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British Chancellor of the Exchequer Rishi Sunak leaves Millbank Studios after a media interview in London, Britain, May 27, 2022.
Hard Numbers: Sinking Sunak, Mellon's millions for Trump, Israelis bearish on two-state solution, Thousands displaced in Haiti, Chinese carmakers take aim at EU
516: British Prime Minister Rishi Sunak might be on the verge of making history … and not in a good way. He could be the first sitting prime minister to lose their seat in a general election, according to a new poll, which predicts Labour could win a whopping 516 seats in Parliament. Meanwhile, the poll suggests that Sunak’s Conservative Party will win just 53 seats.
50 million: Conservative billionaire Timothy Mellon reportedly sent $50 million to Donald Trump's presidential campaign the day after the former president was convicted on 34 felony counts in his hush-money trial last month. Donations disclosed to the Federal Election Commission show that the Trump campaign raked in $68 million from donors in May. Oddly, Mellon has also been the biggest donor to independent candidate Robert Kennedy Jr.’s campaign, having donated at least $20 million to his super pac in the past.
26: Amid the ongoing Israel-Hamas war in Gaza, just 26% of Israelis think a way can be found for Israel and an independent Palestinian state to coexist peacefully, according to new polling. This is a drop from 35% who said the same last year.
580,000: Nearly 580,000 people have been displaced by gang violence in Haiti, according to the UN, which amounts to roughly 5% of the country’s population. It’s estimated that gangs control more than 80% of Port-au-Prince, the Haitian capital. The country is now awaiting the arrival of a Kenya-led international police force to battle the gangs and lend support to a governing council overseen by a prime minister who was appointed in April.
25: It’s a trade war summer!Chinese carmakers are calling for a 25% tax on large European cars over the EU’s plans to impose tariffs of up to 38% on electric vehicles made in China beginning on July 4. The US also recently moved to hit Chinese electric vehicles with higher tariffs — all the way up to a staggering 100%.
Canada's Deputy Prime Minister and Minister of Finance Chrystia Freeland takes part in a press conference in Ottawa, Canada, on Jan. 29, 2024.
Canada’s threatened tax on tech giants risks trade war
Canadian Finance Minister Chrystia Freeland plans to unveil the federal budget on April 16, a release that will be keenly watched north and south of the border. Big Tech companies, in particular, will be looking for clues about when Canada will implement its long-promised digital services tax.
Justin Trudeau’s cash-strapped Liberal government hopes to raise up to $2.5 billion over five years by imposing a 3% tax on companies like Alphabet, Meta, Uber, Amazon, and Airbnb. First promised in the 2021 budget, the Trudeau government said it would implement the tax on Jan. 1, 2024, retroactive to 2022.
Aside from raising much-needed funds, targeting tech giants has the additional benefit for Trudeau of being popular politically. His government has already whacked Alphabet and Meta with its Online News Act, forcing them to share revenues with Canadian news publishers (Meta responded by removing news links from Facebook in Canada), and its Online Harms bill, which compels social media platforms to regulate harmful content or face punitive fines.
Freeland says the digital tax is a “matter of fairness,” given that tech giants have been booking their profits in low-tax jurisdictions.
A move by OECD countries to implement a global minimum corporate tax rate of 15% has gained traction, but US opposition persuaded a majority to vote for a year-long delay last summer. Freeland said she preferred a multilateral approach but that Canada is prepared to move forward alone.
US trade representative Katherine Tai has warned that the Biden administration considers the tax discriminatory and will retaliate with tariffs.
A letter from Senate Finance Committee chair Ron Wyden (D-Ore.) and Ranking Member Mike Crapo (R-Idaho) in October said that any retaliatory steps would have bipartisan support.
Those threats seem to have registered with Freeland. In her fall economic statement, she removed the Jan. 1 deadline, while introducing legislation that would allow the federal government to implement the tax later. The budget may indicate whether Canada still plans to go it alone and risk Washington’s wrath, or wait for a new multilateral effort.
Crisis at the WTO: Fixing a broken dispute system
The appeals body of the World Trade Organization (WTO) is like the Supreme Court for global trade. But it’s fundamentally broken: it hasn’t been able to hear any cases or issue decisions since 2019.
