Multipolar globalisation: 2018 – EU adopts the pro-trade protectionist model

multipolar europe

As we all know, Donald Trump kicked off the reinvention of trade relationships by imposing customs barriers on steel and aluminium.  In addition to the duty of protecting this industry and the jobs connected with it, he was motivated by the strategic nature of this sector which is intrinsically linked to the army. Economy, employment, National Security. This is clearly about national sovereignty. Hence, logic and supranational bodies are again undermined (particularly the WTO and the EU).

Customs barriers: the EU on Trump’s radar

The Chinese competition is brandished as a red flag in order to sweeten the pill. As it happens, it is not China that is most worried. Although China produces about half of the world’s steel, it only ranks 11th among the countries most affected by the tariff measure. Surprisingly enough, the most affected countries belong rather to the allied camp: Canada represents 16% of US steel imports, followed by Brazil at 13%, then South Korea (10%), Mexico (9%) …

fig01Figure 1 – Source: IHS

Europe does not appear on this chart at all, because the EU still does not exist in the minds of the media – especially (and conveniently?!) North American media. In fact, the EU is the largest steel exporter to the United States, accounting for 5 million tonnes out of the 35 million imported by Donald Trump’s country. As we pointed out at the beginning of this GEAB report, the EU’s response places it in complete contradiction with its fundamental principles of Transatlanticism and Free Trade. This, in itself, is a great achievement in the work of ‘moving the lines’ that Trump has been engaged in since entering the White House.

While the President’s measure may be particularly targeting the EU and has promptly succeeded in setting it against its principles, it might also be said that the business model Trump is focusing on is perhaps much more European than Europeans might believe…

Trade relationships: The glory and decadence of the European model 

The fact is that the EU was a kind of driving force for globalisation between the years 1990 and 2000 due to its successful domestic free trade model and it legitimately worked to export its model of regional integration to other regions of the world. Then – and this is probably where it started to fail – it began to dream of being the champion and centre of the liberalisation of world trade. A step too far!

The EU’s regional integration had already begun to experience difficulties faced with the integration of countries economically and politically very different, like Eastern Europe countries. So, how could it aim to apply these principles to the entire planet? Nonetheless, in the 1990s, the EU embarked on a string of free trade agreements, mostly negotiated by the strongest against the weakest. But the EU was so successful that these agreements seemed economically unavoidable to its partners, even though …

Register and read the entire report in the bulletin GEAB 123 / March 2018