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As President Trump Heads to India, the U.S. Struggles to Forge a Trade Deal Between the Two Countries



(WASHINGTON) — American dairy farmers, distillers and drugmakers have been eager to break into India, the world’s seventh-biggest economy but a tough-to-penetrate colossus of 1.3 billion people.

Looks like they’ll have to wait.

Talks between the Trump administration and New Delhi, intended to forge at least a modest deal in time for President Donald Trump’s visit that begins Monday, appear to have fizzled. Barring some last-minute dramatics — always possible with the Trump White House — a U.S.-India trade pact is months away, if not longer.

“I’m really saving the big deal for later on,” Trump said this week. “I don’t know if it will be done before the election, but we’ll have a very big deal with India.’’ The U.S. presidential election is Nov. 3.

For now, the failure to reach a deal, despite the pressure of an approaching summit, may reflect not so much the differences between Trump and Indian Prime Minister Narendra Modi as the similarities. Both men are fierce nationalists who favor protecting their own producers over opening their markets to foreign competition.

“You’ve got two leaders who are looking at trade very much as a zero-sum game,’’ said Richard Rossow, a specialist in U.S.-India relations at the Center for Strategic and International Studies.

Long notorious for high trade barriers and a cumbersome bureaucracy, India had for the past two decades or three decades been slowly reforming and opening its economy. Under Modi, that trend has reversed.

Regarded as a business reformer when he took office in 2014, Modi has increasingly turned protectionist, matching Trump’s “America First” example with “India First” policies of his own.

“U.S. behavior on the trade front has pushed India in the opposite direction of where we could like it to go,’’ Edward Alden, senior fellow at the Council on Foreign Relations, told reporters Friday.

One of Trump’s first acts was to withdraw from a 12-country Asia-Pacific free trade pact negotiated by the Obama administration. Similarly, Modi last year abandoned another Pacific Rim trade agreement, worried that India would be overwhelmed by Chinese imports.

Modi may be even more sensitive about exposing Indian companies to foreign competition because his country is in an economic slump. The International Monetary Fund last month scaled back its expectation for India’s growth this year to 5.8% from the 7% it had expected back in October. Indian loan companies, struggling to collect on bad debts, have reduced lending, thereby squeezing Indian consumers.

The Trump administration escalated the pressure on India last year by denying some of its products preferential duty-free entry to the American market. In effect, that move raised tariffs on Indian imports.

The administration is annoyed by a deficit in the trade of goods with India that last year reached $23.3 billion. The Office of the U.S. Trade Representative last year argued that India had failed to provide assurances that it would give U.S. products “equitable and reasonable access” to its markets.

The thinking was that India would make concessions to regain its duty-free benefits. But India hasn’t yielded yet.

“We had hoped that India would respond with a little more urgency,’’ said Roger Murry, senior policy adviser at the law firm Akin Gump Strauss Hauer & Feld.

Negotiations between U.S. Trade Representative Robert Lighthizer and India’s commerce minister, Piyush Goyal, seemed to be advancing until about a week ago. Yet they failed to bridge their differences.

“I would have thought they would have been able to pull off a mini-deal,’’ said Safiya Ghori-Ahmad, an India specialist at the consulting firm McLarty Associates. “It seems there are a lot of sticky issues.’’

One irritant is that just as negotiators were scrambling to conclude an agreement, India this month made another lurch toward protectionism. It issued an annual budget that raises import taxes on everything from cheese to shoes to toy tricycles.

The two sides have also squabbled over access to India’s dairy market. A predominately Hindu nation, India prohibits, on religious grounds, dairy imports that do not derive from cows that have been raised on vegetarian diets. The U.S. dairy industry argues that such restrictions are scientifically unnecessary and burdensome.

The administration has complained, too, about Indian restrictions on imported medical devices. In 2017, Indian officials imposed price controls on coronary stents and knee implants, forcing American companies to sell those products at a loss.

