US-EU Relations and the Transatlantic

Partnership

Winter School 2015

January 6, 2015

Obama and Hollande at Omaha Beach – June 6,

2014

Source: http://www.thedailybeast.com/cheats/2014/06/06/obama-normandy-democracy-s-beachhead.html

The Political Relationship – A U.S. Preference

for Bilateral Relations with EU Member States

Source: http://www.bbc.com/news/world-us-canada-26140744

U.S.-French Cooperation in Africa

An American military C-17 unloading French soldiers in Northern Mali, January 22, 2013, http://www.bbc.co.uk/news/world-africa-21153272

France is taking the lead against terrorism in

Africa – with U.S. logistics support

Source: http://www.bbc.com/news/world-europe-25242424

From Freedom Fries (2003) to the Obama

Election of 2008

Source: http://depts.washington.edu/frenphil/index.htm

Source: http://www.lexpress.fr/actualite/monde/amerique/reve-

americain-made-in-france_750968.html

Obama’s Presidency – Relief to Disappointment

in the EU

• Obama’s election was initially seen as a new beginning by the

EU – a break with the Bush-era and power politics

• Disappointment set in rapidly as many Europeans began to

believe that Obama did not really care about Europe

The ‘Asian Pivot’

In 2011 – the U.S. government began to talk about an ‘Asian

pivot’ – moving its military resources out of the Middle East

toward Asia.

Many European leaders interpreted this as the U.S. abandoning

Europe.

The Transatlantic Trade and Investment Partnership appears to

have been partly in response to this move.

The offensive against the Islamic State and the war in Eastern

Ukraine has called this policy into question.

Other Geopolitical Reasons for TTIP

The U.S. government believes (as do many Europeans) that the

Doha Round of the WTO has failed.

The move is toward Regional Free Trade Agreements (FTAs)

Source: http://opinionator.blogs.nytimes.com/2014/03/15/

on-the-wrong-side-of-globalization/?_r=0

The Trans-Atlantic Trade and Investment

Partnership (TTIP) - 2013

• The EU and the US began to negotiate a new Free Trade

Agreement in 2013

• US Secretary of State John Kerry said in a meeting with

German Chancellor Angela Merkel in February 2013:

‘We think this is something that can help lift the economy of

Europe, strengthen our economy, create jobs for Americans, for

Germans, for all Europeans, and create one of the largest allied

markets in the world.’

Source: US Department of State

Benefits of TTIP

• TTIP would be the largest trading agreement ever, and the

European Commission believes it will add 0.5% to the EU’s

annual output, and 0.4% to US GDP

• Both sides say it will create jobs, a priority in the EU as well as

in the US

• For the EU, it will help mitigate the risk that the US will divert

trade toward its partners in Asia in the coming years

• More choice for consumers

Source: http://thinkingeurope.eu/blog/transatlantic-

free-trade-agenda-jobs-growth-global-trade-leadership

The Three Pillars of TTIP

Unlike what we would expect, the EU and the U.S. cooperate

better in security/military areas than in economics

3 parts to the talks:

- Access to markets on both sides of the Atlantic – including

government procurement (the defense sector has been

excluded)

- Harmonizing regulation and reducing non-tariff barriers

- A new set of trade rules (possibly intended to set the

worldwide standard in the absence of WTO action)

Problems for TTIP

• Disagreements over product standards – especially regarding food safety – which tends to create high profile disputes – there is significant resistance to genetically-modified food in the EU in particular

• Environmental regulations in the EU are seen as too strict in the US

• Different regulations on testing and licensing products

• Member states have different policies regarding Foreign Direct Investment

• A free trade agreement between the EU and the US could be seen as discriminatory by the rest of the world – Russia and China

• Other US partners are not happy about being left out – Turkey in particular

• EU farmers feel threatened by the more powerful U.S. farming industry

Source: http://ec.europa.eu/ireland/key-eu-policy-areas/transatlantic-trade-investment-partnership/index_en.htm

U.S. Trade in Goods with Europe, 2014Source: https://www.census.gov/foreign-trade/balance/c0012.html

Exports Imports Balance

January 2014 25,885.0 36,028.3 -10,143.3

February 2014 26,449.9 35,534.8 -9,084.9

March 2014 30,644.1 43,027.4 -12,383.3

April 2014 28,404.8 44,472.7 -16,067.9

May 2014 29,108.9 42,985.4 -13,876.5

June 2014 29,604.1 41,731.3 -12,127.2

July 2014 27,739.6 43,387.3 -15,647.7

August 2014 28,443.0 40,472.0 -12,029.0

September 2014 26,205.6 39,300.1 -13,094.5

October 2014 28,249.7 43,291.5 -15,041.8

TOTAL 2014 280,734.7 410,230.8 -129,496.2

What is traded between the US and the EU?

US to Europe

• Aircraft

• Machinery

• Computers

• Office Machinery

• Integrated Circuits

• Chemicals

• Transport equipment

Europe to the US

• Cars

• Gas turbine engines

• Computers

• Office Machinery

• Organic chemicals

• Transport equipment

• Food and beverages (though not as much as you might think)

The trade balance has been positive for the EU at least since the mid-1990s

Organizations to Facilitate Trade between the

US and the EU

The Transatlantic Business Council was created in January 2013 to help businesses contribute to the liberalization of trade between the EU and the US

http://transatlanticbusiness.org/

The American Chamber of Commerce in the EU can help you resolve problems and gain contacts in the EU

http://www.amchameu.eu/

The Transatlantic Economic Council – works on regulatory issues between the US and the EU, http://www.state.gov/p/eur/rt/eu/tec/

Source: Source: http://www.dailytech.com/EU+Plans+to+Prosecute+Microsoft+On+More+Antitrust+Charges+Despite+IE+Decision/article15403.htm

A Brief Competition Policy Case Study:

European Commission Antitrust Policy and

Microsoft• American companies operating in the EU are subject to a great

deal of complicated business regulations that may be unfamiliar

• The key phrase of the EU regulation is that “it is illegal for

companies to abuse their dominant position” – European

Commission Competition Policy

• The EU fined Microsoft 497 million euros in 2004 for not giving out

enough information about its product and forcing the competition

to accept and design products for the Windows Media platform –

the EU also forced Microsoft to offer software without Windows

Media

• Microsoft was then fined 899 million euros in 2008 for not

complying with the 2004 settlement

Microsoft and Antitrust 2

• Microsoft (contrary to what you often see in the press) did

actually pay the fines

• The company was fined $731 million euros again in 2013

because it did not do what it said it would do in 2009 – give

customers a choice of internet browser with Windows

• Google told the European Commission about Microsoft’s

violation, probably trying to get a better settlement in its own

antitrust case

• The penalties are much more severe than in the US

EU Antitrust Fines

• Percentage of value of relevant sales (sales of the product in

question) – can be up to 30% - usually around 15-20%

• Duration of the crime (how many years)

• Whether companies cooperated with the EU investigation

• Limited to 10% of company’s annual worldwide sales

A Useful (Free) Summary of EU Antitrust Policy

can be found here

bookshop.europa.eu/is-bin/INTERSHOP.enfinity/WFS/EU-Bookshop-

Site/en_GB/-/EUR/ViewPublication-Start?PublicationKey=KD3212085