US-EU eco­nomic re­la­tions about to hit stormy weather

The Myanmar Times - - International Business -

WITH spats over Ap­ple and Deutsche Bank and squab­bles about Air­bus and Boe­ing, ap­proach­ing elec­tions on both sides of the At­lantic are ex­ac­er­bat­ing strains in US-Euro­pean eco­nomic re­la­tions.

The re­cent con­tro­versy over tax­ing the iPhone maker surely epit­o­mises the sit­u­a­tion best. Euro­pean au­thor­i­ties’ de­ci­sion in late Au­gust to force the Amer­i­can gi­ant Ap­ple to pay US$14.5 bil­lion in taxes to Ire­land in­fu­ri­ated of­fi­cials in Washington and is still ruf­fling feath­ers.

US Trea­sury Sec­re­tary Ja­cob Lew has re­peat­edly ex­pressed his as­ton­ish­ment and openly ac­cused the Euro­peans of “dis­pro­por­tion­ately” fo­cus­ing on US cor­po­ra­tions.

On the other hand, the US Jus­tice Depart­ment’s $14 bil­lion pro­posed set­tle­ment with Deutsche Bank over trad­ing in mort­gage-backed se­cu­ri­ties de­riv­a­tives has rat­tled nerves in Europe, where some ac­cuse Washington of com­ing down par­tic­u­larly hard on for­eign banks.

Add to this the US vic­tory at the World Trade Or­gan­i­sa­tion last week in the bat­tle over Europe’s pur­port­edly il­le­gal pub­lic sub­si­dies to Air­bus.

The mat­ter is not yet con­cluded but the United States could in the­ory claim bil­lions of dol­lars in com­pen­sa­tion from Europe.

And to top it off, ne­go­ti­a­tions on the Transat­lantic Trade and In­vest­ment Part­ner­ship, which are to re­sume in a week in New York, are also founder­ing – not only be­cause of di­ver­gent po­si­tions but also be­cause of the cal­en­dar.

The Amer­i­cans still in­sist the agree­ment could be signed be­fore the end of the year while Pres­i­dent Barack Obama is still in of­fice. The Euro­peans say this is “not re­al­is­tic”.

There has al­ways been fric­tion among the two al­lied sides, but this time things are wors­ened by the un­cer­tainty from the com­ing pres­i­den­tial elec­tions, set for Novem­ber 8 in the US and for April in France. Gen­eral elec­tions are due to be held in Ger­many be­fore the end of 2017.

“In nor­mal times, both sides would eas­ily reach a com­pro­mise on these is­sues but the prob­lem is that it is com­ing in this in­cred­i­bly un­cer­tain en­vi­ron­ment,” said Ed­ward Alden of the Coun­cil on For­eign Re­la­tions, a New York think tank.

The rise of pro­tec­tion­ist views in the United States with the can­di­dacy of Repub­li­can pres­i­den­tial nom­i­nee Don­ald Trump, and in Europe with the Bri­tish vote to se­cede from the EU, has elec­tri­fied talks and com­pli­cated re­ac­tions from cur­rent gov­ern­ments.

“The dan­ger is that what should be rou­tine dis­putes be­come harder and harder to deal with in this en­vi­ron­ment,” said Mr Alden, adding that both Europe and the United States are now “dis­ori­ented” by the re­jec­tion of trade lib­er­al­i­sa­tion.

As­sail­ing trade part­ners then be­comes tempt­ing. But some ex­perts ex­press doubts about such head-butting.

“I don’t think you can re­ally score points in the com­ing elec­tions in the United States or Europe by at­tack­ing trade part­ners,” said Se­bas­tian Dul­lien of the Euro­pean Coun­cil on For­eign Re­la­tions in Ber­lin, adding nev­er­the­less that “some pop­ulists may think so”. –

Newspapers in English

Newspapers from Myanmar

© PressReader. All rights reserved.