IMF’s Managing Director Christine Lagarde with ECB’s president Mario Draghi.
Eric Piermont | AFP | Getty Images
Two of the world’s most influential economic leaders have said that there are “troubling developments” arising from increased trade barriers and tariffs.
Mario Draghi, the president of the European Central Bank (ECB) and Christine Lagarde, the managing director of the International Monetary Fund (IMF) warned that the global trade dispute between the U.S. and China as well as a threatened dispute with Europe and other industrial nations could cause “headwinds for all” and could get worse.
Speaking at the 8th ECB conference focused on central, eastern and south-eastern European (CESEE) countries on Wednesday, the IMF’s Lagarde said “we meet at a moment when support for global cooperation and multilateral solutions is waning.”
“Global growth has been subdued for more than six years and the largest economies in the world are putting up, or threatening to put up, new trade barriers. And this might be the beginning of something else, which might affect us all in a more broad way, ” she said.
“These troubling developments will create headwinds for all, but certainly for the CESEE growth model, a model that has relied on openness and integration,” she warned.
Lagarde and Draghi, who gave a welcome address at the conference, said the threat of U.S. import tariffs (on Europe) meant that some European countries that are centers of European car production — Czech Republic, Slovakia, Poland and Romania — could be particularly vulnerable.
“Global trade has faced headwinds in recent years as trade-restrictive measures have outpaced liberalising measures,” Draghi told the audience in Frankfurt.
“The central and eastern European business model has become vulnerable to shocks to international trade and financial conditions,” Draghi said, noting that in some CEESE countries vehicle exports represent nearly 30% of total manufactured exports, making them more vulnerable to U.S. President Trump’s threat to increase tariffs on European cars and car parts. Last August, Trump threatened to put a 25% tax on all EU car imports but has yet to implement the move.
“The effect of tariffs could be amplified, as a large share of goods cross borders multiple times during the production process,” he said.
“The main long-term challenge is moving towards a more balanced growth and financing model, which is more reliant on domestic innovation and on higher investment spending than it has been so far,” Draghi added.
Europe is at odds over who will replace Christine Lagarde at the IMF
International Monetary Fund (IMF) managing director Christine Lagarde speaks during a press conference in Tokyo on October 4, 2018.
Kazuhiro Nogi | AFP | Getty Images
European officials are still scratching their heads over Christine Lagarde’s successor at the International Monetary Fund (IMF), according to several people with knowledge of the discussions, with no standout candidate for the role.
Lagarde is due to start her new job as president of the European Central Bank (ECB) in November, leaving the IMF’s chair empty. In Europe, EU member states agree that the next IMF managing director needs to be from the continent — but they’re struggling to rally behind one particular name.
“The truth is that there is no readily available tried and tested European all-rounder,” a European minister, who did not want to be named due to the sensitive nature of the talks, told CNBC.
There is no official shortlist of candidates, but many governments of EU nations have put forward a name to take the top job. Some of the non-official candidates are:
- Jeroen Dijsselbloem, former Dutch finance minister and president of the Eurogroup (which brings together the 19-euro zone finance ministers).
- Mario Centeno, the Portuguese finance minister and currently Eurogroup chief.
- Nadia Calvino, the Spanish finance minister.
- Olli Rehn, central bank governor of Finland and former European commissioner for the euro.
- Mark Carney, the current governor of the Bank of England — a Canadian citizen who also has Irish and English passports.
- Kristalina Georgieva, from Bulgaria, who is currently serving as chief executive of the World Bank.
- Mario Draghi, the outgoing ECB president.
According to two other European officials, who also preferred to remain anonymous, none of the candidates have the right profile at this stage. Some names also don’t have enough experience or they are not liked by certain governments due to their political affiliation, their past comments or their background, the officials told CNBC. Since the IMF’s formation back in 1945, the managing director has always been from Europe.
There is also an age restriction to deal with. The IMF’s rules state that managing directors must be under 65 years of age when appointed and cannot serve beyond their 70th birthday. As such, the chances of certain candidates, such as Kristalina Georgieva, become much smaller.
“If (the) age limit is adapted to today’s realities, there is Georgieva and Draghi,” the European minister told CNBC.
France, who’s chairing the discussions across the different EU capitals, is reportedly looking at ways to change the laws. However, it is unclear whether that idea would be approved inside the IMF.
A source within the French government told CNBC that Paris “does not have a preferred candidate and will play its coordination role impartially.” Meanwhile, a separate EU official confirmed to CNBC that the aim is to have an agreement by the end of the month.
EU has 35 billion euro list ready if US hits EU cars: EU trade chief
European Commissioner Cecilia Malmstrom holds a news conference in Brussels, Belgium March 7, 2018.
Eric Vidal | Reuters
The European Union would retaliate with extra duties on 35 billion euros ($39.1 billion) worth of U.S. goods if Washington went ahead with tariffs on EU cars, the bloc’s trade chief said on Tuesday.
“We will not accept any managed trade, quotas or voluntary export restraints and, if there were to be tariffs, we would have a rebalancing list,” European Trade Commissioner Cecilia Malmstrom told a committee of the European Parliament.
“It is already basically prepared, worth 35 billion euros. I do hope we do not have to use that one,” she continued.
GE reveals new parts for the ‘world’s largest offshore wind turbine’
GE Renewable Energy, a subsidiary of General Electric based in Paris, revealed “the first manufactured components” for its gigantic Haliade-X 12 megawatt (MW) offshore wind turbine.
On Monday, the firm displayed the first nacelle for the turbine, which will now be shipped from Saint-Nazaire in France to Rotterdam-Maasvlakte in the Netherlands. A nacelle sits directly behind a turbine’s blades and is a shell-like structure that contains crucial pieces of kit. These include the turbine’s gearbox, controller, generator and brake.
GE Renewable Energy said that a prototype of the Haliade-X 12 MW would be installed onshore in the Netherlands in order to “simplify access for testing.” Another nacelle is being assembled with a view to testing it in “actual operational conditions” at a site in the U.K.
John Lavelle, the CEO of GE Renewable Energy Offshore Wind, said the firm was “on track to start commercializing this new product very shortly.”
As technology develops, the size of wind turbines is increasing. In September 2018, MHI Vestas Offshore Wind, a major player in the sector, launched the first commercially available double digit turbine, the V164-10.0 MW. The turbine has 80-meter long blades which weigh 35 tons each, and a tip height of around 187 meters.
The scale of GE Renewable Energy’s Haliade-X 12 MW turbine is also considerable. It will have a capacity of 12 megawatts, a height of 260 meters and a blade length of 107 meters. The turbine will generate 67 gigawatt hours of gross annual energy. The company has repeatedly described it as “the world’s largest offshore wind turbine.”
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