▲ Shanghai night view [Pixabay].

COMMENT / Jimena Puga

China's new Foreign Investment Law, which came into force on January 1, 2020, is aimed goal accelerating the country's economic policy reforms to open up the domestic market and eliminate obstacles and contradictions of the previous law. As statement by the President of the People's Republic, the new rule aims to build a market based on stability, transparency, predictability and fair skill for foreign investors. Moreover, the Chinese authorities claim that this new law represents a fundamental part of the State's policy to open up to the world and attract more foreign direct investment.

The draft rule, drafted in 2015, created high expectations among Chinese reformers and foreign investors for a change in the country's foreign investment policy regime. And its publication in 2019, the year at the end of which the President of the United States and the President of the People's Republic agreed to a hiatus in the trade war in which both are protagonists, signaled a breakthrough in this change.

However, the reality is different. Beijing's stance on foreign investment remains significantly different compared to the existing conception of investment in the international arena, but part of the reformist sector of society knows that the government cannot afford to miss the opportunity for improvement following the gradual slowdown of domestic investment in the Chinese market over the past decade.

On the contrary, and taking into account the image that the Empire of the Center has wanted to project to the world since the opening of the regime, it could be thought that President Xi Jinping and the leaders of the Communist Party would have seized the opportunity to give a facelift to a new policy which, compared to the labyrinthine and previous law, would be systematic and perceived in a more friendly way by the investor countries, as a means to revive the decreasing rates of economic progress. The Asian power's new approach to the free market is therefore a smokescreen based on the establishment of protocols that vaguely define the limits of the rights enjoyed by foreign investors.

As a complement to the content of the foreign investment law, the regulation highlights its promotion and protection and details the necessary measures to ensure its effective implementation. It promotes investment by protecting the rights and interests of investors, standardizing the administration of foreign investment, improving the environment of commercial establishments, as well as promoting the advancement of market opening with a broader scope.

Specifically, the provision stipulates that foreign-invested enterprises shall enjoy the same favorable policies as domestic companies. In addition, it details measures to protect business confidentiality and improve the mechanism for the presentation suggestions from foreign firms to the authorities.

It also sets out and clarifies the implementation of a foreign investment negative list mechanism and details the registration and notification system for this investment subject Finally, it also regulates the investment policies for companies established in Hong Kong, Macao and Taiwan, and the legal responsibilities for violations of these regulations.

From a strictly legal point of view, article 2 of the precept defines the concept of foreign investment as "activity of investing directly or indirectly carried out by foreign individuals, companies or other foreign organizations", and also contemplates four circumstances that are considered part of this subject of investment:

• Who establishes a business in the Chinese territory either alone or with another investor

• Whoever acquires participations, shares... or other rights and interests of a business in the territory of China

• Who invests in any new project in China, either alone or with another investor

• Whoever invests in any other manner stipulated by law, administrative regulations or State committee provisions

The term "foreign-investedbusiness " refers to a business incorporated in the Chinese territory under Chinese law and with all or part of its investment financed by a foreign investor.

However, as mentioned above, despite the important innovations of this law, many questions remain unanswered. For example, it does not specify what indirect investment is. Nor does it specify the scope of "foreign natural person": what about Chinese who acquire another nationality, and what about foreigners who acquire Chinese citizenship? In addition, the legislator does not clarify whether investment from Hong Kong, Macao or Taiwan will be considered foreign investment.

Articles 4 and 28 of the new law state that China will adopt the management system of pre-establishment of national treatment (a principle that guarantees foreign investors and their investments access to markets without disadvantages, and therefore under the same conditions as domestic investors). And the Negative List system for foreign investment, which consists of special administrative measures for foreign investment access to certain fields. In other words, the government will treat all foreign investments outside the Negative List as domestic.

This Negative List system was first tested in the Shanghai SEZ and expanded throughout the country in 2018. Both article 4 and 28 clarify that the new Negative List will be promulgated upon agreement of the State committee . This means that neither ministers nor local governments will be able to set restrictions on foreign investment. What's missing? If investors want to access the sectors restricted under the Negative List, they must receive authorization from the Ministry of Commerce, a procedure that the legislator does not include in the rules and regulations

On the other hand, articles 34 and 37 of the new law establish the system of communication on the establishment of new investments for their management and organization.

agreement with these items, foreign investors are obliged to communicate all relevant information to the trading department regulated by the Registration System business or the Credit Information advertising System business . Penalties for non-compliance are also included in these articles. But once again, in this field there is a lack of formal requirements as to how and what content is required for the communication of information to the trading department .

This new turn in economic policy translates, once again, into a strategy by which Beijing intends to project itself on the international scene as a powerful and innovative economic power, trying to hide the slowdown of its domestic market and the damage suffered by the trade war against Washington. However, taking into account the loopholes analyzed in the aforementioned articles and their vague and ambiguous wording, foreign companies will have to wait to determine what this reform really entails after its implementation internship

The port of Chancay, to be position by the state-owned shipping company Cosco, will start operations in 2022.

The Chinese pronounce it almost like Shanghai, but it is not in China but in Peru. The port of Chancay, 75 kilometers from Lima, will become the first Chinese logistics hub for the Pacific side of Latin America. It is the only port in the region for the state-owned shipping company Cosco, which once established in Piraeus its entrance to Europe and is now preparing its access of goods to South America through Chancay. The infrastructure represents an investment of 3 billion dollars.

Computer-aided design of the facilities of the new port of Chancay, 75 kilometers north of Lima [Volcan].

article / Gabriela Pajuelo

The port of Chancay intends to become one of China's main connections with the countries on the west coast of South America, serving as a bridge for the growing trade of goods from this region with Asia-Pacific. Through the company Terminales Portuarios Chancay, China's Cosco Shipping Ports is contemplating an initial investment of US$1.2 billion, earmarked for the first phase of the project - construction of new dikes to gain ground to the sea, achieving a greater depth (16 meters) and surface area for operations (one million containers). The total investment will be US$3 billion; entrance into operation is scheduled for 2022.

China has been Peru's leading trading partner since 2014, replacing the United States. In 2017 China was the destination of 26% of Peruvian exports (US$11.7 billion) and the origin of 23% of its imports (US$8.75 billion). Chinese interest is focused on minerals, the largest Peruvian export sector, and therefore the port of Chancay is emerging as the main exit point for these raw materials to China. Return freight will bring Chinese manufactured goods, not only to Peru but also to neighboring countries.

Beijing's interest in Peru's raw materials already led to the signature in 2009 of a free trade agreement between the two countries, which was optimized last year. It is a relationship that has not been complicated by the granting of large loans that the recipient country then finds it difficult to refund: Peru has only received loans from Chinese public lending institutions amounting to US$ 50 million in 2009, which places it at the bottom of the list of recipients of Chinese loans in Latin America.

Cosco acquired 60% of Terminales Portuarios Chancay for US$225 million in the first half of 2019, sharing a partnership with the Peruvian mining company Volcan, which owns the remaining 40%. This is the first port that the large Chinese state-owned shipping company will control in its entirety in the Western Hemisphere, since its presence in the port of Seattle, in the USA, is limited to the operation of a terminal. Cosco has 34 terminals worldwide, 11 of which are outside China (in Spain it has a presence in the ports of Valencia and Bilbao). Other Chinese companies also have terminals in the region, such as at the mouths of the Panama Canal (China is the second largest Username of this inter-oceanic waterway, after the USA), or are involved in port expansion works, such as in Itaqui (Brazil). Beijing has also expressed interest in managing complete ports -the case of La Unión, in El Salvador-, but Chancay is the first project in this sense.

The new port of Chancay, covering almost 1,000 hectares, will include an entrance complex, a subway viaduct tunnel, and an operational port area. This will have a container terminal with two piers, and a bulk, general cargo, and roll-on/roll-off terminal with another two piers. According to the company, the port will have an annual cargo handling capacity of one million TEUs (Twenty-foot Equivalent Unit). It should be added that the port complex will have the capacity to unload Triple E vessels, considered the second largest container ships in the world.

The multi-port is located 75 km north of Lima and will be connected to the center of the country via a highway to Oyón and Ambo, in the Peruvian Andes. This road infrastructure, with a public investment of US$450 million, represents a decentralization effort by the Peruvian government.

