The World Today for May 09, 2018

NEED TO KNOW

EUROPEAN UNION

The Grass of Elephants

Just before they were scheduled to expire, US President Donald Trump extended stays on steel and aluminum tariffs of 25 and 10 percent, respectively, on the European Union and other key American allies last week – but only for another 30 days.

For all the headlines prophesizing calamity should the new tariffs come to pass, observers say they likely won’t have that big of an impact on the global economy, the New York Times reported. Aluminum and steel account for only a sliver of worldwide trade.

But Trump’s plans do mark a shift in America’s longstanding relationship with its European trade partners. As Miguel Ponce, head of Argentina’s Center for the Study of Foreign Trade in the 21st century, aptly described the situation: “When two elephants fight, it is the grass that suffers the most.”

The EU and the United States are each other’s largest global trading partners, and both have historically pushed for lucrative free-trade deals with one another and with third countries for much of the post-war era.

But according to President Trump, the Europeans have been slinging mud for far too long. He wants to strike new deals that are more America-friendly, and often points to the eurozone’s $151 billion trade surplus in 2017 with the United States as proof of the lack of reciprocity in the nations’ trade relationship.

President Trump has a point, Politico’s chief European economics correspondent Pierre Briançon wrote.

The eurozone’s huge trade surplus with the United States – and the rest of the world at a total of $380 billion – shows that while the union’s German-led austerity measures, spending slashes and export boon after 2009’s financial crisis may have brought the bloc back from the brink, it did so on the back of global trade partners, Briançon wrote. The message of the tariffs could shock the system back into shape.

But while President Trump wags a finger at Europe, the EU is keeping receipts.

It’s already dubbed the measures protectionist and a violation of global norms, and plans to put up a fight by imposing counter tariffs on all-American wares like cranberries, whiskey and tobacco should the EU not be offered a permanent exemption from the penalties. In a message to Trump, the EU recently struck a trade pact with Mexico as well, the Times reported.

Such a tit-for-tat could have a tidal ripple effect, the Economist writes.

An escalating trade conflict with Europe deflects focus from the economic ills of China, whose dumping and intellectual-property theft Europeans see as the real problem. If the Europeans push Trump too far, he could turn around and strike a unilateral deal with Beijing – leaving Europe out in the cold, the Economist wrote.

With the extension now in place, it appears that French President Emmanuel Macron and German Chancellor Angela Merkel may have had a bit of sway during their respective recent visits, the Guardian reported.

Still, with the month-long reprieve quickly timing out, it remains to be seen whether these two elephants will continue to cross tusks or move on to greener pastures.

WANT TO KNOW

IRAN

Pay at the Pump

US President Donald Trump’s decision to pull out of the international nuclear deal with Iran sent oil prices spiking to a three-and-a-half-year high Wednesday, as scrapping the agreement threatens to prevent the third-largest producer among the Organization of the Petroleum Exporting Countries (OPEC) from selling crude to Europe and Asia.

The move also hit Asian share prices, Reuters reported, as it was seen as potentially hurting many firms that have dealings with Iran.

“US sanctions could affect various industries. And tensions between Iran and Israel look set to intensify. Those will begin to cap share prices,” said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

During the last round of sanctions, Iran’s oil supplies fell by around 1 million barrels per day (bpd), rebounding when sanctions were lifted in 2016, the agency reported separately. Analysts now expect another 300,000 bpd to 1 million bpd drop, depending on how many other countries follow Washington’s lead.

ARGENTINA

Going Back to the Well

Argentina is in talks with the International Monetary Fund (IMF) for a financing deal to prop up the plunging peso – even though many citizens still blame IMF-dictated austerity measures for the country’s financial and economic meltdown in 2001 and 2002.

“I spoke with (IMF) Director Christine Lagarde, and she confirmed we would start working on an agreement today,” Reuters quoted Argentina’s President Mauricio Macri as saying in an address to the nation on Tuesday.

The cry for help comes after two weeks of turmoil, during which the peso hit new lows and the central bank hiked interest rates to 40 percent.

The agency cited a local newspaper as saying Argentina would seek at least $30 billion in financing, but noted it couldn’t confirm that amount with the government or the IMF.

Treasury Minister Nicolas Dujovne told reporters that the move would not increase the country’s indebtedness, but rather provide a substitute for issuing bonds. He also said the policy conditions for the IMF financing deal had not yet been discussed.

JAPAN

Attentions Elsewhere

Overshadowed by news out of America, Japanese Prime Minister Shinzo Abe welcomed top leaders from both China and South Korea to Tokyo for the first time in seven years on Wednesday.

Though common ground on a North Korea strategy will be hard to find, Abe told reporters after the summit that the three countries agreed that United Nations Security Council resolutions on North Korea must be fully enforced, Bloomberg reported.

For his part, Chinese Premier Li Keqiang pushed for action on a proposed three-way free-trade agreement and the 16-member Regional Comprehensive Economic Partnership trade deal.

With South Korea’s President Moon Jae-in set to leave early, more concrete developments are expected from bilateral meetings between Abe and Li later this week – including deals ranging from a transfer of crested ibises to agreements to resume currency swaps and grant Japan investment quotas in China’s bond and equity markets.

Still, with Japan-China relations tense since 2012, “the summit’s main deliverable is the fact that these proud countries are talking,” Bloomberg quoted Giulio Pugliese, a lecturer at King’s College London, as saying.

DISCOVERIES

Prehistoric Stalkers

Despite popular folklore, woolly mammoths weren’t the only giants that humans hunted during the last ice age.

Recent fossil discoveries at the White Sands National Monument in New Mexico indicate that humans also hunted giant ground sloths, USA Today reported.

In a new study published recently in the journal Science Advances, researchers discovered human footprints inside those of giant sloths and concluded that our ancestors “stalked” the creatures.

“The White Sands trackway — a series of tracks and footprints — shows that someone followed a sloth, purposely stepping in their tracks as they did so,” said David Bustos, the study’s lead author.

While giant sloths were herbivores, hunting the creatures wasn’t for the faint of heart: They stood about seven to eight feet tall and had sharp claws that could rip a human to shreds.

Scientists still have to determine just how much humans contributed to the creatures’ extinction. But the new fossilized footprints are helping scientists to record interactions between humans and the megafauna that roamed the Earth during the ice age.