EU Commission President Juncker must not succumb to US President, Trump in the trade dispute between the US and the EU, writes the business expert Maria Demertzis of the think tank Bruegel in Brussels in the DW-Interview.
Deutsche Welle: When it comes to the trade relations between the US and the EU, is often of a trade dispute. This is a war – or how would you describe it?
Maria Demertzis: I don’t think we already have a trade war. The expression is too hard. We have seen that President, Trump has taken a number of hostile measures against free trade. This is of course not desirable, neither for the EU nor for the Americans, although Trump insists that it is a good thing. But it is still not a full unfolding of this war. If the EU were to retaliate, it could come easily to an escalation.
Where is the limit? What the red line is for a “trade war”?
There is no clear Definition. You can read it but the Numbers. As soon as you notice a drastic decline in the volume of trade between the two sides, you can safely assume that a trade war. So far, the Numbers have not gone back, but of course it will take some time before the effect shows.
What can the European Union, now a trade dispute?
There are a number of things the EU can do and Yes also makes. To uses first of all the opportunities in the multilateral trading system. It adheres to the rules of the world trading system, has sued the United States before the Tribunal of the world trade organization (WTO). This is the first, and easiest step, is completely in accordance with the rules. This is very important, because the EU wants to keep the international rule-book for the very valuable and. The second step is already clear: As it comes to react to the actions of the Americans in a proportional way. This is necessary in order to show Trump and the Americans that the EU is the enemy accepts-fated acts of the United States, which can damage the economy. The EU wants the not necessarily, but she is forced to do it.
Maria Demertzis, Bruegel Institute: rules of the world trade organization are in compliance with
In addition, the EU continues talking with Trump. Therefore, EU Commission President Jean-Claude Juncker, now moves to the White house to explain how the economy is damaged, and that this must be avoided. He will try to de-escalate, but at the same time, the possible counter-measures against the duties to prepare. It is very important, at the same time trade agreements with other Parts of the world. We have experienced the Deal with Japan last week. The EU speaks with Australia, new Zealand, and the Mercosur network in Latin America. The EU is committed and that is very good.
Jean-Claude Juncker, travels to Washington and should have no offering in the Luggage, because he has no mandate from the EU member States to negotiate anything right now. Instead, he wants to talk about unconventional solutions and new ideas to the trade dispute. What could that be?
I mean, the visit to Washington is part of a larger strategy. We need to understand that nobody wins when trading escalate disputes. Will try the Juncker-Delegation of the government in Washington to make it clear, if you sit eye-to-eye. I’m sure there are a lot of Americans, especially among Republicans who recognize the advantages of free trade. The EU is represented in the trade policy of the EU Commission. This is the mandate Jean-Claude Juncker. He should be pushing to its limits.
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Let me, once again, unconventional solutions to issues. A suggestion is that you can record the suspended negotiations on TTIP, a comprehensive trade agreement between the US and the EU. The is a way?
I’m not sure if it can give these unconventional solutions at all. There is a clear strategy of the EU to engage namely international, and to obey the rules. You should consider now. Frankly, I do not believe that negotiations with Trump would do anything. It is important that the international existing rules and the Obvious, namely, that trade wars are very much damage for any cause.
You stand strongly on the world trade organization (WTO). But the cases before the WTO are very lengthy. It may be that it is actually too late, to the WTO, come to a decision?
It is not right that the world trade organization, works perfectly. The EU recognises also some points of criticism of the United States and her Desire for a Reform of the WTO as a reasonable – according to the experience with other trade conflicts. Therefore, could now try both sides at least, to work on a Reform, and in the Trump desired direction. That would be a good thing. The length of the proceedings before the WTO must not, however, mean that we give up the whole System.
Maria Demertzis is the Deputy head of the Brussels think tank Bruegel. The Greek Economist has worked in the EU Commission, the Dutch Central Bank and the Harvard Kennedy School for Government in the United States.
The interview was conducted by Bianca Ferrari, Studio Brussels