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Sunday, March 18, 2012 9:01 PM


China Halts 10 More Airbus Orders; Global Trade Wars Not Winnable and Should Not Be Fought


In retaliation for the EU's Emissions Trading Scheme, China Halts 10 More Airbus Orders

China has suspended the purchase of 10 more Airbus jets, two people familiar with the matter said on Thursday, raising the stakes in a potentially damaging trade row over European Union airline emissions charges.

The move to delay the purchase of extra A330 planes brings to $14 billion the value of European aircraft caught up in tensions over the EU's Emissions Trading Scheme, which has angered countries including China, India and the United States.

It comes amid urgent efforts to find a solution to the row, which airlines fear could provoke an aviation trade war capable of causing travel disruption and hitting air traffic rights.

The row is over a cap-and-trade scheme which could levy charges for carbon emissions for flights in and out of Europe.

Foreign governments say the EU is exceeding its legal jurisdiction by charging for an entire flight, as opposed to just the part covering European airspace.

"Aircraft sales are different from selling wine or cars, you can't switch the sales button from off to on from one day to another. A red traffic light in aircraft sales can destroy years of sales efforts and damage-repair will take years," said Rainer Ohler, head of Airbus public affairs and communications.
Trade Wars Not Winnable and Should Not Be Fought

This is exactly the kind of spat Romney is bargaining for when he threatens to label China a "currency manipulator".

China is of course a "currency manipulator". Then again the Fed is an "interest rate manipulator" hoping to sink the US dollar. The EU wants the euro to fall (just not collapse), and Japan has intervened to sink the Yen. Switzerland's central bank has intervened to suppress the value of the Swiss Franc.

In short, every major nation on the planet is manipulating currencies either directly or indirectly via interest rate policy.

Global trade wars are not winnable. If Mitt Romney is elected and he does what he says he will do, expect a devastating collapse in global trade.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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