Rebooting Globalization

The EU’s main economic engine is Germany, and President Trump’s recent tariffs targeting the German automotive industry may be pushing the whole region towards recession. Geopolitical issues related to trade are putting pressure on EU countries to choose between China and the U.S. when it comes to their long-term strategic interests. This is a choice that many in the EU are reluctant to make, but if the US- China trade war continues indefinitely their hands may be forced. In the meantime, the markets weigh in…

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Nord Stream 2 Pipeline Divides the EU

As political tensions between the US and Russia continue to mount, many in the US and EU are skeptical of claims that the pipeline’s sole purpose is to deliver sustainable energy. Germany is in favor of the project, Poland not so much, and the Ukraine stands to lose its favored middle-man status. The threat of a US sanctions bill assigning restrictions on companies involved with the project is exposing new cracks in an already fractured alliance. Security issues in the Baltic Sea are at the heart of the naysayer’s concerns, and US Ambassador Sondland has openly criticized the EC for not doing more to kill the project.

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Trump’s Beef with the EU

The EU and U.S. have come to an agreement on allowing more hormone-free American beef into the EU. The agreement will give U.S. exporters a larger share of the overall amount of beef allowed into the EU every year, which is currently 45,000 tons in total. The deal will not change the overall import volume and it still needs approval by the European parliament. President Trump has also announced plans to tax French wine in retaliation for the GAFA tax. French Agriculture Minister Didier Guillaume called such threats “moronic” and “absurd”.

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Geostrategic Challenges and US-EU Trade

US Ambassador Sondland recently addressed attendees at the Centre for European Reform luncheon. His rhetoric was direct, pointed, and constructive. Gone are the days of talking around issues- he wants to have the difficult conversations, and have all parties admit that Cold War-era hopes of China and Russia moving towards democracy have not been fulfilled. His remarks stand in strong contrast to the media’s doom and gloom view of impending retaliatory tariffs and the chances of Boris Johnson and Ursula von der Layen being part of the solution. Don’t worry, Sondland has a plan.  

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The EC’s First Woman President

Ursula von der Leyen was elected as the next president of the European Commission on Tuesday, July 16th. She becomes the first woman to ever hold the position and the first German since Walter Hallstein, whose tenure lasted from 1958 to 1967. Politico has published a satirical piece featuring the kind of emails she can expect to receive from world leaders as she tries to build consensus with less of a mandate than her predecessor, Jean-Claude Juncker. Good luck with that! 

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France Passes a Digital Services Tax Bill

Internet-based businesses with global revenue of more than €25 million ($28 million) in France will now be assessed a 3% tax on revenue. This new measure complicates trade negotiations between the US and the EU. President Trump maintains that the law unfairly targets Silicon Valley tech giants and has called for a Section 301 investigation, while warning of retaliatory tariffs on French products.

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Agriculture and the Trade Wars

The EU on Friday announced the successful conclusion of a 20 year effort to reach agreement with Mercosur, the South American trading block. The deal grants Mercosur increased access to the European market for agricultural goods — mainly beef, poultry, sugar and ethanol. The EU Farm sector has reacted critically, claiming sell-out. Meanwhile, agricultural biotechnology remains a sticking point for any progress between the EU and the US. Perhaps we will be waiting another twenty years for a meaningful deal between those two parties…

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This Week’s International Trade Topics

On the eve of the G20 Summit, President Trump called into Maria Bartiromo’s show on Fox Business and outlined his ‘Plan B’ if US-China trade talks collapse. Steve Bannon thinks any kind of deal is unlikely before the elections in 2020 and believes such an outcome may favor Trump’s re-election campaign. Trump also attacked India over tariffs, and China promised to present trade terms to President Trump at the meeting in Osaka, Japan.

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EU-US Ministerial Meeting in Bucharest

On June 19th, 2019 the Romanian Presidency of the Council of the European Union hosted the semi-annual EU-US Ministerial Meeting on Justice and Home Affairs in Bucharest, Romania. On the agenda were topics of common interest; counterterrorism, migration, borders and visas, resilience of electoral systems, and cyberspace-related concerns like security and judicial cooperation. Five concerned member states are seeking to participate in the Visa Waiver Program, and agreement was reached on the importance of allowing reciprocal visa-free travel across certain borders.  A follow-up meeting has been scheduled for later this year.

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No Mexican Tariffs After All

President Trump has walked back his threat to impose tariffs on Mexico. In what has become a typical ploy, it turns out he was only bluffing. It’s quite ironic that this president, who has complained loud and long about “fake news”, continues to generate so much when it comes to trade.  Mexico’s promises regarding its asylum program and security forces amount to nothing that hasn’t already been agreed upon before the tariff threat. But Trump gets to play the tough guy, announcing that plans for a 5% import tariff on all Mexican goods have been “indefinitely suspended”.

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