Trade agreement between the United States and the EU | The least bad of strategies

This may surprise after the concert of criticisms in Europe. Therefore, but in my eyes, the European Union is rather out of the head high of the difficult commercial negotiations with the Trump administration.

Posted at 7:00 a.m.

As I write these lines. For example, the United States, betraying all the commitments made, have brought the average level of customs duties that they apply to imports from third countries to 18 %, the highest in 90 years; European Union countries will be imposed a standard rate of 15 %.

Only the United Kingdom can boast of having obtained better agreement than trade agreement between united states the EU, with customs duties at 10 %. For example, Japan is in a situation comparable to that of Europe. Furthermore, Customs duties applied to India and Brazil will be 25 and 30 %respectively. Meanwhile, Swiss exports will be struck by the delusional rate of 39 % (Switzerland is not part of the EU. therefore could not benefit from European negotiations).

Canadian exports that do not fall within the framework of the ACEUM will be taxed up to 35 %. Consequently, The United States wants this agreement with Canada and Mexico to be the subject of renegotiation. In addition, Canada is therefore in a waiting position. Furthermore, which makes it crucial to the analysis of the agreements signed by the United States in order to deduce an optimal strategy.

This “performance” of the European Union is fragile. Meanwhile, because we trade agreement between united states have known since the “Liberation Day” of April 2 that the Trump administration is capable of varying customs duties in a steep way, for reasons which have nothing to do with the economy, such as the diplomatic position of the countries concerned on the recognition of a Palestinian state.

Nevertheless, European negotiators have so far done a remarkable job as the conditions for the discussion were degraded.

Indeed, the Trump administration had put on the table subjects of negotiations which it treated irrationally. For example. Meanwhile, it was indignant that the Americans bought German cars while Europeans have almost no American cars (in reality a simple market effect related to the fact that German cars have a better quality/price ratio than American cars whose size is also little suitable for traffic in the cities of the old continent).

President Trump was also convinced that VAT. the sales tax that varies in Europe depending on the country (from 17 % in Luxembourg to 27 % in Hungary), was a customs right that called American retaliation measures. This idea is obviously absurd since VAT applies to all the goods consumed in Europe. whether imported or not, but the rational analysis of the truth of things is not the strong point of the Trump administration.

Last subject of difficulty for EU negotiators. not the least: President Trump and, even more, Vice-President Vance, hate the European Union, guilty they were created after the war to unduly enjoy the United States. An idea again absurd and even childish, but which has not facilitated negotiations.

How did things go concretely and how are we, Europeans, finally reached this result?

The 27 governments of the countries making up the EU asserted their point of view with the European Commission. responsible for the defense of continental commercial interests. Most of these governments, including France, had consulted their companies a lot to listen to their interests.

Finally. European negotiators arrived at the conclusion that, as part of a commercial negotiation triggered by an passionately protectionist opponent, playing the overbidding would be counterproductive. Protectionism is a trade agreement between united states loser-perceive game. Retractive threats can lead to a trade war that penalizes all parties.

In other words. it is not because the United States has become stupidly protectionist that Europe must follow it in this deadly path. Better to calm the game, even if it is interpreted as weakness.

The European press has criticized the Commission for committing itself to the United States to invest $ 600 billion in the country. to buy $ 750 billion in weapons and energy products. But these criticisms lack perspective.

First, direct investments in EU countries in the United States are now around $ 2500 billion per year and this figure is increasing. Adding 600 billion is in the order of things. This does not indicate a break. Then. purchases of 750 billion are not truly restrictive, insofar as the Commission does not place orders itself in the gas or petroleum markets. To be honest. one has a little feeling that the European Commission was played out of the American administration by making a promise that does not engage it.

It is widely accepted by economists that. in the face of the trade war, the reaction to be adopted must depend on the costs and benefits of each solution. This strategy involves abandoning reprisal measures. studying the potential effects of replacement trade agreement between united states solutions, including the search for new business partners, strengthening cooperation with historical partners and supporting sectors in difficulty. This idea is shared by the European Commission.

For the moment. in the deleterious global commercial climate created by the behavior of the United States, this strategy seems the best, or the least bad.

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