The US has blocked new appointments of WTO appeals judges under the Obama, Trump and Biden administrations, complaining that the organization’s rules have hurt US jobs and industry while it lets China protect its massive domestic market from foreign competition. Until WTO reform happens, the US says, it will block any new judges from sitting on the appeals bench.
Without a minimum of three appeals judges, the WTO can’t resolve disputes. And that’s a major problem for the world’s only international organization dealing with the rules of trade between nations. But there may be hope in sight.
On GZERO World with Ian Bremmer, WTO Director-General Ngozi Okonjo-Iweala said she is hopeful the dispute settlement impasse will be resolved by the WTO's 13th Ministerial Conference (MC13) in February 2024.
“[The United States] are not the only ones who have problems with the system. Developing countries also find it difficult to access,” Okonjo-Iweala says, “So let’s take all these complaints, reform system, and make it useful for everyone.”
Watch the full interview: World trade at risk without globalization, warns WTO chief Ngozi Okonjo-Iweala
Catch GZERO World with Ian Bremmer every week at gzeromedia.com/gzeroworld or on US public television. Check local listings.
Ottawa, Washington at odds over digital tax plan
The Canadian government has outlined its plans for a digital services tax, which will hit online retailers and social media platforms with a 3% tax on Canadian revenue.
Trouble is, the Liberals’ tax battle with tech titans poses a threat to the carefully laid international plans of their political allies in Washington, according to a Politico report.
The Biden administration is worried that this could change the dynamics in OECD negotiations on a global digital service tax. The OECD is leading talks with more than 130 nations that want a portion of the profits made by US tech companies in their countries to stay within their borders. The US managed to postpone the taxes until at least 2025 but worries that other countries may follow Canada’s lead and move forward unilaterally.
Business groups in Canada and the United States have loudly objected to Canada’s plan, and Washington has threatened to seek redress if Canada proceeds, although it is not clear that the measure would be captured under USMCA, a trade deal between the US, Canada, and Mexico, rules since large Canadian companies would likely also be required to pay.
Treasury Secretary Janet Yellen is reportedly lobbying Canadian Deputy Prime Minister Chrystia Freeland to drop her plans, but Freeland – who played a key role in negotiating the USMCA and has deep connections in Washington – has insisted Canada must proceed. The tax is expected to come into force by January of next year.
Australian businesses forced to adjust as China trade curbs bite
SYDNEY - Outside the small town of Quambatook on the grain-rich land of south-east Australia, Mr Brett Hosking runs a barley and wheat farm that has belonged to his family for about 110 years.
Australia calls for clarity from China over embargo reports
SYDNEY/BEIJING • Australia's Trade Minister yesterday called for greater clarity from China over reports that an embargo could hit a slew of industries by the end of the week and further escalate tensions between the two countries.
China's global ambitions & plummeting relationship with the US
"US/China relations have been plummeting. Pretty much everything is getting worse," Ian Bremmer tells viewers in this week's episode of GZERO World. In this commentary on the current state of play between the two global powerhouses, Bremmer breaks down the chess game that could be leading to a new Cold War: Travel between the two sides is restricted. Trade and tech competition abound. Beijing is consolidating control over Hong Kong and threatening Taiwan, while its internment of Uighurs has grown more severe. Meanwhile, Europe and developing nations alike are left with a very difficult choice.
Trump won't back off TikTok ban; China may react against US tech firms
Ian Bremmer shares his perspective on global politics on this week's World In (More Than) 60 Seconds:
Donald Trump, TikTok, and Microsoft. What's the story?
Well, the story is that this incredibly successful app that teenagers everywhere seem to really love is functionally owned by China, they are based in the Cayman Islands, registered there, but the Chinese government has itself said that TikTok is a Chinese firm. And that means that the United States, which is involved in a technology Cold War with China, has been looking to hit Chinese tech firms and make it much more difficult for them to act in the United States. I remember there was one Chinese firm that was trying to buy Grindr, which is this app where I think, you know, men can meet men for dating and whatnot, and the idea, in Congress especially, saying, "oh, my God, we can't possibly have China having data like that." Well, I mean, same sort of thing.