U.S. distilleries also have a big stake in a more open Indian economy. India is by far the world’s largest market for whiskey. In 2018, Indian drinkers downed nearly 1.7 billion liters of whiskey, worth $25 billion, accounting for half the world’s consumption and out-drinking Americans by a factor of three, according to Euromonitor. But facing 150% tariffs on imported spirits, U.S. distilleries sold just $7 million worth whiskey to India in 2018, according to the Distilled Spirits Council of the United States.

“There is no doubt that India has turned protectionist during the last two to three years,” said Columbia University’s Arvind Panagariya, a former Indian government official and a specialist in India’s economic policymaking. “And that is surely making matters more difficult by hardening Indian positions.’’

Still, Modi puts a high value on a strategic partnership with the United States, especially in the face of an increasingly assertive China. For that reason, he may be willing to make trade concessions for stronger ties with Washington.

“I remain optimistic about an agreement in due course,’’ Panagariya said.

But Sadanand Dhume, resident fellow at the conservative American Enterprise Institute, said he was discouraged by the failure of negotiators to reach a modest, confidence-building deal before the Trump-Modi summit.

“The ambitions were small to begin with,’’ Dhume said. “If a presidential visit cannot force these two countries to get over a small speed bump, that really does not augur well’’ for a more ambitious trade agreement.

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Germany, Spain Cases Slow; Dimon Sees Recession: Virus Update