The port of Chancay could pose a serious skill to the Callao Port Terminal, managed by DP World Callaobusiness subsidiary of Dubai Ports World), APM Terminals and Transportadora Callao. It is the de facto port of Lima and is the country's main port in terms of traffic and storage capacity, with a port movement in 2018 of 2.3 million TEUs and 56 million tons, representing 51% of the national total.

Cosco Shipping Ports terminals worldwide [Cosco Group].

The Minister of Transport and Communications, María Jara Risco, has announced a plan to double the storage capacity of the port of Callao, but there are questions as to whether this will be enough to compete with the new port of Chancay. President Martin Vizcarra sample convinced that both facilities can work in a complementary way, and that the new infrastructure will allow decongesting truck traffic in the area of the capital.

Chinese investment, in any case, has given rise in some media to talk about "checkbook diplomacy", a concept that refers to the use of investments or loans to establish favorable relations with countries that occupy strategic positions in regions of geopolitical interest. Although an infrastructure such as that of Chancay is highly interesting for the beneficiary country, the latter may be obliged to refund the favor in other ways, perhaps by allowing the exploitation of mineral resources. Apart from that, there are the internal Chinese provisions, which oblige its companies with port terminals in the rest of the world to host the wartime navy if necessary.

China's growing influence in the Western Hemisphere worries the US. Its own Vice President, Mike Pence, warned Latin American countries that these investments represent a potential threat, because at the very least they establish an excessive dependence on trade and credit ties with China, also generating a high trade deficit and high debt. Also, according to Pence, they may negatively affect issues such as environmental care or respect for protected areas. 

In more dramatic terms, the Pentagon has spoken out. In February 2019, Admiral Craig Faller, head of Southern Command, warned that in the future "China could use its control of deepwater ports in the Western Hemisphere to increase its global operational position."

The island faces the most serious economic crisis in the last twenty years: Venezuela's collapse and Trump's pressure highlight Havana's immobility

The end of the USSR, a major subsidizer of the Castro regime, did not lead Havana to the economic and political opening that took place in most of the former communist bloc. After a time of severe hardship in the 1990s, known as the "special peacetime period", Cuba got another savior in Venezuela, thus avoiding the necessary reforms. Today, the Venezuelan collapse and the pressure being exerted by Washington once again highlight Havana's unwillingness to change, as it faces another "special period", less intense, but equally painful for the Cuban people.

▲ Street in the historic center of Havana [Pixabay].

article / Patricia Urdánoz

The Cuban Economics could have Closed 2019 with a growth of barely 0.5% of GDP and could repeat that same poor performance in 2020, agreement to estimates by ECLAC, the UN Economic Commission for Latin America and the Caribbean. These are figures that place the island on the verge of recession, given that there could be a negative quarter. Although the Cuban government places its economic goal for this year at 1%, its bet of 1.5% for 2019 may have been off by up to one percentage point (international organizations, in any case, cannot audit Cuba's accounts); moreover, the elements contributing to the economic performance have worsened.

The growing economic difficulties have generated fears among Cubans about a return to the "special period", as it is known in the 1990's when the dissolution of the USSR left the island without the massive financial aid provided by Moscow. That time of special hardship was overcome with the financial aid that started to arrive from Hugo Chavez's Venezuela in 2002. The Venezuelan collapse was what encouraged Raul Castro to seek salvation through rapprochement with the Obama Administration, but the new restrictive measures of the Trump Administration have left Havana without prospects.

Cubans have begun to suffer shortages of basic products such as medicines and food, and long and endless queues are once again appearing in the Cuban capital. Economics has been stagnant since 2014: although the following year there was a clear upturn, in 2016 there was a contraction, which the Government set at 0.9% of GDP, which meant having fallen into recession for the first time since the "special period", twenty years ago.

Although it is unlikely that Cuba will reach the dramatic figures of much of the 1990s, when the island's Economics contracted by approximately 35%, some estimates, reported by the Wall Street Journal, consider that if Venezuela were to completely cancel its financial aid there could be a contraction of 8% or 10%.

Before the "special period" the island was 82% dependent on the Soviet Union. Venezuela's dependence is comparatively lower and is also decreasing due to the serious crisis in that country. Venezuelan financial aid , basically by sending oil in exchange for the attendance of doctors, sports coaches and other staff, for which Caracas also pays, accounted for 22% of Cuba's GDP in 2013; in 2017 it had fallen to 8.5%.

The economic outlook, in any case, is not good and a worsening in several areas is to be expected for 2020, which will at least prolong the stagnation.

Venezuelan oil, now in Russian hands

Although Venezuelan financial aid has been decreasing, Caracas' contributions continue to be important, so any further erosion of that aid would have an effect on Cuban Economics . The 100,000 barrels of oil per day that Venezuela has been sending to Cuba for many years has recently been reduced to about 60,000 barrels per day. A further reduction is not to be expected, but the control of PDVSA's production that Russia is acquiring leaves the regime of Nicolás Maduro less room for political control over oil.

Fewer physicians abroad

The uncontrolled inflation suffered by Venezuela could force a reduction in the payment that this country provides for the services rendered by Cuban staff on Venezuelan soil. Carmelo Mesa-Lago, an economist specialized in Cuba, points out that Venezuela, which acquires 75% of that Cuban professional service abroad (an important means of access to hard currency), has already reduced its purchases by 23% between 2014 and 2017 and could be forced to make further cuts. Havana, on the other hand, stopped making cash in 2019 with the doctors it had stationed in Brazil and the same will happen in 2020 with those in Bolivia, after political changes in those countries forced their return to the island.

Below the goal of 5 million tourists

The expectations opened in the subject tourism with the increase in travel from the U.S. due to the facilities provided by President Obama have been frustrated by the restrictions again imposed by his successor. In 2018 there was a decrease in the issue of tourists, which was 4.7 million, and this figure fell by 10% in 2019, to 4.3 million. Although the government says it expects an increase in 2020, it has stopped setting a goal of reaching 5 million tourists. The limitation already imposed by Trump in 2018 on US-based cruise travel is followed by the recently announced limitation on direct flights, which could affect the income left by tourism (those who arrive by plane tend to spend more during their stay).

Moderate exports

Export revenues could improve, but neither production nor price looks set to experience a significant increase. Nickel production has been rather stagnant and sugar production is recovering from its all-time low recorded in 2017-2018.

Remittances will continue to flow

The restrictive measures imposed by the Trump Administration on remittances coming to Cuba from the U.S., which are the majority, do not seem to affect their amount, since the established limit remains above the amount of most of the shipments. As indicated in a study by The Havana Consulting Group, the current average remittance amount is between 180 and 220 dollars per transaction, and since 95% of Cubans who send remittances to their relatives on the island do so once a month, the limit of 1,000 dollars per quarter imposed by Washington, which came into force last October, is not reached. In addition, the study specifies that 45% of remittances to Cuba arrive through informal channels. In 2018, Cuba received $3.691 billion, a figure that practically doubles if non-cash remittances are taken into account.

Insufficient foreign investment

Remittances should play an important role in boosting the national Economics , and in fact, since the economic opening of 2010, they have functioned as a source of income similar to foreign investment, since they were behind the start-up of many "self-employed" businesses. Those self-employed businesses reached 535,000 workers in 2016, according to official statistics, but the stagnation in the growth of tourism is putting that private activity in difficulties. The Havana Consulting Group study concludes that "unlike most Latin American countries, the Cuban government does not take advantage of the potential of remittances as a way to attract investment capital to the country." Foreign direct investment, in any case, has been increasing, but the slowness in making attractive the special zone of the port of Mariel and the added difficulties from the US with the implementation in 2019 of the fourth degree scroll of the Helms-Burton Act, which encourages the presentation of lawsuits for the assets expropriated during the Cuban revolution, dampens the investment attractiveness of the island.

DECENTRALIZATION, BUT TIMID OPENING

The problem of inefficiency in the Cuban Economics is largely due to its centralized model , which creates shortages for consumers and great uncertainty for businesses. Along with other burdens that the country has carried since its beginnings, such as corruption, illegalities, low savings, indebtedness and insufficient export revenues. Cuba's foreign debt between 1958 and 2017 multiplied by 190. And there is a difficult situation for the emergence of the private sector.

