Trade Wars

Biden breaks promise to heal transatlantic rift

This article is an onsite version of our Trade Secrets newsletter. Sign up here to receive the newsletter directly to your inbox from Monday to Thursday

Hello again from Washington DC, where the summer weather cools down in the fall (or fall) and people are slowly resuming in-person meetings. We have several transatlantic visitors expected to come to town this week and next, including EU Internal Markets Commissioner Thierry Breton, EU Trade Chief Valdis Dombrovskis and WTO Director General Ngozi Okonjo-Iweala. On that note, today’s piece takes a look at the flickering background music that accompanies European and American relations on trade (and broader foreign policy).

We also have a large British delegation in town, including British Prime Minister Boris Johnson. British officials told reporters the UK had considered applying to join the USMCA trade bloc.

Traders are rightly skeptical that this would be a good idea for the UK. It doesn’t really provide a workaround for things blocking a potential US-UK deal, like the agri-food standards disagreement (also known as the ‘chlorinated chicken’ issue).

The British have already floated the idea that the United States could join the Comprehensive and Progressive Trans-Pacific Partnership (which won’t happen any time soon, in our opinion), so maybe joining existing multilateral clubs is the news. UK strategy to align with the US given that the bilateral deal is on the rocks. However, this does not seem like a strong negotiating position to us.

Chartered waters examines how direct investment between China and the United States has collapsed.

We want to hear from you. Send your thoughts to [email protected] or write to me at [email protected]

Biden’s European record is mixed so far

One of Joe Biden’s big promises was to mend the broken transatlantic relationship. A few months ago, it looked like he was up to the task, with EU officials incredibly pleased with the end of hostilities against Airbus-Boeing, which saw the suspension of tariffs on $ 11.5 billion of transatlantic trade. But this week, things didn’t look so rosy. Aukus’ feud, combined with European anger over the chaotic US withdrawal from Afghanistan, threatens to turn the mood down.

Some of these issues relate more to national security and defense than pure trade and economic cooperation. But the atmosphere is important. As my colleague Alan Beattie pointed out in Trade Secrets on Monday, national security interests and trade are increasingly intertwined. Supply chain security, especially when it comes to items with potential military uses like semiconductors and rare earths, is discussed in the commercial sphere.

Which brings me to the upcoming Trade and Technology Council, which has 10 working groups, some of which discuss supply chain security, export control cooperation, investment screening and abuse of technology. Due to the spat from the submarine Aukus, the French urged the European Commission to postpone the talks. EU officials are questioning whether to move the talks, which were to take place in the city of Pittsburgh, the Rust Belt Biden trade policy for workers), back to October.

What conclusions can be drawn ? Well, things don’t get fixed very quickly. Biden’s record so far is mixed at best.

Europeans downplayed importance of TTC: diplomat said Trade secrets that this was just a “nice meet” that was kicked off during the Trump years so that everyone would have something positive on their calendar amid the gloom of hellish trade wars. But Thierry Breton, the European Commissioner for Internal Markets, told the FT earlier this week that there was a growing feeling in Europe that something was “broken” in transatlantic relations. Breton made a point of stressing that the dissatisfaction concerned much more than the TTC. Now even the success of the Airbus-Boeing truce seems tarnished. “We’ll see what happens,” Breton told the FT, “it’s not a big win”. As we said at the time, avoiding details and not really writing anything seemed to be the order of the day. (In our opinion, the suspension of all these tariffs Is It seems like a victory, but we agree that the original arguments about the aircraft subsidies are not resolved and will likely reappear later.)

The travel ban linked to Covid – another source of European discontent – has now been lifted, but after a long delay and a lot of lobbying from diplomats. Steel and aluminum tariffs remain in effect. And many European embassies in Washington were privately enraged at the way the trade-related (travel) intellectual property waiver for vaccines was suddenly announced. As one diplomat told us at the time, it was ridiculous for the United States to pretend to be the savior of the world when it came to handing out jabs when it was sitting in a pile at the time. AstraZenecas that they couldn’t even use.

As for the TTC, regardless of whether it exists now, no one seems to be quite sure what to expect in terms of real results. Dombrovskis is still expected to report to Washington early next week, according to the US Chamber of Commerce, which is planning meetings with him. (Ngozi Okonjo-Iweala will also meet with U.S. Trade Representative Katherine Tai.) We’ll be interested to see what smoky signals emerge from classic WTO-related arguments, such as appellate body reform. and / or the vehement (but also vague) support of the United States. for the travel exemption. . . just to bring back some old favorites to our transatlantic beef list.

Chartered waters

Today we bring you the last installment in our long series highlighting the cost of diplomatic spillovers on trade. It’s no surprise that the failing relationship between the United States and China has had a major impact on foreign direct investment between the two countries.

However, the magnitude of the blow – especially for Chinese investment in the United States – has been substantial. As the chart below shows, over the past five years, Chinese FDI to the United States has fallen by 85%, from nearly $ 50 billion in 2016 to less than $ 10 billion in 2020. Claire Jones

Commercial links

It seems that the UK government woke up to the reality that a trade pact with the United States is not exactly a priority for officials across the Atlantic, with Boris Johnson now refusing to commit to a deal by the next general election. Don’t say we didn’t warn you.

Safer China’s CPTPP request. David Henig, UK director of the ECIPE think tank, has an interesting article on Borderlex asking how much we want integrate Beijing into the world trading system.

As Narendra Modi is preparing to travel to Washington to meet the quad of lawmakers from the United States, India, Japan and Australia, India’s Department of Health (Nikkei, $) has said Covid vaccine exports would resume next month. Aimé Williams and Francesca Regalado

Recommended newsletters for you

Brexit briefing – Our essential weekly guide to the world, post-Brexit. register here

Dashboard – Key news and analysis behind business decisions in sports. register here