(Bloomberg) — Germany and Spain reported lower numbers of new cases, a tentative sign that lockdown measures are easing the outbreak. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said he expects the fallout to include a major economic downturn and stress similar to the crisis that almost brought down the U.S. financial system in 2008.Japanese Prime Minister Shinzo Abe said he’ll propose a state of emergency in some prefectures, while U.K. Prime Minister Boris Johnson was hospitalized as a precaution. Austria said it is taking the first steps to restart the economy after Easter.Stock markets rallied after President Donald Trump said he sees signs the pandemic is beginning to level off in the U.S. In New York State, fatalities fell for the first time on Sunday, though Governor Andrew Cuomo said it was too early to say if the outbreak had reached a peak.Key Developments:Global cases near 1.3 million; deaths top 70,000: Johns HopkinsTrump and Pence see signs the U.S. outbreak is ‘stabilizing’Tesla shows ventilator prototype made from car componentsIndia bans exports of “game changer” virus drugWuhan emerges from lockdown with a missionVirus spurs global free-for-all in medical tradeGlaxo to Develop Covid-19 Drugs in $250 Million Partnership (8:14 a.m.)U.K. pharmaceutical giant GlaxoSmithKline Plc is joining dozens of companies in the hunt for therapies to treat the illness caused by the coronavirus, signing a partnership with Vir Biotechnology Inc. and agreeing to invest $250 million in the U.S. company.South Africa’s Economy May Shrink as Much as 4%, Central Bank Says (8:09 a.m. NY)South Africa’s economy could contract by 2% to 4% this year due to the coronavirus pandemic and measures to curb its spread, according to the Reserve Bank. The monetary policy committee projected in March that the economy will contract by 0.2%.U.K. PM Johnson Had ‘Comfortable Night’ and Is in ‘Good Spirits’ (8:07 a.m. NY)Prime Minister Johnson is in “good spirits” after spending a “comfortable” night in St. Thomas’s hospital in central London, his spokesman, James Slack, said on Monday. Johnson went to the hospital on Sunday as a “precaution,” he said.Mass Layoffs Push Canada’s Consumer Confidence to All-Time Low (8:00 a.m. NY)The Bloomberg Nanos Canadian Confidence Index, a composite gauge based on a telephone survey of households, declined sharply for a third week as extensive lock downs triggered mass layoffs. The aggregate index dropped to 42.7 last week, the lowest reading since polling began in 2008.Romania to Extend State of Emergency Until Mid-May (7:53 a.m. NY)Romanian President Klaus Iohannis said that he plans to extend the state of emergency over the crisis by another month because “we haven’t reached the peak of the epidemic, so it’s not time to relax.”Netherlands Has Slowest Death Growth in Week (7:40 a.m. NY)The Netherlands reported 101 new fatalities, the smallest increase since March 30. Total reported cases rose 5% to 18,803. An additional 260 patients were admitted to hospitals, according to the RIVM National Institute for Public Health and the Environment.China to Strengthen Transport Control Measures Along Borders (7:15 a.m. NY)China will tighten quarantines in border areas, following a meeting chaired by Premier Li Keqiang. The number of confirmed coronavirus cases found in people who arrived through a land border has surpassed those that came by air.Dimon Sees ‘Bad Recession’ and Echoes of 2008 Crisis Ahead (7:11 a.m. NY)“At a minimum, we assume that it will include a bad recession combined with some kind of financial stress similar to the global financial crisis of 2008,” the CEO said Monday in his annual letter to shareholders. “Our bank cannot be immune to the effects of this kind of stress.”Nigeria to Borrow $6.9 Billion to Offset Virus Impact on Economy (7:03 a.m. NY)The government plans to raise as much as $6.9 billion from multilateral lenders to offset the impact of the pandemic. The state will seek $3.4 billion from the International Monetary Fund, $2.5 billion from the World Bank and a further $1 billion from the African Development Bank, Finance Minister Zainab Ahmed told reporters Monday.French Firms Have Requested Guarantees for EU20 Billion of Loans (6:58 p.m. NY)French Finance Minister Bruno Le Maire said 100,000 companies requested government loan guarantees for a total of 20 billion euros ($21.6 billion). In addition, more than 500,000 small companies have requested aid from France’s solidarity fund.Redhill Announces First Covid-19 Patient Treated With Opaganib (6:19 a.m. NY)RedHill Biopharma said the first patient with a confirmed coronavirus diagnosis was dosed with opaganib in Israel, and additional patients are expected to be treated in the coming days. Pre-clinical data demonstrated anti-viral effects in other viruses, anti-inflammatory activities and the potential to reduce lung inflammation, the company said.Hungary Announces Virus Stimulus Plan of Up to 20% of GDP (6:17 a.m. NY)Hungary’s government will pay some-private sector wages, offer loan guarantees and boost spending on infrastructure and pensions