The island needs new structural economic reforms by the government; it would also be interesting to follow the economic strategies of countries such as Vietnam and China, which have known how to open up to the international market starting from a communist government. For its part, Washington, for its own geopolitical interests, should take care that its pressure measures do not drive the island into the arms of China and Russia.

Raúl Castro's successor as president of the country, Miguel Díaz-Canel, and the prime minister appointed by him, Manuel Marrero, have announced for this year the beginning of a process of economic decentralization that will give greater autonomy to state-owned enterprises. It remains to be seen whether progress will actually be made along these lines and whether this will increase the efficiency of the Cuban Economics , since the reforms promised by Castro have been a very timid opening, not particularly transforming.

Brazilian congress approves ratification of the Technology Safeguards agreement signed by Trump and Bolsonaro

With the reactivation of its Alcantara launch center, the best located in the world due to its proximity to the Equator, the Brazilian space industry expects to reach a business Issue of 10 billion dollars per year from 2040, with control of at least 1% of the world sector, especially in the area of space launches. Jair Bolsonaro's government has agreed to guarantee technological confidentiality to the US, reaching an agreement that Washington had already tried unsuccessfully before the Workers' Party came to power.      

▲ space launch area of the Brazilian Alcântara space center [AEB].

article / Alejandro J. Alfonso [English version].

Brazil wants to be part of the new space era, in which private initiative, especially that of the United States, will play a major role, along with the traditional role of the national agencies of the major powers. With the Technology Safeguardsagreement , signed last March by Presidents Donald Trump and Jair Bolsonaro, the strategic Alcantara base will be able to launch rockets, spacecraft and satellites equipped with U.S. technology.

The guarantee of technological confidentiality - access to certain parts of the base will only be authorized to U.S. staff , although jurisdiction will remain with the Brazilian Air Force - will mean that Alcantara will no longer have to negotiate contracts with only 20% of the world market, as has been the case until now, something that hindered the economic viability of the base. However, the agreement also has a limiting aspect, since it only authorizes Brazil to launch national or foreign rockets and aircraft that contain technological parts developed by the US.

The new political context in Brazil meant that the agreement was ratified without problems on October 22 by the Chamber of Deputies and on November 12 by the Senate, a very different status from that experienced in 2000, when congress blocked a similar agreement promoted by President Fernando Henrique Cardoso. The subsequent arrival of the Workers' Party to power, with the presidencies of Luiz Inácio Lula da Silva and Dilma Rousseff, cooled relations between the two countries and Washington momentarily set aside its interest in Alcântara.

Brazil's space aspirations go back a long way; its aerospace industry is the largest in Latin America. In the 1960s it developed a first launch base, Hell's Barrier, near Natal. In 1994 the military matrix of the research was transformed into the civilian Brazilian Space Agency (AEB). In addition to the development of satellites, in 2004 AEB launched its first rocket. In 2006 a Brazilian astronaut joined the International Space Station, of which Brazil is a partner.

The Alcântara launch center is located in Maranhão, a state in northeastern Brazil. Alcántara is a small colonial town located 100 kilometers from São Luís, the state capital. The town has 22,000 inhabitants and has access to the sea. The launch center was built during the 1980s and has an area of 620 square kilometers. In addition, the launch base is located 2.3 Degrees south of the equator, making it an ideal location for launching satellites into geostationary orbit. The unique geographic conditions of the launch site attract companies interested in launching small to medium-sized satellites, generally used for communications or surveillance satellites. Unfortunately, the facility suffered a bad reputation when operations were briefly halted due to a failed launch in 2003, resulting in the death of 21 technicians and the destruction of some of the facilities. In 2002 the Agency

The United States is interested in Alcantara because of its strategic location. As mentioned above, the launch site is 2.3 Degrees south of the Equator, which allows U.S. rockets to save up to 30% in fuel consumption compared to launches from Cape Canaveral, Florida. Also, due to its proximity to the Equator, the drag to reach orbit is lower than Cape Canaveral, which means that companies can increase the weight of the rocket or the cargo it carries without adding additional fuel. Thus, this location offers U.S. companies the same advantages enjoyed by their European counterparts who use a launch site in French Guiana, located nearby, north of the equator. The Technology Safeguards agreement signed between Presidents Bolsonaro and Trump in March is intended to attract these U.S. companies by assuring them that U.S. companies that do use the Alcantara facility will have the necessary protection and safeguards so that their technology is not stolen or copied by Brazilian operators or engineers.

The Brazilian government is clearly interested in having the Americans use the Alcantara site. The global space industry is worth approximately $300 billion, and Brazil, which still has a space agency in development, could use the funds from leasing the launch site to further develop its space capabilities. The Brazilian Space Agency has been underfunded for many years, so additional revenue is especially convenient for it. In addition, Brazilian officials have speculated that the investment in the launch site will bring more investment to the Alcantara region in general, improving the quality of life in the area. For example, the Kourou base in French Guiana generates 15% of the GDP of that French overseas territory, directly or indirectly employment 9,000 people. In conclusion, the Bolsonaro government hopes that this agreement will deepen the relationship with the USA, and that it will also provide monetary means to invest in the launch site and its surroundings, and to invest in the Brazilian Space Agency.

However, this agreement has also been criticized. In 2000, President Cardoso's government attempted to sign a similar agreement with the George W. Bush administration which was ultimately blocked by the Brazilian congress for fear that Brazil would cede its sovereignty to the US. These same fears are still present today. Former Brazilian Foreign Minister Samuel Pinheiro Guimarães Nieto stated that the US is seeking to establish a military base in Brazil, thus injuring the sovereignty of the Brazilian people. Criticism is also directed at the essay of the agreement itself, which states that the money the Brazilian government earns from the US use of the launch center cannot be invested in rockets of exclusively Brazilian development , but can be invested in other areas related to the Brazilian Space Agency.

In addition to arguments about the integrity of Brazilian sovereignty, there is also a defense of the Quilombolas, descendants of Brazilian slaves who escaped their masters, who were displaced from their coastal lands when the base was built. Currently, the government is proposing to increase the size of the Alcantara launch site by 12,000 hectares, and Quilombo communities fear that they will once again be forced to move, causing them further impoverishment. This has been the subject of discussion in both the Brazilian congress and the U.S.congress , with Democratic House representatives introducing a resolution calling on the Bolsonaro government to respect the rights of the Quilombolas.

The Technology Safeguards agreement is mainly a commercial agreement in order to attract more U.S. companies to Brazil for the Alcantara site, which would save money for these companies due to the ideal location of the launch site, while they would have the opportunity to invest in the Brazilian space program. However, due to the controversies mentioned above, some may consider this as a unilateral agreement where only U.S. interests prevail, while the Brazilian government and people lose sovereignty over a strategic site. However, it should be noted that Brazil has traditionally developed an important aeronautical industry (Embraer, recently bought by Boeing, is an excellent example) and the Alcantara base provides the opportunity for Brazil to leap into the new space age.

For decades, the U.S. closed its doors to Mexican avocados; today it needs them to meet its growing demand.

In 2019, there will be a record of Mexican avocado imports in the United States: almost 90% of the million tons of avocados consumed by Americans will come from the neighboring country, which leads world production. After being banned for decades in the US -alleging phytosanitary issues, mainly invoked by California producers-, the creation of the North American Free Trade Agreement opened the doors of the US market to this Mexican product, first with reservations and since 2007 without restrictions. The arrival of Trump to the presidency marked a drop in imports, but then they have not stopped rising.

▲ Interest in healthy food has increased avocado consumption around the world

article / Silvia Goya

Social trends such as veganism or "real fooding" have increased the world production of avocado, a fruit valued for its healthy fat and vitamin contribution, which is a good complement to a multitude of dishes. In the United States, moreover, the food tradition of millions of Hispanics - the avocado comes from a tree native to Central and South America(Persea americana) - has encouraged the consumption of a product that, like few others, marks the relations between the United States and Mexico.