There is a national security issue, there is a political issue with Trump wanting to beat up on China and everyone, both Dem and Republican, finding that's a popular thing to do. And then there's the issue of reciprocity, that if China is not going to allow Facebook to operate in China, or Wikipedia, or Reddit, then why should the Americans allow TikTok? And other countries like India have already banned TikTok, the fastest growing app ever in India. So, no surprise that the Chinese are going to be forced to have to sell this to the US. But what's interesting is the Chinese government has responded very sharply to this move by the US. And assuming it goes through and I think there's no way that, you know, either it's going to be sold, which I think is more likely, or it's going to be shut down, it is going to go forward. I don't think Trump's going to back off. I think that this is going to lead to the Chinese taking serious steps among remaining US high tech firms in China. Not necessarily tariffs, but non-tariff measures. Some of them would be restricted in terms of what they can and can't do. You could even imagine executives being charged with some kind of illegal activity in China like they've done with a couple of Canadians, a former diplomat, the two Michaels they say, all of which has the potential to make this a much worse relationship. The next few months between the US and China in the run up to the election, very, very dangerous indeed.
Spain's former king is gone. What's happening?
Well, he's the Emeritus King Juan Carlos I and has been quite unpopular in Spain because of both tax fraud and money laundering inquiries. Big issues around his role in facilitating contracts with a high-speed rail that Spain was supposed to be building in Saudi Arabia between Mecca and Medina. There were other issues as well. He left Spain because of all of those problems. The decision to do that was actually facilitated with the existing Spanish government so as not to further damage the royalty in the eyes of the Spanish people. A smart move, a useful move collectively for the stability of the Spanish government. I don't think it's going to have a big impact on the existing coalition, shouldn't fall apart. Nor is it likely to have a lot of impact on the existing head of state.
What's interesting is that the King Emeritus does have immunity for any act conducted while in office. But whether or not some of these occurred after his abdication, I mean, that's something that we'll see as the cases continue. That could lead to making this up much bigger and more salacious story for the Spaniards going forward.
What can the US learn from Israel as back-to-school strategies are planned?
Well, Israel in the early days was seen as one of those that had most effectively hammered down the curve with very low transmission on the back of a very effective lockdown, and massive surveillance, and testing, and contact tracing in Israel. They then opened the schools, in part because there's a view that young people are not as likely to get the disease, they are not frequently vectors for transmission. Remember, we don't know a lot about this disease. Turns out that's probably wrong.
As you've seen, for example, a campground in Georgia and many dozens of campers end up getting the disease. Massive amounts of asymptomatic case transmission, which can put older people in a great deal of danger, those with preexisting conditions. So, what we're finding is that even in a country that's relatively small, with a lot of transparency, with incredible testing, very wealthy, good health care system, that Israel gets explosive cases because they bring the students in. And if they don't have massive social distancing and the kids aren't always wearing masks as they do, for example, in Taiwan, or in Thailand, or in South Korea, then you can get that explosive transmission. And that and the Israeli economy contracting this year, probably 5%-6% is leading to big demonstrations against Prime Minister Netanyahu, which, of course, as well, could lead to more explosive transmission in Israel. So, the United States surely is watching this. It's one of the reasons why you're seeing a lot of American political officials backing away from the idea that we can simply open all the schools if we don't have the conditions in place.
Finally, what is going on with Harry Potter inspired protesters in Thailand?
Well, Thailand actually has done a reasonable job of containing coronavirus, but a horrible impact on their economy, especially because they're so reliant on tourism, which is done for the foreseeable future. There's also been some corruption scandals and, of course, of government, which is functionally suspended democratic elections on the back of a military coup. And after the death of the last king, existing king in Thailand, nowhere near as competent, nowhere near as popular. What's interesting about these protests, aside the fact that they're Harry Potter inspired, so a bunch of people with wands and casting spells and holding photos of Voldemort, which, you know, makes it sound fun, but going after the monarchy is illegal. In fact, it is punishable by up to 15 years in prison. And there's never been a mass protest in Thailand that has directly criticized the monarchy before. Now, the prime minister is saying, let's calm this down, please don't be disruptive. They don't seem to be looking for reasons to arrest people for breaking these laws right now because it could make an unstable situation even worse, but that could also raise the question as to the position that the monarchy plays in Thailand. For so long a stabilizing feature, both economically, socially, and politically in that country. Maybe there are questions around how long it is fit to last.