Atlantic Review

Americans will soon pay more for a precious piece of French Roquefort. The American government has as a last, petty gesture in its trade policy decided to raise tariffs on the product from 100 to 300 percent. This is part of a more general round of retaliatory tariffs in response to the ban the European Union maintains on beef produced with growth hormones. But it is clear that Roquefort has been targeted for political sensitivity, as the Independent writes:

There was a violent reaction in France when import duties were first raised on roquefort cheese 10 years ago. The small farmers' leader José Bové – then a roquefort producer – began his rise to international celebrity by attacking a McDonald's restaurant at Millau, near Roquefort, with mallets and a bulldozer in August 1999.

The main effect this will have is making Roquefort more exclusive. And, perhaps, something of a political statement among Michael Pollan fans and the like. I do hope the French embassy will react appropriately at societal events. If the new administration does not dial this back... Continue reading "Cheese Wars and Strong Coffee"

The new Atlantic Media Network blog has a very useful press roundup on the Doha round collapse, focused on the question who 'did it in'. They quote papers from both sides of the Atlantic on the matter.

The coverage alternates between blaming India and China (India foremost) and choosing the safe, neutral storyline by claiming that they are 'asserting' their newfound power.

One perspective that certainly needs to be added is that of India itself. Here are three stories from the Times of India:

'Do As the Americans Did' is a leader by Arun Maira that focuses on India's need to build up its economy and the associated need for protection. The United States focus as a case study in this matter, as its strongest period of growth (1890-1910) happened at a time when it was protectionist, and Europe was more liberal. Maira claims that 'healthy' free trade must be the end point of an evolutionary process.

'Save Doha' is the paper's editorial. It comes down to the point that India's and China's demands for the threshold for a safeguard mechanism were too protectionist, but that the EU and US could have found a middle point for a compromise. "The world", the paper concludes "can't wait till Indian agriculture is ready to face global competition, of course. But neither can the world ignore India and China's concerns."

'Playing to the Gallery' is another leader, by Narendar Pani. He compares the single-issue focus of the current commerce minister with that of the former, Murasoli Maran, who categorically opposed labour standards at the WTO ministerial in Seattle, 1999. According to Pani, this has led to the BBC arbiting over labour standards instead of the WTO, as western firms are mindful of public pressure. The obstruction back then has turned out to have mainly symbolic consequences and Pani expects similar results from India's current obstruction.

A short commentary on the Doha Round of WTO negotiations:

The talks being held at this time in Geneva are not making enough progress. The latest compromise text that had been drawn up by Pascal Lamy is opposed by India, and the U.S. is also blaming China for going back on earlier promises, as the Associated Press reports.

[Tuesday Update: The talks have now collapsed in what the Telegraph calls a 'blow to globalisation']

One fascinating element of the talks is the emergence of a core group of 7 WTO members who consulted closely on the new deal. Here's an excerpt from the Bridges daily updates:

Seven of the world's largest trading powers emerged front and centre in the struggling talks at the WTO on Wednesday, meeting all afternoon and late into the night in an attempt to find a way out of the impasse in governments' push for breakthrough deals on agricultural and industrial goods trade. [...]

Australia, Brazil, China, the EU, India, Japan, and the US were discussing non-agricultural market access (NAMA), agricultural market access, and trade-distorting farm subsidies, a source said.

This provides a useful mirror for the current balance of power in the world in the trade arena. The absence of Canada is notable. Keep in mind that Russia is not (yet) a WTO member.
Continue reading "Is the Doha Round No Longer Relevant?"

• "In light of the upcoming fourth anniversary of the invasion of Iraq, Executive Director Dr. Jackson Janes discusses the need for repaired relations across the Atlantic and argues that both sides need to step up to the plate: the U.S. needs to take the EU more seriously as a partner, and the EU needs to better recognize its global responsibilities."

• Dr. Janes and Research Director Professor Stephen Szabo analyze "the potential that Chancellor Angela Merkel has in leading Europe and argue that understanding Merkel and the political and economic context in which she operates is important for anticipating what to expect from her chancellorship. To read this article, please click here (PDF)."

• Eric Heymann examines the controversy surrounding governmental subsidies to aircraft makers: "Boeing vs. Airbus: The WTO Dispute Neither Can Win." (PDF).

• Dr. Janes and Prof. Szabo talk to current DAAD/AICGS Fellow Dr. Gunther Hellman about German and American foreign policy developments. Podcast

According to the European Commission:

The EU and US are responsible together for about two fifths of world trade. Trade flows across the Atlantic are running at around €1.7 billion a day. In the year 2003, the total amount of two-way investment was over €1.5 trillion, composed of €731 billion of EU Foreign Direct Investment (FDI) in the US and around €772 billion of US FDI in Europe. The overall "transatlantic workforce" is estimated at 12 to 14 million, of which roughly half are Americans who owe their jobs directly or indirectly to EU companies. In the year 2005, exports of EU goods to the US amounted to €250 billion, while imports from the US amounted to €234 billion. Concerning trade in services, EU exports to the US amounted to €108.6 billion in 2004 while EU imports from the US amounted to €93.0 billion.
The two economies are interdependent to a high degree. Close to a quarter of all EU-US trade consists of transactions within firms based on their investments on either side of the Atlantic. The transatlantic relationship defines the shape of the global economy as a whole as either the EU or the US is also the largest trade and investment partner for almost all other countries.
Being the largest players in global trade, the EU and the US are committed to cooperate both politically and economically, be it on bilateral issues or in the multilateral framework of the World Trade Organisation (WTO). Several trade-related disputes which regularly hit the headlines in reality only impact some 2% of EU-US trade.