The US department Agriculture (USDA) forecasts that to meet the growing domestic consumption of avocado (which has increased 5.4 times since 2000, from 226,000 tons to 1.2 million in 2018), in 2019 the country will have to increase its imports significantly, so that they will go from 87% to 93% of the availability product. That will mean an increase in imports from Mexico, which in 2018 already contributed 87% of the avocado from abroad. This need for imports is partly due to production problems recorded in California, the state with the highest production in the US (about 80%), well ahead of the second, Florida, and a great litigator in the past to prevent the skill of Mexican avocados.

Donald Trump's first year in the White House meant a slight decline in Mexican avocado imports, which in 2017 dropped to 774,626 tons. However, in 2018, a new record was reached, with 904,205 tons, up 17%, in a context of non-materialization of the trade threats launched by the Trump Administration, which finally agreed to the renewal of the free trade agreement with Mexico and Canada. Last year, imports from Mexico accounted for 87% of total avocado purchases abroad; the rest, up to 1.04 million tons, corresponded to those from Peru (8%), Chile (2.5%) and Dominican Republic (2.5%).

History of a veto

The B in avocado sales in the US has attracted the attention of drug cartels, which have clashed for control of the business in some Mexican states such as Michoacán - the major producer of avocados, especially the Hass variety, which is the most widely marketed - giving rise to a "new drug trade". However, the history of controversy between the two countries over this berry goes back a long way. It was in 1914 when the then US Secretary of Agriculture signed a quarantine notice declaring the need to prohibit the importation of avocado seeds from Mexico due to a weevil that the seed carried. In 1919 the "Quarantine of nurseries, plants and seeds" was enacted. This regulatory framework was in force for decades.

During the period of the 1970s, the discussion on the entrance of Mexican avocados into the U.S. market remained in the political limelight due to the insistence of Mexican Plant Health Service officials. Investigations in several Mexican avocado-producing states, however, found weevils in some of the seeds, which did not allow a change in the regulatory policy of the Animal and Plant Health Inspection Service (APHIS) of the USDA department Therefore, in 1976 the USDA, in a letter to its Mexican counterpart, stated that it should continue "as in the past, against the issuance of permits for the importation of avocados from Mexico".

Following these events, U.S. policy toward avocados from its neighboring country remained restrictive until trade liberalization and harmonization of sanitary and phytosanitary measures began to change the context in which governments considered plant health problems and imports. For most of the 20th century, the policy of protection had been to deny access to products that might harbor pests; in the last decade, however, the rules began to change.

The creation of the North American Free Trade Agreement (NAFTA) in 1994 and the World Trade Organization in 1995 paved the way for new Mexican requests for access to the U.S. avocado market. Although NAFTA's main goal was the elimination of tariffs by 2004, it also provided for the harmonization of sanitary and phytosanitary measures between trading partners. However, this free trade agreement explicitly recognizes that each country can establish regulations to protect human, animal and plant life and health, so when the risk of pest infestation is high, the country has the legitimacy to place restrictions on trade.

With the implementation of NAFTA in 1994, the U.S. government came under increased pressure to facilitate the importation of agricultural products from Mexico, including avocados. This led to a shift in USDA's phytosanitary policy to a new policy of "mitigation or technological solutions". APHIS is the branch of government charged with implementing the phytosanitary provisions of NAFTA in the case of the US. APHIS considered that fruit flies - present in a wide variety of species - could also be found in Mexican avocados, so Mexican Plant Health Service officials had the difficult task of proving that the insect was not present in their avocados and that those of the Hass variety were not susceptible to Mexican fruit fly attack. Between 1992 and 1994, Mexico submitted two work plans with their respective research. The first was rejected while the second, despite pressure from the California Avocado Commission (CAC), was accepted.

This second plan called for access of Mexican avocados to 19 of the 50 U.S. states during the months of October through February. In late June 1995, the USDA issued a proposal rule outlining the conditions under which Hass avocados grown on approved plantations in Michoacán could enter the United States. It was in late 1997 that the USDA issued a final rule authorizing the importation of such avocados into the US. This was the first time that the USDA used the so-called "systemsapproach " to manage the risks posed by quarantine pests.

At the conclusion of the second shipping season in February 1999, Mexico requested an expansion of the program to increase the issue of U.S. states to which it could export and allow the shipping season to begin one month earlier (September) and end one month later (March). In 2001, the USDA met with the Mexican Plant Health Service and agreed to consider expanding the importing states to 31 and the import dates from October 15 to April 15. The good relationship established between Presidents George W. Bush and Vicente Fox had a clear influence on this expansionary movement.

Imports in tons. In 2018, imports of 1.04 million tons (87% from Mexico)source: USDA].

Liberalization

For five years Mexican avocados had been shipped to the U.S. without detecting a single pest. Although the expansion of Mexican avocado imports seemed inevitable, the CAC filed a lawsuit against the USDA from California, alleging that Mexican avocados did have pests. In response, the USDA conducted an research and published a draft "pest riskassessment " in 2003 confirming that Mexican avocados did not carry the fruit fly.

The USDA had shifted from its previous position of domestic protection to a new position that benefited importation. Thus, in 2004 the USDA issued a new rule to expand the import program to all 50 states for 12 months of the year. This rule provided for California, Florida and Hawaii to delay the importation of avocados for up to one year in order to test the effectiveness of the proposed regulations. Therefore, it was not until January 2007 that Mexico was allowed to export avocados to California and Florida; since then it has been allowed to export to all states year-round, thus quickly making the US the world's largest importer of Mexican avocados.

Until 2017, the import of Mexican avocados remained stable; however, as previously indicated, with Trump's arrival to the White House, US-Mexico relations again faltered around various issues, one of them being the export of food from Mexico to the US, with avocados as an emblematic case. The new US president threatened a 20% tariff on Mexican avocados to finance the wall he intended to build on the border.

In June 2018 Trump again threatened to place a 25% tariff on avocados and later in May 2019 threatened to impose a 5% tariff on all goods from Mexico.

In March 2019, when the migratory wave occurred, the US president threatened to close the border with Mexico and consecutively withdrew his decision, however, the mere fact that Trump threatened to close the border already escalated the price of avocado by 34%.

U.S.-Mexico avocado relations remain unstable. Although much progress has been made since the implementation of NAFTA, various interests are still at stake that could lead the US to reduce imports of Mexican avocados. Avocados can hardly escape the uncertainty of the U.S.-Mexico relationship.

With its megacity and technology zone project , the Saudis are seeking to consolidate an economic alternative to oil.

NEOM, an acronym for New Future, is the name of the new city and economic-technological area , with an area three times the size of Cyprus, that Saudi Arabia is promoting in the northwest of the country, opposite the Sinai Peninsula. In addition to seeking alternatives to oil, with NEOM the Saudis intend to rival the urban innovations of Dubai, Abu Dhabi and Doha. The project also involves shifting Saudi interest from the Persian Gulf to the Red Sea and closer ties with Egypt, Jordan and Israel.

Aspect of the future NEOM megacity, agreement to the vision of its promoters [NEOM Project].

article / Sebastián Bruzzone Martínez

Middle Eastern states are seeking to diversify their revenues and avoid possible collapse of their economies in order to counteract the end-of-oil crisis expected in the middle of the 21st century. The sectors favored by the Arabs are renewable energy, luxury tourism, modern infrastructure and technology. The region's governments have found ways to unify these four sectors, and Saudi Arabia, together with the United Arab Emirates, seems to want to be at the forefront of the Arab technology degree program

While the world looks to Sillicon Valley in California, Shenzhen in China or Bangalore in India, the Saudi government has begun preparations for the creation of its first independent economic and technological zone: NEOM (short for the Arabic term Neo-Mustaqbal, New Future). The project was headed until recently by Klaus Kleinfeld, former CEO of Siemens AG, who has been replaced by Nadhmi Al Nasr as CEO of NEOM, following his appointment as an advisor to the Saudi Crown.

On October 24, 2017, at the Future Investment Initiative lecture held in Riyadh, Saudi Crown Prince Mohammed bin Salman announced this $500 billionproject , part of the Saudi Vision 2030 political program. The territory where NEOM will be located is in the border area between Saudi Arabia, Egypt and Jordan, on the shores of the Red Sea, through which almost ten percent of world trade flows, with a temperature 10ºC lower than the average of the rest of the countries of the Gulf Cooperation committee , and located less than eight hours' flight from 70% of the world's population, so it could become a major passenger transport hub.

