Global trade in 2018 to be "overshadowed" by US-China dispute: EIU report

Global trade will be "overshadowed by the ongoing dispute" between US and China in 2018, a report by The Economist Intelligence Unit (The EIU) has said.

As per the report prepared by the research and analysis division of The Economist Group, there is a "now a period of negotiation that has the potential to result in an agreement between the two sides-should China choose to respond to US concerns to a degree that both countries are able to claim a face-saving win".

"However, we believe that negotiations will only be partly successful in avoiding the full imposition of the proposed tariffs," the report said.

"We expect, therefore, that a selection of the proposed tariffs on Chinese goods will be applied, most likely around the middle of 2018. In response, China will impose equivalent tariffs on the US."

Besides, the report predicted that the "global trade growth will continue to slow in 2019-22".

"Our assumption that protectionism will rise but that a trade war will be averted means that global trade growth will continue to slow in 2019-22, to an average of 3.5 per cent a year," the report said.

In addition, the report said that the "appetite for new free-trade deals" will continue in the rest of the world.

"With the US turning away from multilateral trade liberalisation, after Mr Trump pulled the country out of the 12-member Trans Pacific Partnership (TPP), China now has the opportunity to help to set the rules of engagement," the report said.

"We are doubtful, however, that China has the willingness or the capability to take on the free-trade mantle for now."

On the negotiations over the Regional Comprehensive Economic Partnership (RCEP), the report said that it "will continue, but we do not expect these talks to be concluded in the next five years".

"Part of the reason for the slow pace of negotiation is the size of the RCEP. It would cover more than 3bn (billion) people if completed. The proposed agreement includes the ten member states of the Association of South-East Asian Nations (ASEAN) and six partner countries (Australia, China, India, Japan, New Zealand and South Korea)," the report said.

--IANS

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