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«Thanks», Ukraine: European Union declares a trade war to US

19.03.17 02:39

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The European Union has faced yet another unpleasant surprise from the new US President, Donald Trump. Following the invoicing of 2% of GDP for the «American umbrella», the White House decided to impose a 20% duty on imported goods, including EU products. Now, the German Chancellor Angela Merkel will have to solve this problem on behalf of the entire EU, reports the German newspaper Süddeutsche Zeitung. 

The media considers three options for the EU response. The first implies the support of European companies at the expense of reimbursement of US customs duties, but such a strategy leads to large budget losses. Brussels can also file a complaint with the World Trade Organization (WTO) or take symmetrical measures, such as increasing taxes on imports from the United States. However, this decision should also be approved by the WTO, where the consideration of the application may take several years.

The trade barrier was the first evidence of Washington's rejection of the Transatlantic agreement, which completely changes the economic architecture of the global West. The US traditionally received half of the profits in Europe and provided the European Union with 70% of foreign direct investment. The agreement on a common US-European market was designed to bring together 50% of world GDP into a common market, increasing the EU and US GDP by 100 billion euros and 90 billion dollars, respectively. 

However, Vasily Koltashov, the head of the Center for Economic Studies of the Institute of Globalization and Social Movements, presented in his interview to «Politexpert» a different view of the trade war between Europe and the United States. According to him, Trump is implementing the promised protectionism in the national economy without regard for European Union, since the transnational blocks (the Transatlantic and the trans-Pacific agreements) were not able to solve the problem of the growth of the American economy itself.

Trump understands that there is no point in reckoning with the interests of European partners. Obama and Merkel seem to have interacted on the Ukrainian anti-Russian front, and yet the European Union has won Ukraine from this, while the United States has won nothing. Trump decided not to tolerate these contradictions. He led the matter to exacerbation as he wants to pursue protectionist policies in the spirit of Abraham Lincoln. He tries to do it, raising duties without considering the fact that this is a violation of the WTO rules. And in this situation, Europeans will have to pay.

Vasily Koltashov predicts that Trump will complicate the situation of the German financial center, creating a problem of further weakening of the euro. However, Europe will not be able to respond to the US with symmetric measures, because ‘this will give Trump an incentive to further raise duties on European goods’. Most likely, the EU will apply restrictions of a different kind, for example, of ecological nature, or visas for Americans mentioned by the German newspaper. For this, the European bureaucracy has a real pretext, such as discrimination against citizens of Bulgaria, Poland, Cyprus, Romania and Croatia, who were denied entry to the United States. 

The fact that Trump has an extremely harsh attitude to the European Union is indicated by his refusal to discuss the easing of tariff restrictions via Brussels. Instead of observing the EU protocol, the protectionist president offers Europeans separate negotiations with each country separately.

Vasilisa Alyabyeva