ESADEgeo Daily Digest, 10/07/2018

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European Council on Foreign Relations – Jeremy Shapiro / Trump’s meaningless NATO spending debate

  • There are good reasons for European countries to spend more on defence, as they are already doing. But the European response to Trump’s histrionics over spending is nearly irrelevant to how his administration will treat NATO.
  • Trump does not want to solve the burden-sharing problem. On the contrary, he wants to use Europeans’ collective sense of guilt over their lack of spending, as well as the European fear of American abandonment, to gain concessions on what really matters to him: reducing the American trade deficit.
  • Europeans need to get their house in order in defence. But that effort has little to do with symbolic defence spending targets and even less to do with the impossible task of satisfying Trump. Rather, they should focus on creating a truly independent defence capability.
  • To persist in the long term, the transatlantic alliance needs equality in negotiation much more than it needs equality in spending. Effective bullying can perhaps create some wasteful defence spending, but it cannot create a new transatlantic bargain that will preserve that essential solidarity.

Brookings – David Dollar / The future of the U.S.-China trade war

  • The US has been putting in place the most extensive import protection since the disastrous Smoot-Hawley tariffs in the 1930s.
  • China is at the end of many global value chains, which include inputs from the US, Japan, South Korea and Taiwan. Some of the pain from the US tariffs will hit these other economies, not China.
  • Still, the trade war comes at a bad moment in China’s cycle. The authorities have been tightening financial conditions and trying to rein in financial risks, so that the economy is slowing, even before it takes a hit from trade.
  • US tariffs create uncertainty in the world and one result is that capital flows out of other economies to the US. In the short run, this raises the value of the dollar and largely undoes the protection.
  • By 2019, the negative effects of the protection in the US are likely to be stronger while the influence of the fiscal stimulus wanes.

The New York Times – Jamie Condliffe / Developing countries may need their own strategies to cope with job-taking robots

  • A new study by economists Lukas Schlogl and Andy Sumner of King’s College London suggests that most strategies to help workers displaced by robots, some of which look promising, have so far been devised for developed nations and may not translate to the developing world.
  • There is a consensus that routine tasks that don’t require emotional intelligence, complex human reasoning, or creativity will gradually be filled by robots and artificial intelligence. That poses particular concern for developing countries, where there are typically larger pools of unskilled labor.
  • Developing countries are likely to feel unable to implement constraints on automation, for fear of companies or even entire sectors relocating to regions where the use of robots isn’t penalized.
  • Retraining would be hard to implement in developing nations because they typically have limited education sectors in place through which to deliver it. And a universal basic income would be hard to finance in developing countries.

Politico – Energy Visions / Has China replaced America as Europe’s climate partner?

  • In light of the US Administration’s retreat from global climate action, are the EU and China the new “power couple”? Energy Visions put that question to POLITICO readers. In total, 77 percent of respondents said yes, while 22 percent said no.
  • Asked who the EU should look to for inspiration and new ideas outside Europe, 41 percent said China, while only 13 percent said the US, and 15 percent saw Canada as a more inspirational source of climate ideas.
  • Meanwhile, 80 percent of respondents said they see China’s technological advancement as an opportunity for Europe, while only 20 percent saw it as a threat.
  • Despite China’s high-level commitment to the Paris climate agreement, there is still some skepticism about whether China will meet its Paris targets: 69 percent said they expect the goals to be met, while 31 percent said they did not.

The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo. The summaries above may include word-for-word excerpts from their respective pieces.  

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