ESADEgeo Daily Digest, 03/12/2018

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The Guardian – Damian Carrington / ‘We are last generation that can stop climate change’ – UN summit

  • Almost 200 nations were set to meet in Poland for two weeks, aiming to hammer out a vital agreement to turn the carbon-cutting vision set in Paris in 2015 into reality. Moves to rapidly ramp up action would be another key goal, with current pledges leaving the world on track for a disastrous 3C of warming. The negotiations will take place against a background of ominous news: the past four years have been the hottest on record and global emissions were rising again, when they need to fall by half by 2030. Climate action must be increased fivefold to limit warming to the 1.5C scientists advise, according to the UN.
  • The political backdrop contains challenges as well, with climate change denial from the US president, Donald Trump, and attacks on the UN process from Brazil’s incoming Bolsonaro administration. The hosting of the summit by a coal-friendly Polish government further worries some observers. But the EU’s new intention to become climate neutral and the plummeting cost of renewable energy have been positives, while a year of extreme weather was anticipated to focus minds.
  • Rich nations have promised $100bn a year by 2020 to help poorer countries adapt to climate change and develop clean energy. Negotiators in Poland would have to bring the two blocs together with firm agreement on how the promise would be fulfilled. The negotiators in Poland must also produce a rulebook governing how action pledged under the Paris agreement was tracked and reported to ensure all nations play their part.
  • Many nations remain firmly committed to climate action, particularly France and China. But the UN secretary general, António Guterres, warned last week that the rise of populism was undermining the political will of some countries to work with others. “We have more and more nationalist approaches being popular and winning elections,” he said. “This has led in my opinion to a lack of political will.”

The Economist – Trade section / The US-China trade war is on hold

  • The meeting between Donald Trump and  Xi Jinping  produced a truce based on two elements: some murky mercantilism, and a deal to talk about a deal. China will increase its purchase of American farm produce, energy and some industrial goods. In exchange America will delay an escalation in tariffs, from 10% to 25% on $200bn of goods planned for January 1st. That is on hold until March 1st at the earliest. But because the formal talks between the two countries could well fail, this truce is worryingly fragile.
  • The Chinese commitment to raise purchases of American goods is by an amount “not yet agreed upon, but very substantial”. That is supposed to reduce America’s bilateral trade deficit with China. Requiring the Chinese government to manage import flows is odd given how America’s government complains that China still behaves like a non-market economy. The idea is also economic nonsense. Bilateral trade deficits do not mean much, especially in an age when supply chains are global. In addition, the bilateral trade deficit is not only a function of Chinese imports, but also of Chinese exports to America. Even if the Chinese state can find ways to boost the purchase of American goods, it cannot determine the behaviour of American consumers. They may be eager to buy from China, if only to get hold of products before relations deteriorate again.
  • The foundations of the deal’s second part are almost as shaky. In theory negotiators now have 90 days to agree “structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture.” That list is ambitious, particularly when levels of trust between the two sides are so low. Given the number of times the Chinese have broken their pledges not to make transfer of technology a condition of access into their market, America is unlikely to settle for a simple promise backed by the threat of extended tariffs. That means China will have to find mechanisms to demonstrate that, this time, it really has changed its ways.
  • A more stable solution to the US-China tensions would involve co-operation with other countries. The European Union and Japan agree with many American complaints, and there has been some work to come up with new rules to resolve them. In the longer term the WTO could even help to enforce those, though not if the Trump administration persists in undermining its dispute-settlement system.
  • The Washington Post – David Lynch / Despite pause in trade war, U.S. and China’s economic relationship is forever changed

The New York Times – Alissa J. Rubin / Macron Returns to Turmoil, as France Weighs State of Emergency

  • A third weekend of nationwide protests by the movement (“Yellow Vests”), largely made up of working-class people angry about a planned increase in fuel taxes and their dwindling purchasing power, left burned cars and smashed store windows in several of the wealthiest neighborhoods of Paris.
  • The interior minister, Christophe Castaner, said on Sunday that he would not rule out the president’s declaring a state of emergency, but by day’s end that appeared less likely, at least for the time being. The president has emergency powers that were expanded after the terrorist attacks of November 2015.
  • Although the government has made no sign of reversing course on the gas tax increase that precipitated the most recent protests or of reducing other taxes, some of the Yellow Vests indicated that they were ready to negotiate. They called for an “immediate and unconditional freeze in the tax increase on fuel” as well as the cancellation of new and more rigorous vehicle inspection rules, which raise costs for drivers. They also asked to change the electoral system to one of proportional representation, which would benefit smaller parties, including those on the far left and far right.
  • Jean-Luc Mélenchon, the leader of the far left, and Marine Le Pen, his counterpart on the far right, both called for the dissolution of the National Assembly. Such a move would force the government to call parliamentary elections, putting Mr. Macron’s majority at risk.

Financial Times – Anjli Raval / Qatar pulls out of OPEC as relations with neighbours sour

  • Qatar plans to quit OPEC next year as relations with its Arab neighbours sour, ending a near-six decade long membership of the oil price cartel. The emirate’s oil minister told reporters on Monday the decision to leave the group of big oil exporting countries had come after Qatar reviewed the ways it could enhance its role abroad while shifting the focus of the country towards gas. Qatar, which is the world’s largest exporter of liquefied natural gas, is among the smallest oil producers in the group, pumping 609,000 barrels a day according to the OPEC research arm’s October oil market report. Mr al-Kaabi said the country was seeking to increase LNG production from 77m to 110m tonnes each year.
  • The move comes amid a deteriorating political situation between Qatar and its neighbours. Four Arab states — Saudi Arabia, the United Arab Emirates, Bahrain and Egypt — have imposed a trade and travel embargo on the country since June last year over allegations that Qatar supports terrorism. However, Saad al-Kaabi, Qatar’s oil minister, insisted the decision to quit OPEC, which the country joined in 1961, was not linked to the political and economic boycott.
  • Qatar’s decision comes as non-OPEC countries, such as Russia, have become more influential in setting oil policy alongside Saudi Arabia, which is the largest producer within the cartel, and its de facto leader. Mr al-Kaabi said the country’s impact on OPEC production policy was small, which had influenced its decision to leave, but the country would still comply with coordinated oil deals among global producers.

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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