as part of a major fiscal stimulus plan aimed at averting a recession and mass unemployment as the coronavirus pummels the economy. The package, valued at 18% to 20% of gross domestic product including planned stimulus from the central bank, will also see the 2020 budget deficit rise to 2.7% of GDP from 1%, Prime Minister Viktor Orban said on Monday.Iran Reports 136 New Deaths, Compared With 151 on Sunday (5:53 p.m. HK)The nation also reported 2,274 new infections, taking the total to 60,500. Total deaths now stand at 3,739.Austria Takes First Steps Toward Economic Restart Next Week (5:43 p.m. HK)Austrian small retailers, hardware and gardening shops will reopen next week after national lockdown measures succeeded in slowing the spread of coronavirus. Chancellor Sebastian Kurz said. But social distancing rules will apply at least until the end of April.Nestle Struggles to Keep Up With Rising Demand, CEO Says (5:40 p.m. HK)Nestle SA is struggling to keep up with consumers’ appetites as obstacles slow down production at the world’s largest food and beverage company, Chief Executive Officer Mark Schneider said. The maker of Pure Life bottled water and DiGiorno pizzas is seeing very strong demand for essential food and drink items, though many of its factories are unable to run at 100% capacity, Schneider said in an interview on Bloomberg Television.Spain Reports Lowest Number of New Virus Cases Since March 22 (5:34 p.m. HK)Spain reported the lowest number of new cases in more than two weeks, a sign that Europe’s biggest outbreak is slowing. New infections were 4,273, taking the total to 135,032, according to Health Ministry data on Monday. The death toll rose by 637 to 13,055 in the past 24 hours, a smaller gain than Sunday’s 674 and the lowest number of daily fatalities since March 24.Airbus Tells Employees Production Rebound Unlikely in Short Term (5:33 p.m. HK)Airbus SE has told employees that a return to full operations isn’t feasible in the short term because of parts shortages and the inability of struggling airlines to take delivery of new aircraft, according to a person familiar with the matter.Dubai Said in Talks to Raise Funds as Shutdown Weighs on Economy (5:30 p.m. HK)Dubai is in talks to raise funds to shore up its finances as the pandemic shuts down much of the economy, according to people familiar with the matter. The emirate’s Department of Finance is holding discussions with banks about a potential bond sale or loan, the people said, asking not to be identified because the information is private.Poland Backs EU Plan to Issue Coronavirus Bonds: Premier (5:02 p.m. HK)Poland is ready to participate in mechanisms to guarantee the issuance of coronavirus bonds by the European Union to help fight pandemics, Premier Mateusz Morawiecki tells parliament.Japan’s Abe Moves to Declare Emergencies in Tokyo, Osaka Areas (4:57 p.m. HK)Prime Minister Shinzo Abe said he will propose a state of emergency in prefectures including Tokyo and Osaka for about a month, after a renewed surge of coronavirus cases in some of Japan’s biggest metropolitan areas. The move hands powers to local governments to try to contain the spread, including by urging residents to stay at home.Abe also announced a much larger-than-expected stimulus package of 108 trillion yen ($988 billion) to support households and businesses struggling from the impact of the pandemic.Hong Kong Reports 24 Additional Coronavirus Cases April 6 (4:45 p.m. HK)Eighteen had travel history, including five who returned from Peru on a government chartered flight, Hong Kong Department of Health official Chuang Shuk-kwan said. That brings the city’s total number of confirmed coronavirus cases to 914.U.K.’s 50 Billion-Pound Subsidies for Companies Wins EU Approval (4:30 p.m. HK)The U.K.’s plan to grant 50 billion pounds ($61.5 billion) to companies suffering the economic effects of the coronavirus outbreak won approval from the European Commission.Indonesia Coronavirus Cases Seen Soaring to 95,000 by Next Month (4:28 p.m. HK)Coronavirus may infect as many as 95,000 people in Indonesia by next month before easing, as authorities ordered people to wear face masks to contain the pandemic. The dire forecast is based on a projection by the nation’s intelligence agency, University of Indonesia and Bandung Institute of Technology, Finance Minister Sri Mulyani Indrawati said.Denmark Faces Budget Deficit of 6.5% Under Optimistic Scenario (4:04 p.m. HK)Denmark faces a budget deficit of 6.5% of gross domestic product this year under the most optimistic scenario provided by the Danish Economic Councils, an independent government adviser. In that model, GDP would fall by 3.5% this year as the economy quickly returns to normal, the group, known as the Wise Men, said in a statement on Monday.Milan Region Official Sees Italy Lockdown Lasting 2-3 More Weeks (3:51 p.m. HK)Italy’s lockdown should be prolonged for at least another couple of weeks, Lombardy’s top health official said. “Clearly, we cannot stay indoors for ever, but we believe that this sacrifice needs to be continued at least for another two to