As announced by the Saudi government, NEOM will be a special economic city, with its own civil and tax laws and Western social customs, of 26,500 square kilometers (the size of Cyprus multiplied by three). The main objectives are to attract foreign investment from multinational companies, diversify the oil-dependent Saudi Economics , create a free market space and home to millionaires, "a land for free and stress-free people; a start-up the size of a country: a blank sheet of paper on which to write the new era of human progress," says a promotional video of the project. All this under the slogan: "The world's most ambitious project: an entire new land, purpose-built for a new way of living". According to the project's website and official accounts, the 16 sectors of energy, mobility, water, biotechnology, food, manufacturing, communication, entertainment and fashion, technology, tourism, sports, services, health and wellness, Education, and livability will generate 100 billion dollars a year.

Thanks to a report published by The Wall Street Journal and prepared by the consulting firms Oliver Wyman, Boston Consulting Group and McKinsey & Co., which, according to them, had access to more than 2,300 confidential planning documents, some of the ambitions and luxuries of the futuristic city have come to light. Among them are flying cars, holograms, a Jurassic Park-style theme park of robot dinosaurs and Genetics edition, never-before-seen technologies and infrastructure, luxury hotels, resorts and restaurants, mechanisms that create clouds to cause rainfall in arid areas, beaches with glow-in-the-dark sand, and even an artificial moon.

Another goal of the project is to make NEOM the safest city on the planet, through state-of-the-art surveillance systems that include drones, automated cameras, facial and biometric recognition machines and an AI capable of reporting crimes without the need for citizens to report them. Similarly, the leaders of the urban initiative themselves predict that the city will be an ecological center of great projection, basing its power supply system solely on solar and wind energy obtained from panels and windmills, as they have a whole desert to install them.

For the moment, NEOM is only a project that is in the initiation phase. The territory where the big city will be located is a desert terrain, mountains up to 2,500 meters high and 468 kilometers of virgin coastline of turquoise blue water, with a palace and a small airport. NEOM is being built from scratch, with an initial outlay of $9 billion from the Saudi sovereign wealth fund Saudi Arabia Monetary Authority (SAMA). Apart from foreign business investment, the Saudi government is looking for workers from all professional sectors to help in their respective fields: jurists to draw up a civil, criminal and tax code; engineers and architects to design a modern, efficient and technological infrastructure and energy plan; diplomats to collaborate in its promotion and cultural coexistence; scientists and doctors to encourage clinical and biotechnological research and welfare; academics to boost Education; economists to make income and expenditure profitable; personalities specializing in tourism, fashion and telecommunications... But, above all, people and families to inhabit and bring life to the city.

As reported by the Arab newspaper Rai Al Youm, Mohammed bin Salman has submitted C proposal drawn up by a Saudi legal committee together with the United Kingdom, which consists in providing a VIP document that will offer special visas, residency program rights to investors, senior officials and workers of the future city. Contracts have already been awarded to the US engineering business Aecom and construction contracts to the English Arup Group, the Canadian WSP and the Dutch Fugro NV.

However, not everything is as ideal and simple as it seems. Despite the great interest of 400 foreign companies in the project, according to the local government, there is uncertainty about its profitability. The problems and scandals related to the Saudi crown, such as the imprisonment of family members and dissidents, corruption, unequal rights, the military intervention in Yemen, the case of the murder of journalist Khashoggi and the possible political crisis following the future death of King Salman bin Abdulaziz, Mohammed's father, have caused investors to tread carefully. In addition, in the region where the city is to be built, there are villages of locals who would be relocated and "compensated and supported by social programs", according to the Saudi government, which will be the subject of reproach by human rights groups.

In conclusion, NEOM is a unique project on a par with the Arab sheikhs themselves, who have adopted a far-sighted economic vision. It is expected that by 2030 it will be possible to live in the city, even if construction is still underway and not completely finished. According to the markets, the project, still far from completion, seems to be on track. It already has a €20 billion structural financing commitment with BlackStone, and a €45 billion technology financing commitment with SoftBank. Since such a project has never been seen before and therefore there are no references, it is difficult to determine whether the visionary plan will be successfully consolidated or whether it will remain just smoke and mirrors and huge losses of money.

essay / Jairo Císcar Ruiz [English version].

In recent months, the open trade hostilities between the United States of America and the People's Republic of China have dominated the main general headlines and specialized economic publications around the world. The so-called "trade war" between these two superpowers is nothing more than the successive escalation of the imposition of tariffs and special levies on original products and manufactured goods from the countries in confrontation. This, in economic figures, means that the US imposed in 2018 special tariffs on US$250 billion of imported Chinese products (out of a total of US$539 billion), while China for its part imposed tariffs on 110 out of US$120 billion of US import products [1]. These tariffs meant an increase of US$3 billion in additional taxes for American consumers and businesses. This analysis is therefore intended to explain and show the position and future of the European Union in this trade war in a general way.

This small reminder of the figures illustrates the magnitude of the challenge to global Economics posed by this clash between the world's two economic locomotives. It is not China that is paying the tariffs, as Trump literally said on May 9 during a meeting with journalists [2], but the reality is much more complex, and, evidently, as in the case of the inclusion of Huawei in the trade blacklist (and therefore the prohibition to purchase any item on US soil, whether hardware or software, without a prior agreement with the Administration), which may affect more than 1.200 American companies and hundreds of millions of customers globally, according to the BBC [3], the economic war may soon start to be a great burden for Economics globally. On June 2, Pierre Moscovici, European Commissioner for Economic Affairs, predicted that if the confrontation continues, both China and the USA could lose between 5 and 6 tenths of GDP, stressing in particular that "protectionism is the main threat to world growth" [4].

As can be inferred from Moscovici's words, the trade war is not only of concern to the countries directly involved in it, but is closely followed by other actors in international politics, especially the European Union.The European Union is the largest Single Market in the world, this being one of the premises and fundamental pillars of the EU's very existence. But it is no longer focused on internal trade, but is one of the major trading powers for exports and imports, being one of the main voices advocating healthy trade relations that are of mutual benefit to the different economic actors at global and regional level. This openness to business means that 30% of the EU's GDP comes from foreign trade and makes it the main player when it comes to doing import and export business. To illustrate briefly, agreement to data from the European Commission [5] in the last year (May 2018-April 2019), the EU made imports worth €2,022 billion (a growth of 7%) and exported 4% more, with a total of €1,987 billion. The trade balance is therefore a negative balance of €35 billion, which, due to the large import/export Issue and the nominal GDP of the EU (taking the figure of 18.8 trillion euros) is only 0.18% of the EU's total GDP. The USA was the main place of export from the EU, while China was the first place of import. These data are revealing and interesting: an important part of EU Economics depends on business with these two countries and a bad performance of their Economics could weigh down the EU member countries' own.

Another figure that illustrates the importance of the EU in subject of trade is that of Foreign Direct Investment (FDI). In 2018, 52% of global FDI came from countries within the European Union and the EU received 38.5% of total investment worldwide, leading in both indicators. Therefore, it can be said that the current trade war can pose a serious problem for the future European Economics , but, as we will see below, the Union can emerge strengthened and even benefit from this status if it manages to mediate well between the difficulties, businesses and strategies of the two countries. But let us first look at the EU's relations with both the US and China.

The US-EU relationship has traditionally been (albeit with ups and downs) the strongest in the international sphere. The United States is the European Union's main ally in defense, politics, Economics and diplomacy, and vice versa. They share the economic, political and cultural model , as well as the main world collective defense organization, NATO. However, in the so-called transatlantic relationship, there have always been clashes, accentuated in the recent times of the Obama Administration and usual with Trump. With the current Administration, not only have there been reproaches to the EU within NATO (regarding the failure of member countries to invest the required budget ; shared criticism with the United Kingdom), but a full-fledged tariff war has begun.

