Tags: tax | competitiveness | global | trade

US Tax Competitiveness Will Sway Global Trade

US Tax Competitiveness Will Sway Global Trade
(Dollar Photo Club)

Tuesday, 05 December 2017 07:57 AM Current | Bio | Archive

Tax competitiveness is moving up the agenda once again.

Interestingly, media reports suggest that the European Union is considering blacklisting 11 countries as tax havens. That list includes South Korea and the United Arab Emirates (UAE).

This is an issue about tax transparency.

Separately, ECOFIN, the collective gathering of the European Finance Ministers is to consider the U.S. tax cut proposal in the light of the World Trade Organization (WTO) rules.

The proposed cut in the corporation taxes is not a trade issue per se, but any selective advantage to specific sectors of the U.S. economy might be.

The issue of tax and tax competitiveness is unlikely to go away anytime soon, and may well become an issue in terms of global capital flow and global trade.

Besides all that, yesterday in Brussels, on Brexit one could say that no deal is not perhaps better than a deal.

The UK-EU divorce proceedings that were seemingly going well yesterday as UK Prime Minister May lunched with EU President Juncker, one of the EU Presidents.

However, issues about the European Court of Justice and the Northern Ireland border have apparently delayed the deal for the time being.

Ultimately, I still do expect the deal to be done.

The Northern Irish Democratic Unionist Party (DUP), which is a unionist political party that supports Prime Minister Mrs. May’s minority UK government doesn’t really want to force an election. The government has also shown a willingness to compromise to move things forward.

However, the idea that Northern Ireland might stay in the European Customs Union does present a political challenge.

London, Wales and Scotland have all said that they would like to stay in the European Customs Union too, and if taken to its logical conclusion, there is a risk that other regions could start looking for exemptions too.

This could potentially leave Canvey Islanda roughly 7 square mile island in the Thames estuary in Essex, England, leaving the European Customs Union alone.

As Canvey Island has its own independence movement, perhaps replacing Brexit with something similar could be a simpler solution, who knows.

Today, we got also an overload of Services and Composite PMI data.

The Caixin China Composite PMI data (which covers both manufacturing and services) indicated that growth momentum improved slightly in November. Although the Composite Output Index rose from October’s 16-month low of 51.0 to 51.6, the latest figure pointed to only a modest upturn in business activity that remained weaker than the series average.

Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group gave an interesting comment: “The Caixin PMI readings in November showed the economy has maintained stability and there was no imminent risk of a significant decline in its growth rate. But we should be cautious because the economy may come under rising inflationary pressure at the start of next year due to continued price increases.”

J.P.Morgan Global Manufacturing PMI showed that global manufacturing growth accelerated to an 80-month high.

David Hensley, Director of Global Economic Coordination at J.P.Morgan, commented: “The November survey points to a strong increase in the rate of expansion of the global manufacturing sector, with growth of output, new orders, new export business and employment all gaining strength. Inflationary pressures continued to build across the production pipeline.”

Etienne "Hans" Parisis is a bank economist who has advised investors on financial markets and international investments.

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The issue of tax and tax competitiveness is unlikely to go away anytime soon, and may well become an issue in terms of global capital flow and global trade.
tax, competitiveness, global, trade
Tuesday, 05 December 2017 07:57 AM
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