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CRISIS OF MULTILATERALISM AND THE EU’S EXTERNAL ACTION
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talks where Washington’s goal appeared to be
lowering the duty on American cars from 10 %
at present to 2.5 %. In parallel, the Commission
launched an investigation to study how the de-
flection of trade would affect Europe if the
United States imposed tariffs on China or third
economies. The truce reached on 23 March
2018 by which Europe and countries such as
Mexico or Canada would be temporarily ex-
empt from the measures has not succeeded in
putting Brussels’ mind at rest. Even if Europe is
spared the American tariff measures, and they
focus only on China, it is highly likely that their
imposition will end up distorting trade flows
and monetary policies, with collateral effects on
European economies.
The threat of a tariff crisis coincides with a
moment European discontent over the lack of
reciprocity on trade and investment rules on the
part of the United States – “Buy American,” or
the barriers to European services on US soil –, a
complaint captured in the conclusions of recent
European Council meetings. The discontent is
compounded by the fact that the evidence
shows that American complaints are hardly jus-
tifiable where Europe is concerned. According
to the annual Transatlantic Economy Report, for
example, the profit of US firms in the EU was
$720 US billion to 584 billion of European com-
panies. Yet, above all, the apparent imbalance
in favour of the Europeans is down to intra-
trade among subsidiaries: US companies pro-
duce 60 % of America’s imports from Europe. In
fact, this framework of sales among subsidiaries
on both sides amounts to $5.5 trillion, benefit-
ting both parties.
The threat of a unilateral imposition of tar-
iffs, which contradicts the rules of the World
Trade Organisation (WTO), is a core element of
the demolition of the multilateral trade system,
though not the only one. On the one hand,
there is America’s withdrawal from the Trans-
Pacific Partnership (TPP) in early 2017 – an agree-
ment, however, that the 11 remaining countries
got up and running in March 2018. On the oth-
er, threats to tear up the North American Free
Trade Agreement (NAFTA) with Mexico and
Canada have continued. Negotiations have
stretched into 2018 chiefly because of the unac-
ceptable conditions for the other two partners in
terms of purchasing obligations and jurisdiction-
al matters on the part of the United States.
In this way, we have gone from expectations
of a transatlantic mega-agreement on invest-
ment and trade that would lay the foundations
for trade in the 21
st
century – the TTIP, which
ultimately fell through – in Barack Obama’s term
of office, to a scenario of the threat of a tariff
war, tension in multiple fields and the attack on
the multilateral system. Europe is confronted
with a new approach fromWashington, accord-
ing to which the international economy would
benefit from US growth based on trade protec-
tion and the tax reform in favour of its big busi-
ness and financial corporations. On the basis of
that, the EU’s expectations regarding any trade
negotiation, beyond this first episode, are inevi-
tably negative, following the imposition of
hawks such as Larry Kudlow, the new director
of the National Economic Council at the White
House, over globalisers such as Gary Cohn. This
shift to economic nationalism has its correlation
in the field of security with the departure of
General McMaster, the National Security
Advisor, and his replacement by the hawk John
Bolton and in foreign policy, with the replace-
ment of Rex Tillerson by Mike Pompeo as the
new Secretary of State.
Despite the gauntlets thrown down by the
Trump Administration, the EU appears reluctant
to enter into a trade war with the United States,
as that could end up seriously harming the close