US-Europe Trade War Worsens, Could Trump Defeat Change That?
The World Trade Organization (WTO) resolution on US subsidies to Boeing this week is posited as an important catalyst for transatlantic trade relations. It may well make the hitherto frustrated negotiations between Washington and Brussels curdle or, on the contrary, raise the tariff pulse less than three weeks before the Americans’ appointment at the polls.
Showing off his diplomacy, EU Trade Commissioner Valdis Dombrovskis signaled on Twitter his intention to immediately engage with the United States again. “Otherwise, we will be forced to defend our interests and respond in a proportionate manner,” he said, referring to the possibility of taxing US products worth $ 4 billion.
His American counterpart, Trade Representative Robert Lighthizer, was much more incisive. He certainly showed his commitment to seek a solution to this dispute but recalled that the EU and its member states have not taken the necessary actions to comply with a similar ruling for the subsidies offered to Airbus.
“The US will initiate a new process with the EU in an effort to reach an agreement to remedy the conduct that harmed the aviation industry and US workers and to ensure a level playing field for US companies,” it said in a statement. Furthermore, by his logic, because the state of Washington repealed the tax breaks for Boeing earlier this year, “the EU has no valid basis to retaliate against any US product,” the official said.
It should be remembered how last August, the Office of the Trade Representative (USTR, for its acronym in English) indicated that although the European Commission previously announced amendments to the contracts to support the launch of the Airbus A350 XWB in France and Spain, said actions “did not they implement “the recommendations of the WTO to withdraw the subsidies received by the aeronautical giant.
That is why it maintained the 15% tariffs on Airbus aircraft and 25% on European products for a total value of 7,500 million dollars (6,390 million euros), with “modest” changes in the list of affected goods.
Although Spain was saved from being splattered by these changes, it is true that, simply with the decision to keep the 25% tariff that weighs on bottled olive oil and green olives of Spanish origin, our country is left at a competitive disadvantage. to Spanish olive growers compared to other European producers such as Italy, Greece and Portugal.
Furthermore, since last October, wines, except sparkling wines, with an alcohol content of less than or equal to 14% by volume and in containers of two liters or less from Spain, France, Germany and the United Kingdom have been taxed with a additional duty of 25%.
Precisely, the European Committee of Wine Companies (CEEV), an association to which the Spanish Wine Federation (FEV) belongs, together with 17 other organizations from the US and the EU that represent the retail trade, the restoration, and distributors and Producers of wine, spirits and beer, last week addressed a letter to the North American and European authorities urging to bet on the negotiation and reach an agreement that allows the elimination of additional tariffs on these products, which would generate growth and employment on both sides of the Atlantic.
“The US is in an advantageous position, since its capacity (to impose tariffs under the ruling of the WTO) is almost double that of the EU, but the 4 billion dollars (for Europe) should not be neglected either,” he acknowledged. Wall Street Journal, Bill Reinsch, Senior Advisor to the Center for Strategic and International Studies in Washington. “This situation sets the stage for a negotiation, but there is still a long way to go.”
It is not misguided. Last August, the EU and the US announced their first negotiated tariff cuts in more than two decades, with the elimination of European tariffs on imports of US live and frozen lobster products. In exchange, Washington reduced levies on a range of European products, including glassware and ceramics as well as disposable lighters.
That said, the chances of reaching a far-reaching trade deal are slim given that the US presidential elections will be held on November 3. The carousel strategy used by Washington allows changing the products and countries affected by these reprisals every 180 days. Given that the latest review came over the summer, the Office of the Trade Representative (USTR) could be given at least until the early stages of 2021 to negotiate with the EU without eliminating tariffs.
The “Google Rate”, another sticking point
Nor should it be overlooked that another area of concern extends to possible reprisals derived from taxes on digital services. If the US and Europe do not reach an agreement on this matter, a new batch of duties and taxes will begin to weigh on the anemic global economic recovery.
The Trump Administration maintains that these types of taxes discriminate against US technology companies such as Google, Facebook and Apple. Washington already launched an investigation in June against Spain, Italy, the European Union, the United Kingdom, Austria, Brazil, the Czech Republic, India, Indonesia and Turkey under the auspices of Section 301 of the country’s Trade Law, which will allow the imposition of tariffs in retaliation for these types of levies.
? The US has also increased pressure on France, which has already approved a 3% audit of digital services but delayed its activation, with the announcement of additional 25% tariffs on French imports valued at $ 1.3 billion. However, like Paris, the Trump administration delayed its implementation. At the moment, until next January 6, 2021.
“It will be necessary to reset the transatlantic relationship regardless of the outcome of the US elections. Some of the tariffs and sanctions that Trump has imposed may survive even if he is not reelected,” estimates Emilie Giraud-Bel, an expert at the Atlantic Council.
In fact, despite the fact that the Democratic nominee for the presidency, Joe Biden, wants to end “the artificial trade war” between the US and the EU to improve transatlantic relations, his adviser Tony Blinken acknowledged in an event recently organized by the House of US Trade that there is still an objective problem between European and US trade. In this way, he referred to the persistent imbalance in the trade of agricultural products with the EU due to the rules, which he said, “prevent us from selling products where we are very competitive.”