Monday 4th - The BESA Times
Sixty-Seventh Edition - Monday, 4th Every week, a complete snapshot of what happened around the world in the past seven day.
The trade deal of US and China is becoming more and more of a reality.
US President Donald Trump and Chinese leader Xi Jinping accorded to meet at the end of this month to conclude the trade war lasted one year so far: the two sides seem in the final stages of negotiation.
The deal would consist on the one hand in lowering the Chinese tariffs on a range of US goods and on the other in the removal of American broad sanctions against the Chinese market.
Beijing is required to lower the barriers preventing US companies from accessing in the Chinese market and to make important purchases of American goods in energy and agricultural sectors. In exchange, the United States would drop its tariffs on Chinese imports up to 80 percent.
Trump position on this agreement is clear; going through this arrangement with China would constitute a major victory after the legal investigations linked to the potential Russian collusion in 2016 elections and the failure in talking the North Korea out of the nuclear armament. Mr. Trump constantly accused China of unfair trading, promising to to Make America great again on the economic side.
Despite the leaders’ optimism, the Treasury’s senior coordinator for China affairs of the Obama administration David Loevinger expresses his doubts: “What’s very clear is we’ve reached the peak of the tariff war [...] The question is how much of a rollback do we get — my expectation is probably not very much.”
French Finance Minister Bruno Le Maire is evaluating a tax for the internet giants
“A taxation system for the 21st century has to be built on what has value today, and that is data”, these were the words of Le Maire on the matters for the newspaper Le Parisien. Data taxes seems rather appealing for the French economy: a three percent tax on the French revenue of large internet companies could yield 500 million euros per year.
The Minister will present a first draft to the cabinet on Wednesday. The tax would be imposed on companies with worldwide digital revenue of at least 750 million and French revenue of more than 25 million euros, targeting some 30 companies such as the so-called American GAFA companies (Google, Amazon, Facebook and Apple), Airbnb, Uber and Criteo, the French online advertising company.
The tax wouldn’t however affect the private firms’ websites: a company selling its products on its own online store won’t be targeted.
The main subjects of this tax are digital intermediary platforms such as Amazon and companies selling personal data for advertising purposes.
Le Maire pointed out the fiscal justice of this measure: the internet giants pay 14 percentage points less tax than European small-and-medium sized companies.
The political implications are also an important determinant since one of the main requests of the yellow jacket movement concern a fairer taxation system.
Despite the France efforts to scale this proposal on European level, Germany isn’t convinced while other member states with low corporate taxes (Luxembourg and Ireland) are firmly adverse.
Italian economy one year after the election
The manufacturing sector of the third-largest economy in the eurozone suffered the blow on February. The European Commission is still sceptic regarding the populists’ policies and they fear a domino effect on the other regions. One year from the rise to power of the Lega-M5S coalition, the country faced a stagnant economy and apparently no improvements on the unemployment rate and on its important debt load.
Premier Giuseppe Conte and Finance Minister Giovanni Tria’s intervention on Monday tried to calm things down, but numerous business lobbies and entities, ranging from Confindustria to Api, fear the arrival of a recession.
In the meantime, the two heads of the coalition have other concerns, mainly related to the recent Five Star Movement’s recent election losses and to the outcoming of the European Election.
Did you know?
Research by HousingAnywhere, the world's largest housing platform for international students and young professionals, shows an increase of 33% in young professionals in the UK searching for accommodation in Europe after the outcome of Brexit. Milan is in the top ten destinations, facing a 39% increase in the accommodation research. As a consequence, more pressure will fall on these cities and their already strained rental markets, but for the actual consequences we will have to wait until the 29th of March, the day UK will leave EU.
What to expect from next week:
The Brexit deadline is getting closer and the negotiation are getting harsher and more drastic while Theresa May’s soft Brexit doesn’t get much consensus. Meanwhile, Jeremy Corbyn advanced the possibility of a second referendum to get back and obtain a fresh poll, but the opposition of dozen of MPs didn’t back up his proposal. The only way to see how the deal will end up is to wait and see.
Another hot topic are the European elections in May. The Eurosceptic vision is taking over the whole continent: traditional parties are suffering from important losses while populists and far right parties such as the French Rassemblement National, the Italian Five Star Movement, the German AFD and the Hungarian Fidesz are gaining more and more relevance. On the other side, Liberal forces defend themselves, the predictions say they will gain few seats.
WRITTEN BY VITTORIO VERGANO
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