Europe to Trump: Don’t give up on free trade
Europe has launched an urgent campaign to keep the Transatlantic trade agenda alive after a toxic U.S. election race in which president-elect Donald Trump struck an aggressively protectionist stance.
Shortly after Wednesday’s result was confirmed, European Council President Donald Tusk and Commission President Jean-Claude Juncker appealed to Trump to visit Europe for an EU-U.S. summit at his “earliest convenience,” and underlined the importance of “cooperating closely” to resuscitate their highly contentious Transatlantic Trade and Investment Partnership (TTIP).
Over the course of the campaign, Trump vowed to protect American workers from the ravages of global trade. He not only vowed to slap high tariffs on China and Mexico — relishing trade wars should they prove necessary — but even toyed with the idea of quitting the World Trade Organization if it stood in his way.
Post-Brexit Britain was one of the few places that Trump actively courted as a trade partner.
European Trade Commissioner Cecilia Malmström played down the significance of the election rhetoric. She noted that the most bitter attacks in the campaign were directed at the Trans-Pacific Partnership between the U.S. and 11 other Pacific Rim countries, rather than TTIP.
“TTIP simply is not on the radar,” she said, holding out the prospects of an EU trade rapprochement with Trump.
Commission Vice-President Jyrki Katainen said it remained to be seen whether the real estate mogul would change his language on trade after his victory. “We don’t want to speculate on the final opinions of the new president of the United States. Time will show what is the policy.”
The stakes are high: The U.S. is the EU’s largest trade partner with €620 billion a year moving between the two, eclipsing China where two-way trade reached €520 billion in 2015.
Because of that interdependence, Malmström argued it made no sense to let TTIP die: “There is still a very good case to have TTIP, to facilitate trade between the two biggest economic powers makes all the sense in the world.”
All bark, no bite?
Beneath some of the more acid rhetoric, Trump the tycoon has sounded open for business.
In an interview with CNBC in August, Trump qualified his stance on global trade, saying: “The fact that I’m negotiating trade will mean that we’re going to make good trade deals.”
“But we are absolutely going to keep trading. I am not an isolationist. And they probably think I am. I’m not at all. I’m a free trader. I want free trade, but it’s got to be fair trade. It’s got to be good deals for the United States,” Trump said.
After declaring victory in New York on Wednesday, he said the U.S. “will get along with all other nations willing to get along with us.”
“I want to tell the world community that while we will always put America’s interests first we will deal fairly with everyone — all people and all other nations. We will seek common ground not hostility, partnership not conflict,” he added.
Despite leaving the door open, trade deals will be difficult.
“We have already seen problems with the [EU-Canada deal] CETA, and the election results will not be a good signal for TTIP,” said Steffen Elstner, an economist at the German Council of Economic Advisers.
“In Europe, everyone hoped that Clinton would get the presidency and not Trump so you need to normalize the relationship between the U.S. and Europe. It’s a good thing to talk and get rid of this uncertainty concerning trade relationships,” he added.
One wild card in the Trump era is how the U.S. will perceive its role in the WTO. Analysts said pulling out would be difficult, not least because of outstanding trade complaints the U.S. has already launched under the auspices of the WTO, stemming from Chinese domestic support for agricultural products to China’s export duties on cobalt, copper, graphite, lead, talc, tantalum, and tin.
“I don’t think that he will go so far that he will go out of the WTO. I guess that stance was for a period during the election campaign,” Elstner said.
Malmström agreed: “We hope very much, of course, that the U.S. will stay in the WTO … the U.S. has been a very important partner there and I hope it will remain so.”
Ulrich Grillo, president of the German Industry Association, warned that Trump would cause global damage if he veered toward protectionism.
“The uncertainty in the economy is huge. Donald Trump is well-advised to not seal off the U.S. economy from the world. Otherwise the uncertainty about his future policy will cause significant negative effects for the world economy.”