three weeks,” Giulio Gallera, the top health official of the Lombardy region, said on Canale 5. “Then, we’ll have to use precautions — masks, or other facial protections — to avoid starting another round of outbreaks.”Russia Reports 18% Increase in Covid-19 Cases (3:36 p.m. HK)Russia reported 954 new cases of overnight, bringing the total number to 6,343, Interfax said, citing Russian consumer health watchdog Rospotrebnadzor. There were two deaths, for a total of 47.Japan Consumer Confidence Tanks to Lowest Since Financial Crisis (3:23 p.m. HK)Japan’s consumer confidence tumbled in March, reflecting the massive hit to shoppers as the pandemic keeps people indoors. The cabinet office released numbers Monday showing a 7.4 percentage-point drop to 30.9. It also cut its overall assessment of consumers’ mindset to “worsening” from “stalling” in the previous month.Germany’s Virus Outbreak Slows With Lowest New Cases in Six Days (3:13 p.m. HK)Germany saw the lowest number of new coronavirus cases in six days in a tentative sign that lockdown measures are easing the outbreak. As restrictions across Europe’s largest economy enter their fourth week, infections rose by 4,031 to 100,123, according to data from Johns Hopkins University. The death toll increased by 140 to 1,584 on Monday, the lowest daily increase in five days.Paris Hospitals Head Sees Some Stability in France (2:56 p.m HK)The epidemic in France has “sort of” stabilized thanks to confinement measures, Martin Hirsch, head of Paris hospitals, said Monday on France Inter radio. The decrease in cases will be slow and any loosening of the confinement could actually restart the epidemic, he said.Indonesia Orders Citizens to Wear Face Masks (2:43 p.m. HK)Indonesian President Joko Widodo ordered citizens to wear face masks when leaving home to contain the pandemic that’s killed almost 200 people in the world’s fourth most populous nation.Authorities must ensure availability of face masks for every household, Widodo told a cabinet meeting. The appeal for compulsory use of masks follows a change in the World Health Organization’s advisory on use of protective face covers, the president said.Singapore Adds $3.6 Billion to Stimulus (2:26 p.m. HK)Singapore increased its cash payout to households and announced additional steps to save jobs in a third stimulus package as the city state prepares to go into a partial lockdown to contain a spike in coronavirus cases.The additional stimulus will cost S$5.1 billion ($3.6 billion), taking the nation’s total virus relief to almost S$60 billion, or 12% of gross domestic product, Deputy Prime Minister Heng Swee Keat said Monday in Parliament. The government will seek to draw an extra S$4 billion from past reserves and push up its budget deficit in the current fiscal year to 8.9% of GDP, he said.Thailand Sees Fewest New Cases Since March 20 (1:18 p.m. HK)Thailand reported 51 new coronavirus cases, the lowest number since March 20. The new infections bring the total number of cases to 2,220. The country confirmed three more deaths, bringing total fatalities to 26, according to Taweesilp Witsanuyotin, a spokesman for the Covid-19 center.Tesla Shows Ventilator Prototype (12:06 p.m. HK)Tesla Inc. engineers showed footage of a prototype ventilator the company is trying to make with auto parts amid a shortage of the machines for coronavirus patients. According to the video on Tesla’s YouTube channel, the design includes a touch screen, computer and control system from a Model 3 electric car.New York Governor Andrew Cuomo said supply-chain disruption is the biggest hurdle for every manufacturer, including Tesla. “Their timeframe frankly doesn’t work for our immediate apex,” he said at a press conference.South Korea Sees Lowest New Cases Since Surge (9:51 a.m. HK)South Korea reported 47 new coronavirus cases over 24 hours, the lowest number since the start of a surge on Feb. 21 connected to a religious sect. The health ministry said there are a total of 10,284 cases in the country, with 186 total deaths. The nation has seen five consecutive days of less than 100 new cases within a 24 hour period, according to statements. The latest development comes after the government extended its advisories of social distancing for two more weeks as of Sunday, canceling group events and recommending against religious activities and protests as well as delaying school classes nationwide.China Finds 78 New Asymptomatic Cases (8:41 a.m. HK)China reported 78 new cases of people who tested positive but showed no symptoms of the coronavirus, according to the National Health Commission.The country reported 39 additional cases for April 5, with all but one imported. Of the confirmed cases, five of them were earlier classified as asymptomatic. China has a total of 81,708 confirmed virus cases.Hubei province reported one new fatality, bringing the country’s total death toll to 3,331.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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After Trump Bans All N95 Mask Exports, Canadians Remind U.S. That They Helped Americans After 9/11



