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B He was recently pessimistic, even in German government circles, about whether an escalation of the trade war between America and the EU could be avoided. Some thought Trump would impose punitive tariffs on imports of European cars after the summer, which would have hit the Germans hard.
The relief of European Commission President Jean-Claude Juncker and US President Donald Trump The meetings at the White House have concluded a kind of disarmament agreement and now want to walk in the opposite direction. American car homework is once out of the table.
Both parties now want to start negotiations to completely abolish tariffs on non-automotive industrial goods and to reduce trade barriers and bureaucracy. No wonder the German Minister of Economy, Peter Altmaier, had a jubilation on Twitter. "Congratulations to Commission President Juncker and Donald Trump: They have made a breakthrough that can prevent a trade war and save millions of jobs!" Wrote Altmaier. "It's great for the global economy!"
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It is indeed a great success for Juncker and for European leaders (and the bosses) who co-opted this strategy. With a combination of firmness and willingness to speak, the EU has apparently pushed Trump to falter without actually making substantive concessions on the issue. Although Trump spoke of two concessions granted by Europe. For example, the Europeans "would start buying soy almost immediately", as Mr Trump and Mr Juncker said they would intensify their energy cooperation with the United States and "build more of liquefied gas terminals ". "This is also a message for others," said Mr Juncker, obviously meaning the Russians, whose EU wants to become less dependent on energy issues.
But if you look at the joint written statement from both sides in detail, it becomes clear that these two points are very vague. There is only one letter of intent from Europe to import more LPG from the United States. And soybeans are only one of many non-industrial areas where trade barriers should be lowered, including services, chemicals, drugs and medical devices.
Highlighting the two points during the press conference was aimed primarily at giving Trump something that he could portray as a success and politeness towards the EU. Soybeans, for example, are an important signal for many Trump voters among US farmers who are beginning to worry because their products in China are no longer competitive due to Chinese retaliation against Trump's punitive tariffs on 39, steel and aluminum. It should be noted that one of the main concerns of Trump – the lowering of high tariffs on European cars for US imports – is not part of the deal. The French probably did not want to go there.
It is certainly too early to sit down and relax. After all, no one knows what will happen in the negotiations to which both parties have committed themselves. Especially that Trump's economic advisors are desperately divided among themselves on many commercial issues. But the agreement marks at least a historic turnaround of the Trump administration. Until now, the only question was to know where Trump would go with his punitive tariffs and his protectionist measures.
Trump overcame his two-faced struggle
Now it's all about knowing where the two sides want to go in liberalizing economic relations. And that definitely points in the right direction. Because, as shown by Trump's previous punitive tariffs and European and Chinese countermeasures, protectionism is painful for everyone, businesses, workers and consumers. And many more people will benefit if not from politics, but the free market decides winners and losers.
The trade dispute of last year has in any case shown how much anyone who, in the past, hastened to withdraw from a free trade agreement with the United States or with other Western countries.
The EU will remain in force for the moment. But with respect to the goals, both sides are coming back almost to the situation before Trump's term. In the last phase of the Obama administration, Europe and the United States had negotiated a Comprehensive Trade Agreement (TTIP) that would not only reduce tariffs, but would also reduce non-tariff trade barriers. Both parties wanted to become something like the global trends and norms launchers and to coordinate and adapt their respective procedures.
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What's up what Trump and Juncker have now described in general terms is almost the same project, but with a reduced scope. A TTIP light. In the industrial sector (cars excluded), both parties want to work for zero tariffs, zero non-tariff barriers and zero subsidies. And in other sectors as well, barriers need to be dismantled and regulatory bureaucracy reduced, some of which are more important barriers to exporting for companies than tariffs.
More importantly, both parties agreed to work together to combat unfair trade practices. "Intellectual property theft, forced technology transfer, industrial subsidies and market distortions by state enterprises and overcapacity". This is clearly directed against China.
China has generated its growth with unfair methods
Trump is undoubtedly right in this area: the West has for too long been watching Beijing push its economic growth and rise to global power with commercial practices unfair. The West should have acted much sooner and with much more determination against China, which seriously distorts the rules of the economic game. Precisely because Trump is right on this issue, it was all the more incomprehensible that he ignited his trade war on two fronts, against China and against the EU, instead of teaming up with Europeans and act together.
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The agreement with the Europeans is now almost a Trump confession that he lifted and that he had need a front-end recovery. For during this time, the negative consequences of its trade war are evident in steel processing companies and farmers. And Republicans feared to be swept in mid-term elections in November
The duration of peace between the EU and the Trump government is not clear. Under normal circumstances, negotiations such as those agreed upon will take years to produce results. In addition, the Trump administration is one of the most chaotic in the modern history of the United States. So you should not give too much that the peace now agreed will last. But at least the agreement reached now is going in the right direction. Finally.
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