Each unilateral measure harms the global value chain, to which 70% of global trade is linked, and no one except Donald Trump benefits from the ongoing trade wars, Bernd Lange, head of the European Parliament’s International Trade Committee told EURACTIV Poland.
He also said London faces “tough negotiations” to replace all EU trade deals after Brexit, because “Australia or Japan are looking at the EU’s internal market, not at the one of a small island”.
Bernd Lange (DE/S&D) is the chair at the Committee on International Trade (INTA) at the European Parliament. He spoke to EURACTIV Poland’s Karolina Zbytniewska.
How should Europe brace itself for the global slowdown?
I think that the reason for the upcoming recession is the global tendency to trade wars, establishing of trade barriers and the overall climate of insecurity. These facts hinder investment and prevent orientation for the future. Therefore, we should strive to establish the rule of law in the global trade, to diminish trade barriers which harm the global cause.
The WTO decided that the US can hit the EU with tariffs for the Airbus subsidies. You commented on Twitter that Trump is abusing tariffs to oust European products from the US market, while the European SMEs are the largest victims. But the subsidies were illegal and Trump got a green light to impose tariffs. Or?
Indeed, the tariffs based on the Airbus subsidies are legal. This is the first time that tariffs coming from Donald Trump are legal, actually. The steel tariffs were not. But you are right, the present ones follow the ruling of the WTO. But since the start of the whole World Trade Organisation’s process in 2005, we have reduced some of the subsides. For instance, the British government was paid back by Airbus or the interest rate of German credit was increased.
Therefore, from our point of view, there is now compliance with the ruling. Now the tariffs are not just imposed on airplanes but also on products coming from the EU which have nothing to do with Airbus. That’s what really harms SMEs.
Can Trump use the same arguments when there is already a ruling on Boeing for which we are waiting?
When there is a ruling, we will have a concrete volume of the possible tariffs coming from the EU. But we will stick to airplanes so Boeing will be much more expensive in the future. To be honest, this escalation makes no sense. We should negotiate and fix the ruling on subsidies, on state aid in the aircraft sector. The situation is relevant also in a broader context, as some countries, for example, China, are entering more and more into the Airbus and Boeing field.
Who benefits from the trade wars then? You have just mentioned China – anyone else?
I don’t think so. We have now a global value chain with 70% of global trade linked to it. Therefore each unilateral measure harms the global value chain. And you can see it – the prices for some necessary import products in the US are raised and this leads to higher prices for consumers as well. To believe that tariffs will make investment come back to the US is an illusion. So, I think that besides Trump personally, nobody benefits from these trade wars.
Airbus is a combined venture of France, Germany, UK, and Spain. But entrepreneurs from other countries also will suffer from the tariffs, undeservedly. Don’t you think that the four countries should set up a fund to protect or help them, some conditionality mechanism?
You are right – Trump has really focused his tariffs on specific countries, also those not involved in Airbus production. It seems that his intent is to split the EU, which we want to avoid.
Today, countries like the US or China tend more and more to play alone. The EU wants to be more assertive beyond its borders. Don’t you think these two rulings, the Airbus one and the one to come on Boeing, can reinforce the WTO’s ideal of the global trading system?
I hope we can rescue the global rule-based system of WTO. And one of the main elements, the crown jewel, is that WTO’s Dispute Settlement Body (DSB) ruling about conflicts. But besides, the US is not really respecting the rulings of the WTO and so they are undermining its mandate. They stopped the nomination of judges in WTO’s appellate body, so since December there will be no appellate body anymore and this is truly a mess that puts the whole system at risk.
Finally, how does Brexit influence the position of the EU and of Britain on the international trade scene?
I think there will not be any major consequences for the EU. Australia or Japan are looking at the EU’s internal market, not at the one of a small island. So, it will be more dangerous for Britain, because the trading partners are not eager to give it the same conditions they gave to the EU. Tough negotiations await London. The EU has now 44 trading agreements in force, binding also the UK. Along with the Brexit, London will have to negotiate them on their own.
Hopefully, there will be a deal-based Brexit because we have such close economic links and value chains that we can negotiate our part of the agreement. The hard Brexit would damage lots of companies and their suppliers. Due to the length of Brexit discussions, lots of supply chains are already changing. For instance, in the automotive sector, 60% of suppliers from the UK are now substituted by the ones from continental Europe. So, Brexit means a mess for lots of people working in the British industry.
[Edited by Zoran Radosavljevic]