(TORONTO) — The premier of a Canadian province that sheltered thousands of stranded American airline passengers after the 9/11 attacks questioned the humanity of U.S. President Donald Trump on Sunday after Trump banned the export of N95 protective masks to Canada.

The conservative leader of another province compared it to one family member feasting while letting another one starve. And yet another premier said it reminded him of 1939 and 1940, when Canada was part of the fight against global fascism while the United States sat out the first years.

Canadians across the country expressed hurt and disappointment that their neighbor and longstanding ally is blocking shipments of the masks from the United States to ensure they are available in the U.S. during the coronavirus pandemic. Canadian health care workers — like those in the U.S. — are in dire need of the masks that provide more protection against the virus that causes COVID-19.

Newfoundland Premier Dwight Ball said one of the great lessons in humanity is that in times of crisis you don’t stop being human.

“To say that I’m infuriated by the recent actions of President Trump of the United States is an understatement,” Ball said. “I cannot believe for a second that in a time of crisis that President Trump would even think about banning key medical supplies to Canada.”

Ball noted that in 2001, more than 6,600 passengers descended on Gander, Newfoundland, a town of 10,000 without warning as more than 200 flights were diverted to Canada following the attacks on the United States.

Flight crews filled Gander’s hotels, so passengers were taken to schools, fire stations, church halls. The Canadian military flew in 5,000 cots. Stores donated blankets, coffee machines, barbecue grills. Locals gave passengers food, clothes, showers, toys and banks of phones to call home free of charge.

“Newfoundland and Labrador will never give up on humanity. We will not hesitate for one second if we had to repeat what we did on 9-11. We would do it again,” Ball said.

“This is a time when we need to work together to continue to protect our residents and keep them safe from COVID-19 no mater where they live or what passport they hold.”

Former Gander Mayor Claude Elliott also said he’s disappointed.

“I understand the United States is going through a very dramatic time, especially in New York, and they need a lot of supplies, but we’re fighting an enemy that is just not one state, it’s the whole world,″ Elliott said. “And when we come to those times of tragedy in our life, we need everybody helping each other.″

Trump used his authority under the 1950 Defense Production Act to direct the government to acquire the “appropriate” number of N95 respirators from Minnesota-based 3M and its subsidiaries. He also asked it to stop exporting such masks, also known as respirators, though 3M issued a statement saying that could have “significant humanitarian implications” for healthcare workers in Canada and Latin America. The company said possible retaliation by other nations could actually lead to fewer of the masks being available in the U.S.

Ontario’s conservative Premier Doug Ford also expressed disappointment.

“It’s like one of your family members (says), ‘OK, you go starve and we’ll go feast on the rest of the meal.’ I’m just so disappointed right now,” Ford said Saturday. “We have a great relationship with the U.S. and they pull these shenanigans? Unacceptable.”

Alberta Premier Jason Kenney, also a conservative, recalled resentments from the start of World War II: “The United States sat out the first two or three years and actually initially refused to even provide supplies to Canada and the United Kingdom that was leading the fight at the time,” he said.

Prime Minister Justin Trudeau took a more diplomatic approach, saying Sunday he’s confident Canada will still be able to import N95 masks from the U.S. despite the export ban and said he will talk to Trump in the coming days.

Trudeau noted Canada supplies the U.S. with many supplies, including pulp for surgical-grade N95 masks, test kits and gloves. Canadian nurses also work in the U.S.

Trudeau earlier said Canada won’t bring retaliatory or punitive measures against the United States.

“I’m confident we are going to be able to solve this and I look forward to speaking with the president in the coming days,” Trudeau said.

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Virus Spurs Global Free-for-All Over $597 Billion Medical Trade



