Trade Tensions Overshadow Global Economic Summit

HANGZHOU, China (AP) —
European Commission President Jean-Claude Juncker, right, is shown the way by a Chinese official as he arrives at the G20 Summit in Hangzhou in eastern China's Zhejiang province, Sunday, Sept. 4, 2016. European Union leaders have called for China to take action on its bloated steel industry and defended an order to Ireland to collect back taxes from Apple, highlighting the trade strains looming over a global economic summit.(AP Photo/Ng Han Guan)
European Commission President Jean-Claude Juncker (R.) is shown the way by a Chinese official as he arrives at the G-20 summit in Hangzhou in eastern China’s Zhejiang province, Sunday.(AP Photo/Ng Han Guan)

European Union leaders called Sunday for China to take action on its bloated steel industry and defended an order to Ireland to collect taxes from Apple, highlighting the trade tensions looming over a global economic summit.

The Group of 20 meeting of leaders of the United States, China, Germany and other major economies “must urgently find a solution” to excess steel production, said Jean-Claude Juncker, president of the European Commission. He called on Beijing to accept a monitoring mechanism for overproduction that Beijing’s trading partners blame for low prices and job losses.

Juncker also rejected U.S. criticism of the order for Ireland to collect $14.5 billion in back taxes from Apple. An EU panel ruled the company’s low taxes were improper government aid.

“Free trade must be fair trade,” Juncker said at a news conference with Donald Tusk, president of the European Council.

The toughly worded comments reflected the political pressures on governments at a time of weak global economic growth that is fueling demands to protect local industries.

Another prominent issue at the summit is G-20 member Britain’s June vote to leave the 28-nation European Union, a move seen by some analysts as the first in a wave of moves by other nations to retreat from free trade.

China, the G-20 host, has made trade a headline issue for the meeting in Hangzhou, a scenic lakeside city southwest of Shanghai. Chinese officials have said they will propose a plan to boost commerce through closer cooperation on regulation, finance, tax and other issues.

China hopes its status as G-20 host will bring it more influence in management of the global economy.

Chinese leaders say they want the G-20, launched to coordinate the response to the 2008 financial crisis, to take on a longer-term role overseeing global economic management.

Germany, South Korea and other governments say they also want to use the meeting to discuss climate, energy and possible reforms to the global tax system to reduce tax evasion.

The two-day meeting began Sunday on a diplomatic high note following a joint announcement by President Barack Obama and his Chinese counterpart, Xi Jinping, that their governments had submitted documents committing them to carrying out the Paris climate agreement.

But U.S. and other officials say they plan to bring up Chinese industrial overcapacity and other potentially thorny issues. Washington has imposed import duties of up to 500 percent on Chinese steel to offset what regulators say are improper subsidies.

China, the world’s biggest steel producer, has committed to reducing its production capacity by 100 to 150 million tons by 2020, a pledge Xi repeated Saturday.

“This is a global problem, but with a specific Chinese dimension we have to address,” said Juncker. “We are really insisting on the need to take this seriously.”

Juncker defended the EU’s tax order on Apple against U.S. criticism. An EU panel concluded Apple received improper aid because it paid lower rates than other companies. Ireland has made its low taxes part of its strategy to attract investment.

Juncker rejected suggestions the EU was targeting an American company. He said previous tax orders have affected European companies, including a January ruling that covered 35 companies, most of them from Europe.

“This is not a decision against the United States of America,” said Juncker. “We are basing our decisions on facts.”

Tusk affirmed the EU’s stance on Britain’s possible departure, saying there would be no talks with London over future relations until it formally begins the withdrawal process. Uncertainty over the status of trade, immigration and other critical issues has disrupted business activity and prompted anxiety among investors.

“We need to protect the interests of the members of the EU that want to stay together, not the one which wants to leave,” said Tusk.

Speaking at a joint news conference with Obama, British Prime Minister Theresa May said her government was going ahead with its departure and was looking to create new trading opportunities.

“There will be no second referendum, no attempt to turn the clock back or get out of this,” said May.

The two leaders tried to downplay the impact on U.S.-British relations but Obama suggested London might have to wait to make a post-EU trade deal. He said Washington is focused on finishing trade deals with Asia-Pacific governments and the EU.

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