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With hints that the DETER Act [the Defending Elections from Threats by Establishing Redlines Act of 2018] may be under some consideration in the National Defense Authorization Act process going on in Congress, we would like to highlight our analysis from earlier this year for consideration by any involved in the negotiations and potentially affected parties.

While we frequently advocate for tough action to deter Moscow from its many aggressions, our analysis in this piece still stands: the DETER Act is the wrong way to address concerns about Russian President Vladimir Putin’s aggression.
Institutions and fora such as the United Nations, the Bretton Woods Institutions, the World Trade Organization, the Organization for Economic Cooperation and Development, and the G-groups are based on the organizing principle of multilateralism. After World War II, they have helped nation states coexist in a peaceful and relatively prosperous environment. Nowadays, they face criticism for being inefficient and lacking transparency. Some governments are withdrawing from these institutions altogether and reaffirming their individual power, which has led to a more fragmented world order.

US tariffs on the EU, Mexico, and Canada are a gift to Beijing

As US Commerce Secretary Wilbur Ross arrives in Beijing on June 2 for talks on the future of the Sino-American trade relationship, he comes bearing a gift: freshly issued tariffs on steel and aluminum imports from the European Union (EU), Canada, and Mexico.

With these tariffs, which came into effect on June 1, US President Donald J. Trump’s administration fired the first shot in a trade war with some of its biggest trading partners and closest allies.
Spanish Prime Minister Mariano Rajoy’s conservative government was ousted in a no-confidence vote on June 1, sharpening a crisis within the European Union (EU) which is already dealing with the political uncertainty in Italy.

Rajoy’s startling ouster marked the first time Spain’s leader has been toppled in such a way since the country transitioned to a democracy in 1978. Pedro Sánchez, the leader of the main opposition Socialist Party (PSOE), will succeed Rajoy and is expected to call early elections.

While Southern Europe is gripped by a political crisis, the situation in Spain and Italy is different.
While the fundamentals of the Italian economy remain sound, the political uncertainty gripping the country has spooked markets. Tools created during the European debt crisis in 2009—such as the European Stability Mechanism (ESM)—are insufficient to support funding needs of the Italian sovereign and corporate sector for a sustained period of time. Interventions such as the ones deployed a few years ago by the ESM (and its predecessor, the European Financial Stability Facility) in collaboration with the International Monetary Fund (IMF) and the European Central Bank (ECB) for Greece, Ireland, Cyprus, Portugal, and Spain are not a viable option should yields on Italian debt continue to rise.
The European Union (EU) on May 18 announced that it was beginning the process to activate its proposed blocking regulation, initially proposed in 1996 to try to counteract what the EU saw as the extraterritorial reach under the United States’ Iran-Libya Sanctions Act (ILSA) and Cuba sanctions program. Those disagreements were settled politically with the Clinton administration, but there has been renewed interest in the draft regulation in the wake of US President Donald J. Trump’s decision to withdraw the United States from the Joint Comprehensive Plan of Action (JCPOA) and reimpose US secondary sanctions on Iran. 

It is not clear that proponents of reviving the regulation fully appreciate just how different the global financial and compliance environments are now compared to the mid-1990s.
US President Donald J. Trump’s May 8 announcement that he would withdraw from the Iran nuclear deal was broadly consistent with what many observers expected from the administration. However, because the sanctions component proved tougher than most predicted, the full scope of economic and political ramifications remains unknown.

While the United States gears up for the reimposition of broad secondary and narrower primary US sanctions on Iran for its nuclear activity, there will be a wind-down period for ceasing business, allowing for at least some transition time. 
The US government recently sent a large delegation to China in hopes of averting a looming trade war with a major economic competitor. While the intent of the May 2-4 meetings was laudable, it failed to produce any significant outcomes. Negotiators—including US Secretary of the Treasury Steven Mnuchin, US Secretary of Commerce Wilbur Ross, US Trade Representative Robert Lighthizer, and Trade Adviser Peter Navarro—left the meetings with only an escalation of previous demands made by both Washington and Beijing.

However, Chinese President Xi Jinping’s top economic adviser Liu He will visit Washington next week to continue the talks.
Despite past difficulties, Ukraine’s track record of economic reforms appears to have set the country in the right direction, according to Oleksandr Danylyuk, finance minister of Ukraine.

Speaking at the Atlantic Council on April 17, Danylyuk struck an optimistic tone about the coming years in Ukraine as he addressed the economic reforms that the government in Kyiv has undertaken so far. “Despite the difficulties, the previous implementation [of economic reform] shows we can achieve,” he said. According to Danylyuk, that the slew of reforms carried out in the past three years had and will continue to change Ukraine by nourishing the hopes of the Ukrainian people.

The Ukrainian economy is expected to grow at 3.2 percent this year, and into 2019, according to the International Monetary Fund’s just-released World Economic Outlook. However, Ukraine will face a presidential election in 2019, creating both volatility and uncertainty which could cloud prospects for further economic growth.
Tuesday, May 1 may mark the start of a fully fledged global trade dispute.

US President Donald J. Trump announced tariffs on imports of steel and aluminum products into the United States on March 23, granting temporary exemptions for only seven key US allies of the US: the European Union (EU), Australia, Brazil, Argentina, Canada, Mexico, and South Korea. Those exemptions expire on May 1.


    

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