Why Europe Should Let Trump “Win” on Trade

The European Union says it’s ready to retaliate against new tariff measures proposed/instituted by the Trump administration. However, letting Trump “win” the trade war would be far smarter.

Mentioning Trump’s name in Brussels (the capital of the European Union) produces a lot of eye-rolls. Trump is not only unpopular, but he is also regarded as being uninformed at best and having malicious intent at worst. Whether or not those things are accurate is a story for another time, but the trade war debate reveals the level of self-reflection in Europe. Much is said about the tariffs imposed on European goods, and the narrative in Brussels is that the United States started the trade war, forcing the European Union to retaliate.

The fact that the European Union initiated the most important trade barriers didn’t occur to them.

On January 18, the European Union adopted a negotiating mandate for the trade talks with the United States. Brussels announced that every new tariff measure by Washington, DC, would be met with retaliatory tariffs in Europe.

EU Trade Commissioner Cecilia Malmström warned that if Trump decides to punish Europeans on trade, “we are very advanced in our internal preparations” to retaliate. “Should that happen, we are ready, it would have a very damaging effect on the negotiations,” she said.

Between 2010 and 2014, the US and the EU negotiated the Transatlantic Trade and Investment Partnership (TTIP). The negotiations ended after considerable public protests in Europe pressured Brussels to break-off the talks. Fear-mongering anti-free trade activists warned the public about the threat of importing goods from the United States, such as GMO foods.

However, importing goods produced to different standards than EU norms does not in the least “undermine” EU standards. Provided consumers are aware of the origin of their products, mutual recognition of standards poses no threat to anyone’s legislation.

report by Foodwatch, a German NGO pretending to stand for consumers, also treats the idea of free trade with contempt. This is well illustrated in a chapter on Mexican trade relations on page 47. The researchers write:

In 2001 Mexico introduced a tax on all soft drinks flavoured with sweeteners other than cane sugar (e.g. with beet sugar or isoglucose, a syrup made from corn or wheat starch). The exception for drinks sweetened with cane sugar protected the country’s own sugar cane production.

They continue by explaining that such taxes are being challenged under WTO trade rules and that industry lobbyists oppose them through the claim of “a form of trade discrimination.” The EU, of course, is well-known for trade discriminatory practices aimed at protecting its own producers, including its famous ban on beef treated with the estradiol-17β hormone.These activists would oppose free trade no matter what because it increases food trade.

Such agricultural protection is always a major sticking point in trade negotiations, so it is certainly an odd point for anti-trade activists to bring up.

The report’s tenor is exemplified by this statement from one of its authors, Thomas Fritz, during the Foodwatch press conference:

Our conclusion is that due to these FTAs [Free Trade Agreements], food trade is indeed likely to grow, along with the risks posed to the consumer and the environment.

Forget concerns about democracy, judicial procedures, or even those of food standards: these activists would oppose free trade no matter what because it increases food trade. “The risk to the consumer”—what risk are we talking about? The risk of falling food prices and increased quality? The risk of expanded choice? And to what “risk” are we exposing the producers in South America to? The risk of increased production and economic prosperity?

What would it take for Donald Trump to “win” the trade war? In essence, Trump supports getting rid of all tariff and non-tariff barriers. All the European Union needs to do is to tell the administration “you won” and drop the previously introduced retaliatory measures. This would open the market and provide cheaper goods for European consumers and enable Trump to approach his goal of a zero-tariff basis.

But that isn’t going to happen because the notion of “winning” is as politicized in Brussels as it is during a Trump rally. So next time you receive eye rolls at the mention of the trade war in Europe, recognize that over here on the old continent, we aren’t really any better.

Rice tariffs: who are we kidding on the EU’s “free trade”?

The European Union introduces tariffs on rice from Cambodia and Myanmar in an effort to protect Italian farmers. Another example of “free trade” à la European Union.

It was announced last Wednesday that tariffs on rice from Cambodia and Myanmar were being re-introduced, in order to fulfil safeguard clauses. The terminology here is telling. European farmers are supposed to be “safeguarded” from foreign competition. It was at the request of Italy the Commission already suggested structural tariffs in November, those starting at €175/tonne in the first year and then progressively dropping to €150 in the second year and €125 in the third year.

Back then, the proposal didn’t find a majority in the Council, and therefore bounced back to Berlaymont, which now confirmed its initial intention. Until now, Cambodia and Myanmar benefitted from the EU’s Everything But Arms (EBA) trade scheme, which unilaterally grants duty-and quota-free access to the world’s least developed countries (apart from arms and ammunition).

Italian MEP Tiziana Beghin said, according to Politico, that she had been fighting for a safeguard to protect Italian farmers since 2014, and said that the news was a “relief” for more than 4,000 enterprises and families.