One of those trade disputes is that the EU and the US accuse each other of granting illegal subsidies to Boeing and Airbus. See "U.S. details complaint on Airbus subsidies" in International Herald Tribune and the latest statements on this dispute from the European Union. I have not found the latest statement from the US Trade representative, but only a US press release concerning that never ending dispute from May 2005, which indicates that this is a long dispute...
Related: Our reader ROA recommends "Jumbo Trouble: The Airbus A380 was supposed to be the future of aviation. Will it ever get off the ground?" in Popular Mechanics.

Our reader ROA writes: "Anyone from an EU country that complains about the US being power mad, arrogant, fascist, bullying, etc.  should be ashamed of themselves.  I personally would like to see the US implement the metric system, but think the EU's attempt to block any measurements other than metric is an example of a power mad megalomaniac bureaucracy run amok." ROA refers to the European Union Metric Directive, which means according to the U.S. Government's Export Portal:

After January 1, 2000, all products sold in the EU needed to specify and label in metric measurements only. Prior to implementation, the European Commission recommended a 10-year deferral of the metric-only directive, allowing companies to use dual labeling through 2009. The delay provides time for U.S. companies to prepare for a metric-only European market beginning January 1, 2010. After the EU Directive takes effect, member and associated countries will no longer permit dual indications of measurement. U.S. exporters can no longer label or print inches, pounds, or any other non-metric measurement on shipments. This affects labels, packaging, advertising, catalogs, technical manuals, and instructions.

The US  Department of Commerce organized a public forum on the EU's Metric Directive for all interested stakeholders on October 12, 2006.
A Telegraph blog post, recommended by ROA, argues:

An extraordinary row, involving major European and US industries, is blowing up over the European Commission's determination to make it illegal, in three years' time, for any products made in or imported into the EU to carry any reference to non-metric measures. Not only will this cost industries on both sides of the Atlantic billions of dollars and euros, but it is in direct breach of US federal law. The Commission is so set on stamping out the hated non-metric system that, as of January 1, 2010, it is imposing a total ban on what it calls "supplementary indications" – ie any mention of inches, pounds or other non-metric units in advertising, labelling, catalogues, manuals and the like.

I doubt whether the directive is in breach of US law. The Telegraph blogger explains "Any European firm wishing to sell to the US will not be allowed to refer at all to the units its American customers understand. This in itself will be illegal under the US Fair Trade and Packaging Act, which permits use of metric units only so long as they are accompanied by a US non-metric "translation"." Though, I can't imagine that the EU is telling European companies that they must use metric labels only for their exports to the US. That would be bad for our companies. I think the directive concerns only imports to the EU.

Endnote: The European Commission's Press Office in London debunks Euromyths. Re Metrication:

Metrication in the UK is not the result of British membership of the EU. In 1965, eight years before joining the EEC, the Wilson Government decided to initiate the UK's metrication programme, in response to global moves in this direction – Ireland and all Commonwealth countries had already adopted the metric system.

Gabor Steingart makes "an argument for a trans-atlantic free-trade zone" in the English version of Der Spiegel:

The role NATO played in an age of military threat could be played by a trans-Atlantic free-trade zone in today's age of economic confrontation. The two economic zones -- the European Union and the United States (perhaps with the addition of Canada) -- could stem the dwindling of Western market power by joining forces.

"I find the idea fascinating," Chancellor Merkel told the EU committee in Germany's parliament, according to another Spiegel article in early October. The enormously difficult project of creating a Transatlantic Free Trade Area would be her backup plan, should the Doha trade talks ultimately prove untenable.
Related Atlantic Review post: Will Germany Promote the Creation of a Transatlantic Free-Trade Area?

[UPDATE: The idea is not new. Already in 1997, Germany Foreign Minister Klaus Kinkel "proposed that a transatlantic free-trade zone, TAFTA, be created in the long term."]

"Spurred by concern about China's growing economic might, Germany is considering a plan for a free-trade zone between Europe and the US," writes the Financial Times (FT) in an article availabe at MSN Money:

A senior aide to Angela Merkel said the chancellor was "interested" in promoting the idea as long as such a zone did not create "a fortress" but rather "a tool" to encourage free trade globally, "which she is persuaded is a condition of Germany's future prosperity". Separately, on Friday, the US, Canada and the European Union complained to the World Trade Organisation about China's tariffs on car parts, raising the prospect of Beijing facing its first WTO dispute.

China's Prime Minister Wen Jiabao was on tour in Europe. Hopefully he was pressured on Darfur as well. Global Darfur Day was on Sunday and Jewels in the Jungle has a news round-up. Die Zeit's Kosmoblog criticizes a lack of attention for Darfur in Germany. The FT mentions only that Chancellor Merkel criticized China's poor human rights record and restrictions on foreign news agencies. [UPDATE: The Frankfurter Allgemeine Zeitung writes that Darfur was discussed and that Prime Minister said China supports UN troops in Darfur] The FT concludes:

As German perceptions of China have grown more American, Washington's approach has shifted too. Speaking before his first trip to Beijing, Hank Paulson, US Treasury secretary, this week outlined a more balanced policy mixing traditional US criticism with praise for China's reforms.

Prof. Drezner sees "many reasons to believe that TAFTA [Transatlantic Free-Trade Area] will never get off the ground", but finds the idea "very intriguing. Even if it takes ten years to negotiate, the combined weight of a TAFTA in terms of both market size and rule-setting behavior would be formidable." (HT: ROA) The FT advises caution:

Ms Merkel's aide said it was "far too early" to tell whether the project of a transatlantic free-trade zone would be part of Germany's priorities when it assumes the six-month presidency of the European Union and chairs the G8 group of leading industrial nations from January.