In barely two years we have gone from the TTIP (Transatlantic Trade and Investment Partnership) negotiations, the announced basis for trade in the 21st century that finally failed in the final stages of Obama's term in the White House, to the current status extreme protectionism of the USA and the EU's response. Particularly illustrative is the succession of events that have taken place in the last year: at the stroke of Twitter, in March 2018 the US unilaterally imposed global tariffs on steel (25%) and aluminum (10%) to protect American industry [6]. These tariffs did not only affect China, they also inflicted great damage on companies in European countries such as Germany. Tariffs of 25% on European vehicles were also in the air. After a harsh climate of mutual reproaches, on July 25, Jean Claude Juncker, President of the European Commission, announced with Trump an agreement to lower tariffs on agricultural products and services, and the US committed itself to review the imposition of metallurgical tariffs on the EU, as well as to support within the World Trade Organization the European calls for a reform of Intellectual Property laws, which China does not respect [7]. However, after the reiteration of the transatlantic friendship and Trump's advertisement of "we are moving towards zero tariffs" [8], soon the clattering of the cash registers began again. In April of this year, on April 9, Trump announced on Twitter the imposition of tariffs on the EU worth US$11 billion for the EU's support to Airbusskill of the American companies Boeing, Lockheed Martin...), blowing up the principle of agreement of July last year. The EU, for its part, threatened to impose tariffs of €19 billion for US state support to Boeing. As can be seen, the EU, despite its traditional conciliatory role and often subjugated to the US, has decided to fight back and not to allow any more outbursts of tone from the American side. The latest threat, in mid-July, is against French wine (and due to the European mechanism, against all wines of European origin, including Spanish wines). This threat has been described as "ridiculous" [9], since the USA consumes more wine than it produces (it is the world's largest consumer) and therefore the available supply could be considerably reduced.

It is still too early to see the real impact that the trade war is having on the US, beyond the 7.4% drop in US exports to China [10] and the damage that consumers are suffering, but the Nobel Prize winner in Economics Robert Schiller, in an interview for CNBC [11] and the president of the World Trade Organization, Roberto Azevedo, for the BBC, have already expressed their fears that if the status and protectionist policies continue as they are, we could be facing the biggest economic crisis since the end of World War II. It is difficult to elucidate what the future relationship between Europe and its main export partner , the US, will be like. All indications are that friction and escalation will continue if the US Administration does not decide to tone down its rhetoric and actions against free trade with Europe. Finally, it must be clear (and with the intention of lowering the sometimes excessively alarmist tone of the news) that between the threats (either by Twitter or spokespersons) from both sides and the actual imposition of tariffs (in the US after the relevant advertisement from the Office of the US Trade Representative; in the EU through the approval of the 28) there is a long way to go, and we must not confuse potential acts and facts. It is clear that despite the harsh tone, the negotiating teams on both sides of the Atlantic are still in contact and are trying to avoid as far as possible actions detrimental to both sides.

On the other hand, the relationship between China and Europe is frankly different from the one with the US. The Belt and Road Initiative (BRI) (which Italy has formally joined) confirms China's bid to be the next leader in global Economics . Through this initiative, President Xi Jinping aims to redistribute and speed up trade flows to and from China by land and sea. To this end, the stability of South Asian countries such as Pakistan and Afghanistan is vital, as is the ability to control vital maritime traffic points such as the Strait of Malacca and the South China Sea. The Asian "dragon" has an internal status that favors its growth (6.6% of its GDP in 2018 which, being the worst figure for 30 years, is still an overwhelming figure), as the relative efficiency of its authoritarian system and, especially, the great support of the State to companies boost its growth, as well as possessing the largest foreign currency reserves, especially dollars and euros, which allow a great stability of the country's Economics . The Chinese currency, the Renminbi, has been declared a world reservation currency by the IMF, which is another indicator of the good health that the Chinese Economics is expected to enjoy in the future.

For the EU, China is a competitor, but also a strategic partner and a negotiating partner [12]. China is the EU's main import partner , accounting for 20.2% of imports (€395 billion) and 10.5% of exports (€210 billion). The Issue of imports is such that, although the vast majority reach the European continent by sea, there is a railway connection that, under the BRI, links the entire Eurasian continent, from China's manufacturing capital, Yiwu, and the last stop at the southern tip of Europe, Madrid. Although some of the imports are still so-called "low-end" goods, i.e. products of basic manufacture and cheap unit price, since China's entrance the WTO in December 2001, the concept of material produced in China has changed radically: the great abundance of rare earths in Chinese territory, together with the progress in its industrialization and investment in new technologies (in which China is a leader) have meant that China is no longer thought of only as a mass producer of bazaars; on the contrary, the majority of EU imports from China were machinery and high-end, high-tech products (especially telecommunications and data processing equipment).

In the aforementioned press statement of the European Commission, China is warned to comply with the commitments made in the Kyoto Protocols and Paris Agreements regarding greenhouse gas emissions; and urges the Asian country to respect the dictates of the WTO, especially with subject to technology transfer, state subsidies and illegal practices such as dumping.

These aspects are vital for economic relations with China. At a time when most countries in the world signed or are part of the Paris Agreements for the reduction of greenhouse gas emissions, while the EU is making efforts to reduce its pollution (closing coal plants and mines; putting special taxes on energy obtained from non-renewable sources...), China, which totals 30% of global emissions, increased in 2018 by 3% its emissions. This, beyond the harmful effects for the climate, has industrial and economic benefits: while in Europe industries are narrowing their profit margins due to the rise in energy prices; China, which is fueled by coal, provides cheaper energy to its companies, which, without active restrictions, can produce more. An example of how the climate affects economic relations with China is the recent advertisement [13] by AcerlorMittal to reduce its total steel production in Europe by 3 million tons (out of 44 million tons of usual production) due to high electricity costs and increased imports from countries outside the EU (especially China) which, with overproduction, are lowering world prices. This internship, which is especially used in China, consists of flooding the market with an overproduction of a certain product (this overproduction is paid for with government subsidies) to lower prices. As of December 2018, in the last 3 years, the EU has had to impose more than 116 sanctions and anti-dumping measures against Chinese products [14]. Which sample that, despite the EU's attempts to negotiate on mutually satisfactory terms, China does not comply with the stipulations of the agreements with the EU and the WTO. Particularly thorny is the problem with government-controlled companies (a ban on 5G networks in Europe, controlled by Chinese providers, is being considered for security reasons), which have a virtual monopoly inside the country; and above all, the distorted reading of legality by the Chinese authorities, who try to use all possible mechanisms in their favor, making it difficult or hindering direct investment of foreign capital in their country, as well as imposing requirements (the need to have Chinese partners, etc.) that hinder the international expansion of small and medium-sized companies. However,

The biggest friction with the EU, however, is the forced transfer of technology to the government, especially by companies of strategic products such as hydrocarbons, pharmaceuticals and the automotive industry [15], imposed by laws and conditio sine qua non companies cannot land in the country. This creates a climate of unfair skill and direct attack on international trade laws. The direct investment of Chinese capital in critical industries and producers in the EU has caused voices to be raised calling for greater control and even vetoes on these investments in certain areas for Defense and Security issues. The lack of protection of intellectual rights or patents are also important points of complaint by the EU, which aims to create through diplomacy and international organizations a favorable climate for the promotion of equal trade relations between the two countries, as reflected in the various European guidelines and plans on topic.

As we have seen, the trade war is not only limited to the US and China, but third parties are suffering from it and even actively participating in it. The question arises here: can the EU benefit in any way and avoid a new crisis? Despite the pessimistic mood, the EU can derive multiple benefits from this trade war if it manages to maneuver properly and avoid as far as possible further tariffs against its products and keeps the market open. If the trade war continues and the positions of the US and China harden, the EU, as a major partner of both, could benefit from a redistribution of trade flows. Thus, to avoid the loss due to tariffs, both China and the US could sell heavily taxed products to the European market, but especially import products from Europe. If an agreement is reached with the US to lift or minimize tariffs, the EU would find itself facing a huge market niche left by Chinese products vetoed or taxed in the US. The same in China, especially in the automotive sector, from which the EU could benefit by selling to the Chinese market. Alicia Garcia-Herrero, of the Belgian think tank Bruegel, states that the benefit for Europe will only be possible if it does not lean towards any of the contenders and remains economically neutral [16]. It also stresses, like the European Commission, that China must adopt measures to guarantee its reciprocity and market access, since the European Union still has a greater business and investment Issue with the USA, so that the Chinese offer should be highly attractive for European producers to consider directing products to China instead of the USA. The UN itself estimates at US$70 billion the benefits that could be absorbed by the EU thanks to the trade war [17]. Definitely, if the right measures are taken and the 28 draw up an adequate road map, the EU could benefit from this war, without forgetting that, as the EU itself advocates, coercive measures are not the solution to the trade problem, and hopes that, due to their ineffectiveness and damage caused to both consumers and producers, the tariff war will come to an end and, if differences persist, they will be resolved in the WTO Appellate Body or in the Permanent Court of Arbitration of the United Nations.

