n.
At a higher level, Europe’s possible responses range from pure antagonism and retaliation, to staying the course and building alliances with other countries.
Then there are more specific questions: what is the worst-case scenario in terms of US trade and investment discrimination and over what time horizons should the EU prepare to react? What are the implications beyond the purely economic relations, in terms of defence and cultural values?
In our view, the underlying objective of the EU’s response to unilateral measures by the US should be to sustain the multilateral trading system. The aim should be to react strongly and decisively but based on principles. The aims would be to wait until future US administrations change course and abandon unilateral actions, and to prevent an unnecessary
escalation that would be damaging to all: the EU, the US and the rest of the world.
In the event that the US terminates the North American Free Trade Agreement and imposes tariffs on imports from Mexico that are above the US mostfavoured nation (MFN) tariffs, it would amount to a violation of the US’s WTO obligations.
The EU and other WTO members would be affected directly because they have foreign direct investments in Mexico to serve the US market (see Table 3). The EU and Mexico (with which the EU has an FTA) and other WTO members that would be similarly affected, should then file a WTO complaint against the US.
In case the US introduces a form of DBCFT that is clearly in violation of WTO rules, the EU should carefully consider, again in collaboration with other WTO members, stronger measures. There is for example the possibility to adopt reciprocal measures on corporate taxation that would only be directed against the US. An alternative would be to use anti-subsidy measures against US exports to the EU or even to third countries. The latter is entirely within the EU’s remit and one of the WTO legal instruments at the European Commission’s disposal.
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*Youtube — The Eurozone’s Coming Storm.Stratfor pinpoints the political and economic developments that could lead to the collapse of the currency area.
*Youtube — George Friedman: Eastern Europe Is Trapped Between Russia and the West. George Friedman writes the free weekly column “This Week in Geopolitics” (http://www.mauldineconomics.com/subsc…) for Mauldin Economics. Subscribe now and get an in-depth view of the forces that will drive events and investors in the next year, decade, or even a century from now.
The European Union’s eastern bloc finds the ongoing refugee crisis annoying but is far more worried about Russia. Geopolitics expert George Friedman says the formerly Soviet-dominated nations see Russia gaining strength but don’t know if NATO will defend them in a crisis.
*Youtube — Geopolitics, Identity and the National Interest with Tim Marshall .