Germany on Trade and Trading with the Enemy
The Economist: The German problem:Why Germany’s current-account surplus is bad for the world economy
Introduction:
Washington Post: The United States and Europe are on a collision course over IranTHE battle-lines are drawn. When the world’s big trading nations convene this week at a G20 summit in Hamburg, the stage is set for a clash between a protectionist America and a free-trading Germany.
President Donald Trump has already pulled out of one trade pact, the Trans-Pacific Partnership, and demanded the renegotiation of another, the North American Free-Trade Agreement. He is weighing whether to impose tariffs on steel imports into America, a move that would almost certainly provoke retaliation. The threat of a trade war has hung over the Trump presidency since January. In contrast, Angela Merkel, Germany’s chancellor and the summit’s host, will bang the drum for free trade. In a thinly veiled attack on Mr Trump, she delivered a speech on June 29th condemning the forces of protectionism and isolationism. An imminent free-trade deal between Japan and the European Union will add substance to her rhetoric (see article ).
There is no question who has the better of this argument. Mr Trump’s doctrine that trade must be balanced to be fair is economically illiterate. His belief that tariffs will level the playing field is naive and dangerous: they would shrink prosperity for all. But in one respect, at least, Mr Trump has grasped an inconvenient truth. He has admonished Germany for its trade surplus, which stood at almost $300bn last year, the world’s largest (China’s hoard was a mere $200bn). His threatened solution—to put a stop to sales of German cars—may be self-defeating, but the fact is that Germany saves too much and spends too little. And the size and persistence of Germany’s savings hoard makes it an awkward defender of free trade.
Introduction:
When the French energy giant Total signed a landmark gas deal with Iran this month, the company’s chief executive lauded the nearly $5 billion investment as a trailblazing initiative for peace.
“We’re here to build bridges, not walls,” Patrick Pouyanné said in an interview with Agence France-Presse at the signing ceremony in Tehran.
The venture, which includes China’s National Petroleum and the Iranian company Petropars, will develop the South Pars gas field under a 20-year contract. It is Iran’s first major energy contract with a European firm since a nuclear deal with world powers lifted sanctions on Iran last year.
“Economic development is also a way of building peace,” Pouyanné said.
Pouyanné’s remarks reflect a broader vision among European leaders for improving ties with Iran, in part by encouraging firms such as Total to invest now that major sanctions are gone. But his comments also highlight the growing rift between the United States and Europe over how to engage with Iran, which the Trump administration has identified as a global menace and singled out for sanctions and isolation.
Since President Trump took office, Europe and the United States have pursued increasingly different courses on Iran, casting doubt over the future of the nuclear accord, which limits Iranian nuclear activities in exchange for sanctions relief and other trade.
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