This trade war is a highly complex and nuanced topic ; this analysis has attempted to address many of the aspects, data and problems faced by the European Union in this trade war. It has been generally analyzed what the trade war consists of, as well as the relations between the EU, China and the USA. We are facing a gray future, with the possibility of multiple and quick turns (especially on the part of the US, as seen after the G20 summit in Osaka, after which it has allowed the sale of components to Huawei, but has not removed the company from its blacklist) and from which, if the requirements and conditions set out above are met, the EU will definitely benefit, not only economically, but if it remains united and making a common front, it will be an example of negotiation and economic freedom for the whole world.

REFERENCES

Thomas, D. (14-5-2019) Who loses in the China-US trade war. BBC. Retrieved from.

Blake, A. (9-5-2019) Trump's rambling, disappointing Q&A with reporters, annotated. The Washington Post. Retrieved from.

3. Huawei: US blacklist will harm billions of consumers (29-5-2019) BBC. Retrieved from

4. EU warns China and the US: a trade war would subtract 0.6 points of GDP(3-6-2019) El Confidencial. Retrieved from

5. European Union Trade Statistics. (18-6-2019) European Commission.Retrieved from: http://ec.europa.eu/trade/policy/eu-position-in-world-trade/statistics/

6. Pozzi, S. (2-3-2018) Trump reaffirms protectionism by raising tariffs on imported steel and aluminum. El País (New York correspondent)Retrieved from.

7. Inchaurraga, I. G. (2013). China and GATT (1986-1994): Causes and consequences of the failure of a negotiation. Cizur Menor, Navarra: Aranzadi. pp. 204-230.

8. Tejero, M. (25-7-2018) EU-USagreement : "zero tariffs" on industrial goods; more soybeans and liquefied gas. El Confidencial. Retrieved from

9. Pardo,P. & Villaécija, R. (17-6-2019) Trump threatens Spanish wine. El Mundo. Retrieved from.

10. A quick guide to US-China Trade War (14-5-2019) BBC. Retrieved from

11. Rosenfeld, E. & Soong, M. (25-3-2018) Nobel-winner Robert Shiller warns of an 'economic crisis' from trade war threats. CNBC. Retrieved from.

12. EU reviews relations with China and proposes 10 actions(12-3-2019) European Commission- Press statement .

13. Asturias takes 23% of Arcelor's new EU production cut(6-5-2019) 5 Días Retrieved from.

14. Morales, R. (26-12-2018) EU increased 28.3% its antidumping measures in 3 years: WTO. El Economista Mexico. Retrieved from

15. Warning about forced technology transfer to Chinese government.(20-5-2019) Infobae. Retrieved from

16. García-Herrero, A.; Guardans, I. & Hamilton, C. (28-6-2018) Trade War Trinity: analysis of global consequences. Bruegellecture). Retrieved from.

17. European Union, the big beneficiary of the trade war between China and the U.S.(4-2-2019) UN News . Retrieved from

The positive consequences of the free trade agreement will derive more from the end of uncertainty than from the new provisions introduced.

After a year and a half of negotiations, the new Treaty between the United States, Canada and Mexico (this country has named it T-MEC, the other two speak of USMCA) is still pending approval by the legislative chambers of each country. In Washington, the political discussion should begin shortly; it will be important what effects are foreseen for the US Economics and that of its two neighbors. The first programs of study disagree on some aspects, although they agree that the changes introduced in the renegotiation of the agreement that existed since 1994 will not have a special impact.

▲ signature of the free trade agreement between the U.S., Mexico and Canada, in the framework the G-20, in November 2018 [Shealah Craighead-White House].

article / Ramón Barba

The renegotiation of the formerly North American Free Trade Agreement (NAFTA), now known as the Treaty of the United States, Mexico and Canada (T-MEC or, in its English version, USMCA), has been one of the main points in the Trump Administration's diary . C by the three negotiating parties at the end of 2018, the treaty is now pending ratification by the legislative chambers of each country.

Put in place in 1994, the agreement had been described by Trump as "the worst trade agreement in history". Since the beginning of his presidency, Trump has proposed to modify some aspects of the agreement to reduce the large trade deficit with Mexico (about $80 billion, twice the deficit that the US has with Canada), and at the same time to refund activity and jobs to the US Rust Belt, where the echo of his promises had been decisive for his electoral victory.

What has each country gained and lost in the renegotiation of the treaty? And, above all, what effects will it have on the Economics of each country? Will the United States improve its trade balance? Will Mexico or Canada be negatively affected by some of the modifications introduced? We will first examine how the claims of each of the partners were left at the end of the negotiations, and then we will look at the possible economic effect of the new version of the treaty in the light of two recent programs of study, one by an independent body of the U.S. Administration and the other by the IMF.

Tug of war

In the negotiations, which dragged on for almost a year and a half, Mexico and Canada managed to "maintain the status quo in many important areas", but while the actual changes were modest, as analyzed by the Brookings Institution, they "went almost uniformly in the direction of what the United States wanted". "Trump's aggressive and threatening approach ," which he challenged with breaking the treaty for good, "succeeded in obtaining modest concessions from his partners."

On the core topic of the automotive industry, the US managed to increase from 62.5% to 75% the proportion of car production that must be made within the free trade area , to force 30% of the work needed to manufacture a car to have a wage of $16/hour (40% as of 2023) -a measure aimed at appeasing US unions, since in Mexico the average wage of an automotive worker is currently $4/hour-, and to set a tariff of 25% for cars coming from abroad.

Mexico and Canada were satisfied in their demand that an autonomous termination clause not be introduced after five years if there was no prior consensus on the renewal of the agreement, which had been put on the table by Washington. In the end, the T-MEC will last for 16 years, renewable, with a review in the sixth year.

Justin Trudeau's government had to make some concessions to the U.S. dairy sector, but preserved what had been its main red line from the beginning: the validity of Chapter 19, concerning the settlement of disputes through independent binational arbitration.

Mexico, for its part, gained the peace of mind that comes with the survival of the agreement, avoiding future uncertainty and guaranteeing close trade relations with the large U.S. market. However, the labor conditions of Mexican workers can be a double-edged sword for the Aztec Economics , since on the one hand it can favor an improvement in the standard of living and encourage consumption, but on the other hand it can affect the location of companies due to less competitive salaries.

Regardless of these changes in one direction or the other, the treaty update was necessary after 25 years of an agreement that was signed before the Internet revolution and the digital Economics that it brought. On the other hand, the change of name of the treaty was a "trick" devised by Trump to sell to his electorate the renewal of an agreement whose previous name was associated with criticisms made over the last two decades.

The discussion on the text will take place in the fall in the US congress , where Democrats will insist on reinforcing guarantees that Mexico will implement the committed labor measures. Before the vote the US will have to apply an exemption to Canada and Mexico from the steel and aluminum tariffs that the Trump Administration has imposed internationally.

Economic effect

The United States International Trade Commission (USITC), an independent body that has the status of a government agency, considers that the T-MEC will have a limited but positive impact on the US Economics . Thus, in a report published in April, it estimates that the entrance into force of the reformulated agreement will increase US production by 0.35%, with an increase in employment of 0.12%, figures somewhat lower than those forecast when NAFTA came into force in 1994, when the US expected a 0.5% increase in its Economics and a 1% rise in employment.

In any case, this timid impact would not be so much due to the content of the agreed text, but to its mere existence, since it eliminates uncertainties about US trade relations with its two neighbors.

