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THE STATE OF THE EUROPEAN UNION
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sent by European Council President Donald Tusk
on 30 January to the leaders of the remaining
27 member states that contained a “united we
stand, divided we fall” message in which he de-
scribed the Trump presidency as a threat to EU
and called for unity and deeper integration.
Tensions rose once again in early February when
the heads of the European Parliament’s main
political parties petitioned the European
Commission and Council to reject Trump’s new-
ly appointed ambassador to the EU Ted Malloch,
an outspoken critic of the EU. Relations took a
slightly more positive turn at a 10 February
meeting between EU High Representative for
Foreign Affairs and Security Federica Mogherini
and US Secretary of State Rex Tillerson in
Washington during which they discussed their
differing positions on immigration and trade
but also expressed a willingness to establish
common ground.
A new agenda of uncertainties
Protectionism: “balanced” trade
The ramifications that policies now being imple-
mented by the Trump administration might
have for the European economy are not yet
clear. On the one hand, a policy of protectionist
retrenchment in the US would depress the
world economy and have a negative impact on
labour markets on both continents. Any new
euro crisis provoked by American retrenchment
would aggravate this turmoil and be particularly
damaging to the US economy. On the other
hand, and somewhat paradoxically, a decision
by the US Federal Reserve to raise interest rates
to counter inflation triggered by the higher mili-
tary and infrastructure expenditure Trump is call-
ing for could very well put pressure on eurozone
countries in general and Germany in particular
to abandon austerity policies in favour of a pan-
European stimulus and growth policy.
The Trump administration has made no
bones about its intention to rewrite the rules of
international trade and any agreements the US
government has signed to date it considers con-
trary to US interests. This was made clear at
both the January 2017 World Economic Forum
meeting in Davos, Switzerland and the G20
meeting held in Baden-Baden, Germany two
months later, which US Secretary Treasury
Steven Mnuchin attended. In spite of the G20’s
pro-trade stance, the declaration issued at the
end of this encounter was conspicuously devoid
of any reference to free trade and avoided con-
demning protectionism, a term that Mnuchin
artfully managed to supplant with the expres-
sion “balanced trade”. The same declaration
also omitted any reference to financing of ac-
tion on climate change agreed to during the
COP21 meeting in Paris.
Once both negotiating parties realised that
further progress on TTIP was effectively blocked
(the clearest indication being the absence of any
reference to the pact during the US presidential
debates), the project was quietly put aside pend-
ing a change of political and social climate, after
which various European leaders have suggested
that negotiations could be revived, albeit on dif-
ferent basis. The EU has meanwhile concluded
the Comprehensive Economic and Trade
Agreement (CETA), a parallel treaty with Canada
that could serve as a model should the TTIP be
revived at some point in the future. CETA was
approved by the European Parliament on 15
February 2017 following successful negotiations
between the central Belgian government and
the regional parliament of Wallonia, Belgium,
which had voted to block the deal back in
October 2016. As a “mixed agreement”, the