EU faces knotty trade fights with US no matter who wins

EU faces knotty trade fights with US no matter who wins
Passions are running high as the US prepares to choose its leader. (AP)
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Updated 03 November 2020

EU faces knotty trade fights with US no matter who wins

EU faces knotty trade fights with US no matter who wins
  • Europe’s push for digital taxes on American tech companies is a major source of friction between Washington and Brussels

FRANKFURT: Europe is closely watching the US presidential election, waiting to see whether the next four years will mean more tariff wars under Republican President Donald Trump or a shift toward less confrontational negotiation under Democratic challenger Joe Biden.

It’s no secret that European officials are more in tune with Biden’s stated intent to improve transatlantic relations. But no matter who wins, fundamental disputes that erupted — or in some cases, merely worsened — under Trump may not be easy to resolve.

In particular, Europe’s push for digital taxes on US tech behemoths like Google and Amazon could mean friction no matter who is in the White House. Likewise with the dispute over government support for Europe’s aircraft maker Airbus and America’s Boeing, which dates to well before Trump. And don’t forget Europe’s longstanding ban on US chicken treated with chlorine.

Chad P. Bown, senior fellow at the Peterson Institute for International Economics, says that even in friendlier times, “there are bilateral irritants, there always have been and there always will be. It’s the nature of trade, they’re going to be there — and they have to be resolved.”

And that is fraught with with consequences for the 16 million workers on both sides whose jobs are supported by transatlantic trade, the biggest such relationship in the global economy. Tit-for-tat tariffs over the past four years have affected companies and people making and selling a whole host of goods.

Among them are German makers of sweet biscuits, who have been sideswiped by tariffs imposed by the US after the World Trade Organization ruled European governments had broken the rules with subsidies for Airbus. The German confectionery association, known by its German acronym BDSI, says that affected producers have lost 30 percent of their export volume in the first half of this year.

“The small and mid-size, mostly family run enterprises have overnight and through no fault of their own lost a substantial market, which they built up and with great effort over decades,” said Andreas Nickenig, chair of the fine baked goods sector of the organization.

Matters could escalate if the EU imposes tariffs on US products in retaliation for tax breaks given in the past to Boeing.

Trump has used strong language about Europe’s trade surplus with the US, saying that the EU is “worse than China” and “has been treating us very badly” with “barriers that are incredible.”

Some observers hope that Biden could send a message by dropping the tariffs that Trump slapped on European steel and aluminum, enraging the Europeans and other allies by calling their metals a threat to US national security. The so-called Article 232 proceeding both hurts European producers and raises the cost of steel for US companies. Europe retaliated by raising tariffs on US-made motorcycles, bourbon, peanut butter and jeans.

Claudia Schmucker, a trade expert at the German Council on Foreign Relations, said that “it would be a major sign of willingness to work with the EU” if Biden were to announce after taking office that he intends to suspend the steel and aluminum tariffs, much as Trump repudiated the Trans-Pacific Partnership trade deal with Asian countries excluding China as one of his first official acts. There are hopes Biden would take a more rules-based approach based on the World Trade Organization, an international forum for resolving trade disputes.