The Five Star Member of the European Parliament surely completed a smart political move for her constituants, which benefit from new tariffs, or who have been misled into supporting them. More misled however have been those who for the longest time have believed that the goal of the European Union was to be in favour of free trade. What a disappointment that must be.

The European Commission writes in its press release:

“The initial request for trade safeguards on rice imports was tabled by the Italian government in February 2018 and supported by all other EU rice growing Member States (Spain, France, Portugal, Greece, Hungary, Romania and Bulgaria).”

It is written in this way because either the Commission has absolutely no notion of what it means to have a vested interest, or because it realises itself that free trade does not exist in the European Union.

While rice-producing member states are naturally lobbied by their local rice farmers, consumers have nobody to speak on their behalf. Too many of the established consumer organizations have nothing to say on tariffs. In fact, it seems all too often that they back the protectionist far-left and far-right positions, in order to “protect jobs” and “support local production”.

To them, consumer prices seem irrelevant. In fact, the European consumer organization BEUC has nothing to say at all about the EU’s re-introduction on rice tariffs. Does it not matter to them that it is low-income consumers who will be hit the hardest by this form of indirect taxation?

This is not the first time this happens. The European Union constantly introduces new tariffs, and many have been added since the United Kingdom voted to leave the European Union. The reasons are diverse: often it is because the producing country is accused of subsidizing their local economy (which the EU does also through the Common Agricultural Policy), but a safeguard measure can be as blatantly protectionist as in the example of rice imports from Cambodia and Myanmar.

If you were to suggest something similar on a national level, you’d be accused of nationalism. If done on a Brussels-level, it is merely a safeguard.

Protectionism is purely ideological because it is based on sentimental beliefs. If we were to take nationalism out of the picture, it would be difficult to argue that international free trade would be disadvantageous while domestic free trade (say, between cantons or provinces) is advantageous. This is particularly true in large trading blocs such as the European Union. Aren’t French farmers also hurt by imports from Bulgaria?

And if internal subsidization processes of the EU are working to eliminate those differences within the bloc, then how is Bulgaria supposed to rise out of its economic hardships, if nobody can ever compete with Western Europe, make a profit and innovate? And what is the big threat anyway, when cheap food for our consumers is the result?

The price for the economic illiteracy of this entire process is footed by the European consumer, who is told that the Trump’s of the world are the problem with free trade. And while Washington D.C’s trade politics have indeed changed for the worse, they’re unparalleled in their doublespeak by an EU pretending to stand for free trade in the world, while catering to local interests in order to keep the bloc together.

Warum sollen Arme Zölle auf Medikamente zahlen?

Zeitgleich zum Weltwirtschaftsforum trifft sich Ende Januar unweit von Davos in Genf der geschäftsführende Vorstand der Weltgesundheitsorganisation. Erschütternde Nachrichten über erneute Ebola-Fälle aus dem Kongo sollten vermuten lassen, dass es sich bei diesem Vorstandstreffen hauptsächlich um die effektive Bekämpfung dieser schrecklichen Seuche drehen wird.

Hilfsmitarbeiter haben teilweise ihre Arbeit im Kongo ruhen lassen müssen, da es Gewalt und Übergriffe auf sie gab. Gleichzeitig wurden Regionalwahlen in zwei Provinzen verschoben, was mit der anhaltenden Ebola Epidemie begründet wurde, aber von vielen Menschen als politisches Manöver gegen die Opposition wahrgenommen wurde. Dies sorgte für zusätzliche Unruhen und macht die Arbeit von internationalen Hilfskräften noch schwerer. In solchen Situationen ist auf die geballte Kraft der Weltgesundheitsorganisation und deren UN Mandat zu hoffen.

Doch der 2017 gewählte und amtierende Generaldirektor, Dr. Tedros Adhanom Ghebreyesus, hat zu häufig andere Prioritäten als die akute Bekämpfung von ansteckenden Viren. Der ehemalige äthiopische Außenminister zeigt offen seine ideologisch motivierten Vorstösse im Kampf gegen nichtübertragbare Krankheiten (englisch: non communicable disease oder NCD), wie zum Beispiel Videospielsucht. Erst letzten Sommer machte die WHO Schlagzeilen mit der Anerkennung von Videospielsucht (gaming disorder) als Krankheit.

Während Videospiele hoffentlich nicht die Agenda des nächsten Vorstandstreffens füllen werden, besteht die Gefahr, dass deutlich mehr über nationale Gesundheitspolitik gesprochen wird als die internationale Bekämpfung globaler Seuchen. So stehen große Teile der Agenda im Lichte der sogenannten Access to Medicines Roadmap, die sich zwar zum Ziel setzt den Zugang zu Medikamenten weltweit zu verbessern, aber hauptsächlich Regierungen vorschlägt private Gesundheitsunternehmen zu enteignen und deren geistiges Eigentum ohne oder zu deutlich geringeren Lizenzgebühren zu verwenden. So spricht sich die WHO für verpflichtende Lizenzen an lokale Generikaproduzenten aus, die es erlauben die bestehenden Patente von forschenden Pharmafirmen zu ignorieren.

