |  Blog

Chinese President Xi Jinping attends the World Economic Forum (WEF) annual meeting in Davos, Switzerland January 17, 2017. REUTERS/Ruben Sprich

The World Economic Forum Annual Meeting is currently underway in Davos, Switzerland. The meeting brings together world leaders- both in politics and business- to share insights and innovation about the future of regional and global industries (World Economic Forum).

Last year, global trade grew at a rate of about 1.7%, which was the slowest it has grown in 15 years (New York Times). The conversations of World Economic Forum addressed the present decline of globalization and growing popularity of protectionism. Despite rising sentiments of protectionism, both Chinese President Xi Jinping and U.S. Vice President Joe Biden defended globalization and free trade.

Xi was the first Chinese head of state to appear at the meeting, and he argued that economic globalization is not to blame for the current problems we face today (NPR)  Although he did accept that globalization had its flaws, he asserted that no country would benefit from a “trade war.” According to Reuters, Xi also claimed that the world depended on the U.S. and China to maintain a stable relationship, especially in light of the uncertainty Donald Trump will bring once he takes office.

Vice President Joe Biden also attended the meeting an expressed a similar ideology as Xi. Biden urged that the world fights the urge to “embrace isolationism and protectionism,” and continue to invest in democratic alliances (Fortune Magazine).

Overall, the first day of the forum mirrored rising concerns about the future of the world economy and globalization as a whole. Political leaders insisted that protectionism would only worsen current problems, and advocated for inclusive growth rather than exclusive growth.

Restrictions on Trade with China Would Lead to a Trade War the U.S. Will Lose

January 11, 2017  |  No Comments  |  by Nicole àBeckett  |  Blog

Since the early 2000s, U.S. foreign debt has grown faster than the growth of its economy as a whole, stemming from a significant trade imbalance with China. Between 2011 and 2015, the US trade deficit with China sat at an annual average of $300 billion (US News).

The trade deficit with China is concerning, yet steep tariffs and restrictions of Chinese imports will not solve the U.S.’s problems. Analysts have indicated that steep tariffs would harm both economies, with the U.S. being the bigger loser of the two (Fortune Magazine). The U.S. relies on China far more than vice versa, and steep tariffs would lead to a trade war that the U.S. would undoubtedly lose.

China accounts for around 20% of the world’s population, and the U.S. cannot ignore the size of its consumer base. Large American corporations such as Apple and Boeing sell more to Chinese consumers than American consumers, and they rely on raw materials and finished goods produced in China. This reliance on China for materials and finished goods spans from across almost every U.S. industry, and the precipitation of a trade war would lead to shortages within these industries (US News).

A trade war with China would only become a reality if U.S. President-elect Donald Trump follows through with his threats of imposing a 35% or 45% tariff. A tariff at this rate would go against the rules of the World Trade Organization (WTO), and would potentially lead to U.S. withdrawal from the organization. Many U.S. policy-makers condemn this prospect, so for now we must wait until after the inauguration to determine if Trump’s trade policies will actually transpire.

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