Ladies & Gentlemen,
It is an honour for me to address you here today as you prepare for CONEXPO in March 2020. Before you go over to Las Vegas, I was kindly asked to share with you my perspective on the future of the Transatlantic relationship from my position as Trade spokesperson for the largest Group in the European Parliament.
It’s no secret that the Transatlantic relationship is in troubled waters. US protectionist policies are dampening global growth prospects and increasing uncertainty.
EU-US problems could carry huge potential knock-on effects for the construction equipment sector: in 2018 the “United States was the biggest destination country for EU exports of ‘Machinery and vehicles’ with 21 %. While China (14 %) was the only other export destination with a share of more than 10 %” (Eurostat).
The Transatlantic partnership remains of an unseen depth and potential:
- It supports 16 million jobs in Europe and the US.
- It represents one third of global GDP (expressed in terms of purchasing power) and
- accounts for half of the total global consumption.
- In 2017 we both accounted for about 55% of each other’s foreign investment.
- It is a historic partnership that is characterised by tremendous interdependence on all levels, interlinked institutions, mutual interests and common values.
Yet this very interdependence, that has underpinned stability in the global, multilateral trade nexus for decades, is now being weaponized. By a President who has an unfortunate view of trade as a zero-sum game.
The interdependence that binds our economies and our futures together is being used against us and against other allies. To extort concessions from longstanding partners and to disrupt years of carefully constructed links.
The EU has so far kept its cool.
Choosing de-escalation over escalation, choosing talks over tariffs whenever possible.
Yet we stand our ground in our conviction that a rules-based order is ultimately to the benefit of all parties. Even though we recognize that rules need to evolve through necessary reforms. But we cannot stand by as the US president continuous his opportunistic electioneering with the nuts and bolts of the global trade order. This means we must enforce the rules whenever and wherever they are broken. The best way to protect our values, is by putting them into practice.
OUTSTANDING ISSUES
Tomorrow, on the 18th of October, yet another list of US tariffs on European goods will enter into force.
This is the consequence of a ruling in a case in which the EU was found to give illegal subsidies to Airbus.
The case was initiated more than 10 years ago.
However, this knowledge did not prevent President Trump from claiming it as a ‘huge victory’ for his own administration…
Surely, these tariffs are different. They are legal. And not a unilateral whim of the US president. This was not the case for the tariffs that are still imposed on steel and aluminium.
Therefore it must be crystal-clear that we fully recognize the right of the US to levy duties. We uphold and abide by the rules and rulings of the WTO. And so we welcome that it has the teeth to enforce those rules.
However, a similar case is pending before the WTO. In this case the US was condemned for illegal subsidies to Boeing. And the EU will equally soon be awarded the right to impose countermeasures.
To me it seems only reasonable that there is a common solution for a common transgression. And the EU has walked the talk. Only as late as July the European Commission proposed in Washington to end illegal subsidies on both sides. But it fell on deaf ears.
Today, our hands remain extended to find a negotiated and fair settlement. It would be even better if we can do it on a multilateral level. Because these types of subsidies also exist elsewhere in the world.
But if the US decides to trigger tariffs nevertheless, then it leaves the EU no choice but to respond in kind.
Moreover, the list of European products that will bear the brunt of the tariffs includes:
cheeses, wine, olive oil, whiskey…
In sum: agri-food products.
Now someone should explain to me why agri-food producers should pay the bill for a conflict over aircraft subsidies?
A final remark on this matter. I cannot help but notice a certain ambiguity in the attitude of the US administration towards WTO dispute settlement.
Refusing on the one hand to nominate new members of the WTO Appellate Body.
This is provoking a de facto paralysis of the dispute settlement system, because coming December the Appellate Body will no longer have the necessary quorum of judges. While on the other hand touting the ruling as a great victory.
If anything, this ruling proves the efficiency of the WTO dispute settlement system.
Coherence would dictate that the American government adapt its position accordingly.
They should act constructively to save the capstone of the international trade order.
These tariffs will only compound problems in an already strained environment. Even before the demise of the WTO dispute settlement body we face:
- the looming threat of car-tariffs – on grounds of ‘national security’ – mid-November;
- President Trump’s general attitude towards multilateral agreements. Need I recall for example the withdrawal from the Paris climate agreement? Or the recent threat to tear up the international Postal Union?
- And I have not even mentioned Brexit yet!
The incoming “geopolitical Commission” – will have a very full in-tray. Trade wars are NOT good and NOT easy to win. and the EU will push to make this very clear.
POSSIBLE WAY FORWARD
In the meantime, it remains important to advance with a positive agenda:
- Ongoing negotiations on conformity assessmentoffers a positive outlook. These negotiations are happening in the framework of the Juncker-Trump agreement of July 2018. They are advancing slowly mainly because our counterparts seem to be dragging their feet. There is still much potential untapped for the construction sector.
- Further unlocking Public Procurementmarkets in the US, could offer huge opportunities. As JCJ correctly said, the EU remains open, but no longer ‘on offer’.It is time to make work of reciprocity.
CONCLUSION
President JFK once said: “You can’t negotiate with people who say what’s mine is mine, and what’s yours is negotiable”. The EU will continue to deliver this message. We will never adopt the same bullying-tactics as the US President. But we will stay true to our commitment to an international rules-based order.This means that we play by the rules. We must enforce them whenever, wherever, and by whomever they are violated – strengthened in the near future by a Chief Trade Enforcer. This is the best way to conserve a rules-based system. Not just by paying lip service to it, but by walking the talk.
Thank you for having me, and the best of luck in your preparations for CONEXPO. I hope it will take place in a calmer trade-environment. One that inspires confidence in the future, rather than paralysing uncertainty. Because with confidence come opportunities. Not least for the construction sector.