The tariffs imposed by Donald Trump has caused such outrage in Europe that European governments and the EU Commission have spent most of recent weeks condemning the US President for his steel and aluminium taxes against — among others — European exporters.
On the question of tariffs, Canadian Prime Minister Justin Trudeau too has exchanged words with his neighbour. Reacting to the US presidents action, French President Emmanuel Macron called the US tariff “illegal and a mistake”, while Britain’s international trade minister, Liam Fox, confirmed that they were “patently absurd”.
The president of the European Commission, Jean-Claude Juncker said: “I am concerned by this decision. The EU believes these unilateral US tariffs are unjustified and at odds with World Trade Organization (WTO) rules. This is protectionism, pure and simple.” Also commenting on it was the EU trade commissioner Cecilia Malmstrom, who stated: “The EU’s response will be proportionate and in accordance with WTO rules. We will now trigger a dispute settlement case at the WTO.”
The EU will now challenge the US action in front of the WTO and take retaliatory steps. The bloc is determined to present itself as the defender of the global trading system. Perhaps this position will have credibility if the EU were not a consistent and shocking violator of trade rules when it is convenient for its members’ protectionist interests.
In the upcoming few weeks, the EU will vote on a proposed ban of palm oil, a biofuel which none of its member states are able to produce, as they all lack a tropical climate. EU countries do grow a lot of competitor crops, however, including rapeseed, sunflower, and sugar beet. By some curious coincidence, just palm oil is being singled out for a ban on supposed “environmental ground”.
Tim Worstall, a senior at the Adam Smith Institute — which is a neoliberal think-tank and lobbying group and promotes free market ideas through research and publishes commentary — states that this would be a credible argument if it weren’t for the fact that palm oil entering the EU passes every environmental hoop which European bodies can put up for it.
Worstall points out that the EU’s hypocrisy on trade has been noticed by the south-east Asian countries where most of the palm oil is produced. Just as the EU prepared its retaliation to the US president’s aggression over steel tariffs, so Asian governments are preparing their own retaliation to the EU’s aggression over palm oil. With Trump’s aggression, markets in the US stumbled last week after his shock threat to impose a 10 per cent tariff on $200bn of Chinese goods. China described the US threats as “extreme pressure and blackmailing” and vowed swift retaliation.
Reports suggest that Asian retaliation could include the loss of up to £7bn of defence and aerospace contracts for British exporters. Other European countries will not be spared — Germany alone exports more than 12 billion euros annually to south-east Asian countries. It may be true that, in relation to steel and aluminium, the EU has been wronged. It is also true to say that Trump’s mercantilist attitude towards trade is harmful and illogical: no free-trader would quarrel with the EU leaders’ criticisms of Trump.
However, for the EU to then present itself, Worstall says, as the paragon of virtue, and the standard-bearer for the international trading system, is a huge and unjustified leap. The EU cannot credibly claim to be defending global free trade while at the same time clearly bullying smaller countries in Africa and Asia into accepting its protectionist tariffs and regulations. The fact that Juncker does not resort to tweets (as Trump does) to announce his protectionist policies may make him more dignified, but it does not give him the moral or political high-ground over Trump, says Worstall.
With a new trade policy to come, there is much for the UK to learn. Domestic special interests and anti-trade lobbyists will attempt to derail trade progress. The illogical debate about chlorine-chicken already hovers over UK-US trade discussions, just as palm oil hovers over the potential discussions with south-east Asia.
If the UK truly wants “Global Britain” to be a leader in promoting global trade, it must resist the impulse to give in to every environmental, social or special-interest lobbying campaign. Britain will need to avoid the mistakes that, even currently, bedevils the EU’s trade policymaking.
By Andy Jalil – our foreign correspondent based in the UK. He can be reached at firstname.lastname@example.org