The report believes that the T-MEC will lead to an increase in the production of automotive accessories in the U.S., boosting employment in that country, but causing a rise in the price of products and, therefore, negatively affecting exports. The report also predicts that maintaining the current arbitration system, as demanded by Mexico and Canada, will discourage US investments in the Mexican market and boost them in the US.

These conclusions do not coincide with the International Monetary Fund's assessment, although both bodies agreement in ruling out major effects of the agreement. Thus, an IMF study published in March believes that, at the aggregate level, the effects of the new wording "are relatively small". The new provisions "could lead to less economic integration of North America, reducing trade among the three North American partners by more than $4 billion (0.4%), while giving their members a combined gain of $538 million". He adds that the effects on real GDP of the free trade area are "negligible," and qualifies that many of the benefits "would come from trade facilitation measures that modernize and integrate customs procedures to further reduce trade costs and border inefficiencies."

The result the study sample that the more demanding rules of origin in the automotive sector and labor value content requirements, issues that especially concern the US-Mexico relationship, "would not achieve their desired consequences". According to the IMF, "the new rules lead to a decline in vehicle and parts production in the three North American countries, with shifts toward increased sourcing of vehicles and parts from outside the region. Consumers will find higher vehicle prices and will respond with lower quantity demand".

As for Canada's dairy market, an issue of particular relevance in the US-Canada trade relationship, the effects of increased US access "would be very small and macroeconomically insignificant".

This disparity in forecasts between the USITC and the IMF is due to the fact that several variables are undetermined, such as the future of the Trans-Pacific agreement , in which Canada and Mexico are involved, or the ongoing trade discussions between the US and China. A sample in which the ground is especially shaky is the fact that in January and February 2019, Mexico became the first trading partner of the USA (an exchange of 97.4 billion dollars), ahead of Canada (92.4 billion) and China (90.4 billion). That raised the US trade deficit with Mexico by $3 billion, just in the opposite direction of the Trump Administration's pretensions.

Beijing accelerates its change of economic strategy as Germany tries to reinvent itself as a manufacturing powerhouse with its 'Industry 4.0'.

From being the big factory of the lowest products in the global price chain to becoming a manufacturing powerhouse appreciated for the added value that China can bring to its production. The 'Made in China 2025' plan is underway with the purpose of bringing about change in a few decades. The Chinese push aims to be countered by Germany with its 'Industry 4.0', to preserve the international recognition of what is produced by German industry.

▲ Huawei booth at Mobile World Congress 2017 [Huawei].

article / Jimena Puga

"Made in China 2025" is a political-economic plan presented by Chinese Premier Li Keqiang in May 2015. The main goal of this initiative is to grow China's industry, while encouraging industrial development in China's poorest inland areas, such as Qinghai, Sinkiang and Tibet provinces. One of the goals is to increase the domestic content of basic materials to 40% by 2020 and 70% by 2025.

But what does the People's Republic want to achieve with this initiative? As Mu Rongping, director general of the Innovation and development Center of the Chinese Academy of Science, announced, "I do not believe that the Made in China 2025 plan and other industry-related plans pose a threat to global Economics and innovation. These industrial policies stem from traditional Chinese culture. In China, whenever we establish a new political or economic measure, we always have high expectations. So if we get only half of it, we will be satisfied. This point of view has led China to change and to some extent, to innovation.

Chinese economic development

In 1978 Deng Xiaoping came to power and changed all Maoist Structures . Thus, from an economic perspective, law has become a decisive element in resolving conflicts and maintaining social order in China. Deng tried to establish a socialist system, but with "Chinese characteristics". This justified a free market Economics and, consequently, the obligation to develop new rules and Structures. In addition, the president introduced the concept of democracy as a necessary instrument for the new socialist China. The most important legal reform was the possibility to set up private businesses. In 1992 the expression of a "socialist marketEconomics " was adopted, a label to hide real capitalism (1).

The current president of the People's Republic, Xi Jinping, has said he is against economic protectionism and in favor of balancing globalization to "make it more inclusive and equitable". He also added an increase in the study of current capitalism and the development of socialism with Chinese characteristics proper to the country, since if the party were to abandon Marxism it would lose "its soul and direction", in addition to describing it as "irreplaceable for understanding and transforming the world".

Made in China 2025 and Industry 4.0 plan

Over the past decade, China has emerged as one of the most significant manufacturing miracles in history since the Industrial Revolution began in Britain in the 18th century. By the end of 2012, China became a global leader in manufacturing operations and the world's second largest economic powerhouse over Germany. The Made in China paradigm has been evidenced by products made in China, from high-tech products such as computers or cell phones to consumer goods such as air conditioners. The Center Empire's goal is to extend this plan to three phases. In the first, from 2015 to 2025, China aims to be on the list of global manufacturing powers. In the second, from 2026 to 2035, China plans to position itself in the middle tier in terms of global manufacturing power. And finally, in the third phase, from 2036 to 2049, when the People's Republic will celebrate its 100th anniversary, China wants to become the world's leading manufacturing country.

In 2013, Germany, a world-leading country in terms of industrialization, published its Industry 4.0 strategic plan. Known for its prestigious brands such as Volkswagen or BMW, the country's leading industries have emphasized their innovative strength that allows them to reinvent themselves again and again. The Industry 4.0 plan is another example of the German country's manufacturing strategy to compete in a new industrial revolution based on industrial integration, the integration of industrial information, the Internet and artificial intelligence. Germany is known worldwide for the design and quality of its products. The Industry 4.0 plan, presented in 2013 by the German government, focuses on the smart factory, i.e. making the factories of the future more sustainable and intelligent; on cyber-physical systems, which integrate advanced technologies such as automotive, data exchange in manufacturing technology and 3D printing; and on goods and people.

Both Industry 4.0 and Made in China 2025 focus on the new industrial revolution and employ elements of manufacturing digitalization. The core of the German plan is the cyber-physical system, i.e. a mechanism controlled or monitored by algorithms closely linked to the Internet and its users, and integration into dynamic value creation mechanisms. The Chinese plan, in addition to the "Internet Plus Industry" action plan, has a special goal on consolidating existing industries, promoting diversity and expanding the scope of many industries, enhancing regional cooperation through the use of the Internet for borderless manufacturing, new product innovation and product quality improvement.

By 2020, the United States will be the most competitive manufacturing country in the world, followed by China, Germany, Japan, India, South Korea, Mexico, Taiwan, Canada and Singapore. Of these ten countries, six are Asian countries, one is European and the remaining three are members of NAFTA (North American Free Trade Agreement).

This new shift in industrial strategy translates into the world's anticipation of a fourth industrial revolution driven by technological advances. China will undoubtedly be one of the international leaders of this revolution thanks to the Made in China 2025 and One Belt One Road plans, however, new emerging economies such as South Africa, Vietnam or Hungary that have contributed to global Economics in recent years will require more attention.

(1) Vid. ARANZADI, Iñigo González Inchaurraga, Derecho Chino, 2015, p. 197 et seq.

REPORT / Jokin de Carlos Sola

Simplicity is the best word to describe this Baltic country. Its flag represents the main landscape of the country; a white land covered in snow, a black forest, and a blue light sky. And so is its economy, politics and taxation. What a minimalistic artwork is Estonia.

Estonia is the smallest of the three Baltic countries, with the smallest population and a quite big border with Russia, concretely 294 km long. Even so, Estonia has a bigger GDP per capita (17,727.5 USD in 2016 according to World Bank) than the other two Baltic states: Latvia and Lithuania. It has a bigger presence in the markets and a bigger quality of life according to the OECD in a study done it in 2017.

Technology is a very important part of Estonia's economy. According to the World Bank, 15% of Estonia's GDP are high tech industries. Following the example of Finland, Estonia has made technology the most important aspect of their economy and society. But not just that, with the eyes faced towards the future, or as the Estonians call it "Tulevik", this former part of the Soviet Union of 1,3 million inhabitants has become the most modernized state in Europe.

The 24th of February of 2018 Estonia celebrated the 100th anniversary of the its independence, so it is interesting to see how the evolution of this small country is and will continue to be.

All this has been possible because of different figures like Laar, Ilves, Ansip, and Kotka.

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