Während die WHO also der forschenden Privatwirtschaft den Kampf erklärt, verschweigt sie die eigentlichen Probleme, mit denen Patienten in Entwicklungs- und Schwellenländern ringen.

Misswirtschaft und Korruption sorgen in diesen Ländern oft für eine schlechte oder sogar desolate Verteilung von bereits knappen Finanzmitteln im Gesundheitssektor. Anstelle Krankenhäuser zu modernisieren und die einfachsten aber notwendigen Materialien und Medikamente vorrätig zu haben, verschwinden sowohl Steuergelder als auch internationale Hilfszahlungen in den Koffern von korrupten Politikern und Mitarbeitern.

Aufgrund fehlender Rahmenbedingungen und mangelnder Infrastruktur kommen oft gespendete Medikamente und Impfstoffe erst gar nicht bei Patienten an. Von einem führenden Pharmamanager habe ich einmal gehört, dass seine Branche volle Warenhäuser mit AIDS-Medikamenten in mehreren afrikanischen Ländern hätte, diese aber leider nicht an die Patienten liefern könne. Gründe dafür liegen bei mangelnden Kühlketten, schlechten Straßen, aber auch korrupter Strassenpolizei und Übergriffen auf Ärzte.

Dies sind einige Punkte auf die sich die WHO konzentrieren könnte, falls sie wirklich effektiv das Patientenwohl steigern wolle. Zwei weitere, noch schneller wirksame, Maßnahmen wäre die einseitige Abschaffung von Mehrwertsteuern und Einfuhrzölle auf Medikamente. Besonders Schwellenländer wie China, Brasilien und Russland erheben oft hohe Zölle auf innovative Medikamente. So geht der Ökonom Matthias Bauer beispielsweise davon aus, dass chinesische Patienten über 5,5 Milliarden Euro durch die Abschaffung von Zöllen auf importierte Arznei sparen könnten. In Indien und Brasilien würde Freihandel die Medikamentenpreise fast halbieren.

Die oft finanzstarken Pharmaunternehmen könnten wichtig Partner in der Erschließung von benötigter Infrastruktur in diesen Ländern werden. Daher sollte die Weltgesundheitsorganisation solche Firmen nicht als Buhmann für Versäumnisse staatlicher Akteure ausmachen, sondern eher die wirklichen Gründe für schlechte Gesundheitssysteme und mangelnde Versorgung ausmachen: Korruption, Bürokratie und Protektionismus.

Während der Abbau von Korruption sicherlich ein langer Prozess ist, lassen sich Zölle einseitig und schnell abschaffen. Dies bedarf meist nur eines Erlasses des jeweiligen Landes. Ein schnelleres Zulassungsverfahren und ein einfacher Import von Medikamenten sind weitere Schritte die den Preis senken und Patienten einfacheren Zugang geben.

Proposed EU duties on rice would hurt European consumers, says #ConsumerChoiceCenter

European Affairs Manager of the Consumer Choice Center Luca Bertoletti criticized the request and said that it’s time the European Union stopped pushing forward protectionism.

“The reasoning behind trade barriers is to protect a specific industry – in this case Italian rice growers – from competition. What’s usually overlooked though is that whilst taking the producer side, protectionist policies end up causing a great harm to consumers who get stripped of the opportunity to enjoy the benefits of free trade. The Italian government is simply asking to limit the affordability of rice,” said Bertoletti.

“The Association of South East Asian Nations (ASEAN) is the third largest trading partner of the EU. In 2017, co-operation with the ASEAN resulted in the output of more than € 227,3 billion in goods. As part of this economic engagement, the European Union has been actively trading with both Myanmar and Cambodia and therefore using the agricultural imports, in particular, rice, to feed up the EU market.

“Before employing another protectionist measure, the European Commission should ask itself whether it wants to ensure European consumers are able to enjoy a great supply of rice and consequently a favourable pricing or whether it is the unwillingness of one group to compete which matters more,” Bertoletti concluded.

https://www.eureporter.co/frontpage/2018/11/08/proposed-eu-duties-on-rice-would-hurt-european-consumers-says-consumerchoicecenter/

Free Trade For Us is a single-issue campaign produced by the Consumer Choice Center and supported by partners to raise awareness about the positive impact of free trade and to show policymakers all over the world that the millennial generation is united against tariffs, trade barriers, and retaliatory measures that only hurt consumers and workers.