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In a speech to BusinessEurope on September 14, EU Trade Commissioner-designate Valdis Dombrovskis laid out a broad agenda for transatlantic trade, closing with this from his fellow countryman, the Latvian writer Reinis Kaudzīte: “A rusty nail is difficult to pull out.”
Dombrovskis, the European Commission executive vice-president who is now also Trade Commissioner-designate, observed that the U.S.-EU trade relationship “is built on a platform of certainty and trust, allowing our economic operators to invest and plan with confidence.” Citing a study issued by the U.S. Chamber and AmCham EU, he noted that these trade ties support 16 million jobs on both sides of the Atlantic.
Commission President Ursula von der Leyen sounded a similar theme in her recent State of the EU address, saying the United States and EU should build ties by working collaboratively on a broad agenda that includes “trade, tech (and) taxation.”
European officials point to the recent “mini deal” to reduce tariffs on Maine lobsters and European lighters and crystal glassware as an important step. However, a deal covering 0.02% of transatlantic trade is far from the level of ambition we would hope to see from the world’s largest trading partners, even if it is mutually beneficial.
There are more rusty nails to pull, and the U.S. and EU also must resolve outstanding bilateral disputes. The U.S. application of Section 232 tariffs on steel and aluminum from the EU and the threat to apply such tariffs on autos and auto parts are destructive, and the Chamber has consistently advocated for their removal. The Chamber has also commented on the path ahead in the long-running “EC and certain member States — Large Civil Aircraft” dispute at the WTO.
U.S.-EU differences extend to the WTO. The Chamber strongly supports the WTO. Americans have benefitted not only from tariff reductions secured via multilateral negotiations but also from the WTO’s guarantees that U.S. firms operating abroad will not face discriminatory treatment.
True, the WTO needs reform. It must become more nimble by making it easier for members to pursue new market-opening trade agreements. Likewise, reviving the WTO’s Appellate Body (AB) is imperative. The Chamber encourages the EU and other parties to continue to engage on substantive solutions that address legitimate complaints about the AB’s overreach and overly bureaucratic procedures.
One useful step the EU can take to support the WTO is to make more consistent efforts to respect its rules and rulings. Unfortunately, WTO rulings against the EU’s moratorium on approvals for GMO products or its ban on imports of hormone treated beef produced not compliance but years of delay and continued trade barriers against U.S. farmers and ranchers.
The Chamber shares Europe’s goals of advancing its digital economy. But we’re concerned when policymakers describe Europe’s digital ambitions as striving for “technological sovereignty;” and we caution against an approach that places Europe on a path that advances national champions by discriminating against foreign firms, including American ones.
We encourage the EU instead to pursue a policy of “technological resilience” that emphasizes cooperation with like-minded international partners and the private sector on measures that promote traditional European and American values and principles such as support for open markets, respect for the rule of law, and encouraging data flows while protecting privacy.
Several EU member states have adopted or are considering Digital Services Taxes (DST) that represent a straightforward violation of WTO obligations, despite an earlier consensus that the issue called for a solution based on the ongoing multilateral talks at the Organization for Economic Cooperation and Development (OECD). The EU and its member states should abjure these unilateral measures and redouble efforts to secure a multilateral solution.
The United States and the EU have long had the “most important diplomatic, economic, political, and security relationship in the world,” as Dombrovskis said. But the relationship does have its share of rusty nails, and a claw hammer will be among the most important tools for the new trade commissioner and his counterparts in the next U.S. administration.