(Bloomberg) — Germany’s Vice Chancellor Olaf Scholz has said the shared experience of battling the coronavirus could lead to a “new age of solidarity.”There’s little sign of the crisis bringing nations closer together, though: From India to Europe and the U.S., governments are rushing to get hold of masks, ventilators, gloves and medicines in a free-for-all that’s stoking tensions in a world already stung by globalization. Countries are rushing to introduce export restrictions, contributing to what the World Trade Organization calls a “severe shortage” of goods needed to fight the virus.“Understandably, governments are taking protective measures to stem the pandemic,” the WTO said in a report published on Friday. However, “some of these measures may inadvertently impact the flow of critical medical goods across territories.”The tussles show just how vulnerable the world trade in medical supplies is to unilateral action by individual nations, and how dependent developing countries are on the richer world for basic medical gear to fight an epidemic. That’s all happening in a climate of distrust as President Donald Trump pushes his America First agenda, which has seen him frequently criticize global institutions as well as longstanding U.S. allies like Germany and France.The wrangling also reflects the rising economic clout of Beijing and its entrenchment in global supply chains. China is either a provider of raw materials for medical equipment for many countries, or their main source of completed goods.As the policy focus shifts to public health, the lack of control over supply chains translates into political pressure on governments. In India, the main opposition Congress Party berated Prime Minister Narendra Modi’s government for allowing the export of testing kits until Saturday, calling it “the ultimate betrayal to India.”India also ran afoul of Trump at the weekend when it banned all exports of hydroxychloroquine, a malaria drug the U.S. president has repeatedly championed in the fight against Covid-19. Trump said on Saturday that he spoke to Indian Prime Minister Narendra Modi to appeal for the release of shipments the U.S. has already ordered, and that India is giving his request “serious consideration.”A major exporter of generic drugs, India had already restricted foreign sales of certain medicines and pharmaceutical ingredients in response to the coronavirus crisis. That’s raised concern in Europe.The Indian export ban has been repeatedly discussed by the European Union’s Integrated Political Crisis Response mechanism, a group of experts and senior diplomats in Brussels seeking to coordinate the bloc’s policy, according to internal documents seen by Bloomberg. The EU’s executive arm has been negotiating with the government in New Delhi to ease the restrictions.Export LimitsSo far this year there have been 91 export curbs implemented by 69 jurisdictions, the “overwhelming majority” enacted in March as the virus epicenter shifted to Europe and then the U.S., according to Simon Evenett, professor of international trade and economics at the University of St. Gallen in Switzerland.That is setting off international friction.Officials in Germany and France have clashed with Washington over what they say are American attempts to unfairly obtain safety equipment.The interior minister of Berlin city state, Andreas Geisel, blamed “the U.S.A.” for confiscating 200,000 masks ordered from a U.S. producer when they were in transit through Bangkok. “We view this as an act of modern piracy,” Geisel said.French officials accused unidentified Americans of paying over the odds to secure masks in China that had been earmarked for France. The U.S. Embassy in Paris rejected any suggestion the federal government had been involved in such actions as “completely false.”Also at the weekend, Spain accused Turkey of retaining a shipment of respirators bought by two regional Spanish governments from a Turkish company.The Berlin official backed off his account on Saturday, saying on Twitter that the masks were ordered from a German company and why they didn’t reach Germany is being reviewed.The crunch affects critical medical equipment worth about $597 billion in 2019, according to the WTO. The issue arises because not all countries produce the necessary goods, from hand soaps and sanitizers to syringes and protective glasses. One example: China, Germany and the U.S. export 40% of the world’s personal protective products. China, meanwhile, is the world’s biggest exporter of face masks, with a 25% share.Joint ProcurementIn a bid to ease the flow of imports, the European Commission on Friday waived tariffs and value-added tax on such medical gear until end-July. That reduces the price of masks in Italy by a third, said Commission President Ursula von der Leyen. “We stand by our health workers and hospitals and we will do all we can to help them further,” she said in a video message.The commission has sought to begin joint procurement for various medical supplies while ramping up production of in Europe. Von der Leyen and Thierry Breton, the EU official responsible for the bloc’s internal market, held talks with industry representatives recently and concluded that boosting output under existing capacity was more feasible than retooling other manufacturing at the likes of auto and aerospace companies.By contrast the U.S., the world’s largest importer of medical products for the last three years, has turned to carmakers such as General Motors to produce ventilators during the crisis.Trump, who has equated himself to a “wartime president” as virus cases spiked in the U.S., said on Friday that he’d invoked the Defense Production Act to ban the export of crucial medical supplies, including high-functioning respirators, surgical masks, gloves and other personal protection equipment. That flies in the face of a recent call by Group of 20 leaders to work together against Covid-19.“We need these items immediately for domestic use, we have to have them,” Trump said.In a March 26 statement following a special video conference, G-20 leaders including Trump vowed to “work to ensure the flow of vital medical supplies, critical agricultural products, and other goods and services across borders.”Canada’s Prime Minister Justin Trudeau said Saturday he will speak to Trump in the coming days to point out that Canada also sends key equipment across the border.The race for medical supplies marks a return to geopolitical tensions just months after the U.S. and China reached an initial deal to stave off a global trade war. At root, the political conflict over sourcing the equipment is an extension of trade policy.“Governments have not aligned their trade and medical policy responses to coronavirus,” Evenett of St. Gallen said in a March report. That incoherence, he said, “threatens the lives of people at home and abroad, including those of front line professionals.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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