Term Paper on US and EU Relationship
The
face of world is continuously changing since the end of the cold war. The once
bi-polar world became uni-polar after the disintegration of USSR and now going
to become multi-polar, as European Union and Japan have caught up to the US in
terms of economic performance in many areas. At present, the combined Gross
Domestic Product of European Union and the United States of America is around
60% of the world’s GDP and their combined trade is equal to the 40% of the
global trade. In such a situation if there are tensions between EU and the US
then the economy of the whole world will suffer.
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As far as political scenario is concerned, the United States has dominated the
world, but to maintain its supremacy, it has to rely on its western allies,
especially those, who are the members of North Atlantic Treaty Organization
(NATO). If the tension between the US and EU increases, there may be a chance
for either the uni-polar world again or the isolation of the US.
In the recent past, the United States and the European Union have had the bitter
disputes over economic and trade issues. Apart from the economic success of the
European Union, one more important factor, which is responsible for the tension
between the EU and US is the changing face of the US itself. The ethnic and
geographical changes within the US pronounce the changes in US priorities around
the world. This change of ethnic mix of the population reflects a genuine shift,
towards a more utilitarian calculation in European Union and United States
relations. At different times, different trade disputes have arisen between the
European Union and the United States, but all of these disputes can be
categorized into the following eight categories:
1- Direct protectionism: this includes the disputes, which are due to the
imposition of illegal tariff or due to the abuse of public purchasing
procedures.
2- Indirect Protectionism: this includes the disputes caused by the abuse of
domestic standard.
3- Disagreement over the applicability of agreed rules.
4- Attempt of United States or the European Union to enforce its own domestic
standards.
5- Complaints of any party regarding the unfair restriction of its exports.
6- Complaints of any party regarding the distortion of its trade by unfair
subsidy of a particular type of production
7- Complaints of any party regarding abusing for protectionist purpose the
agreed WTO anti-dumping provisions.
8- Direct conflicts in international trade between the domestic standard and
regulation and the standard of the trading partner.
European industry opposition to the US:
It looks very obvious that the European Union industry took advantage of the
dispute between the United States and the European Union. Just take the example
of the aircraft noise dispute, the Hush Kits were made by the US Company and was
fitted to the aircraft which also were used by the US airlines, so the ban was
affected the US economically much more than the EU. If US airlines were forced
to equip themselves with modern and better aircraft, their bottom line will
badly suffer and there is also a chance that they will buy new aircraft from the
Airbus. Hence the EU industry interests were obviously with the consumers.
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Policy
Considerations and economic interests
In the banana war, the foreign policy considerations were being pursued by the
economic means. European Union has very little production of bananas and it was
not correct to say that they are trying to protect their domestic interest in
this dispute. European Union actually tried to ensure the survival of the banana
production of some of the countries, which have historical ties with it. Some of
these countries would not survive without preferential tariff regime, and if
they were not allowed to do so, they would rather turn to producing illegal
crops for the European Union markets. It is difficult to find a solution of such
disputes, especially because of the attitude of the EU, who tried to deal with
the foreign policy and the trade policy with the same way.
Other
disputes
Trade disputes are those disputes, which are quoted more often but actually
these disputes affected only 2 % of the total Commerce between the United States
and the European Union. The development of the European Rapid Reaction Force was
principally a political decision laden with economic implication. Actually the
establishment of the US fear that if the European also introduce a European
Aerospace, Defense and Space company to break the dominance of US companies, the
US would face the same competition in the field of defense as it has faced in
the Aerospace Company. This would affect the US army industry and the national
security directly. Such opposition was regrettable, because the strong and
effective EU military force is necessary for US also, if the US really want to
reduce the force commitment in the peacekeeping worldwide.
The other political issue, or rather a dispute, between the United States and
the European Union is the impact of global warming. Both the US and the EU have
different point of views regarding this issue. The European Union, have the
opinion that the governments tackle an issue before it becomes a real problem.
On the other hand, the US is not taking the global warming issue as a serious
danger and refused to take any action for fear of driving many energy intensive
industries to less regulated countries. European Union considers itself a
superpower too and so it has taken a stand against United States in many issues
like Kyoto Protocol, National Missile Defense (NMD) and North Korea. It is also
important to note that on one hand EU completely backs US up on the war against
terrorism and on the other hand depicts differences on the strategy of the war
and the sphere of the operation.
The European Union also criticizes the United States on its role against Iraq.
The EU improved its relations with North Korea and Iran and rejected the demands
of the US for the extradition of terrorist suspects. Although no fundamental
change can be found in the US-EU relationship in the short term, but in recent
years the more frequent disputes between these two depicted that the cracks
between their relationship is widening. These cracks in their relationship have
spread from economic and trade to the political, diplomatic and security
agendas. During the past few years, the European Union emerged as a power and
now it’s not afraid of offending the United States. It now even challenges the
US on economic, political, trade and international issues. Europeans are now
consistently talking in terms of European Model and European Values and ethics.
There is an obvious hostility between the US and the EU beginning to take the
form of differences in underlying values. The media in the US think that the
European Union is going to challenge the leadership of the United States. This
reaction is really weakening the European US relationship. With the above
discussion, it looks obvious that the nature of dispute between the US and the
EU is much broader than trade and commerce only.
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Solution of Trade Disputes
The issue of dispute settlement, and how to avoid future disputes translates
into three questions:
• Within the context of present political structure, how the actions can be
taken to prevent the disputes?
The answer is immediate practical actions like:
1. Such disputes must be included in high level meetings
2. Common standards for development and implementation of technologies must be
set up
• How the disputes can be settled by bilateral actions?
1. The mechanism of dispute settlement has already existed in the form of NAFTA,
but it is only applicable and effective if both the parties are agree to solve
the dispute
• How and when the dispute referred to the WTO?
1. This
can be settled by the mutual concern of both the parties. The system will work
more effectively if they concentrate less on winning at all costs and more on
central importance of the system.
All these Trade disputes cannot be allowed to destroy the relationship between
the US and EU. To prevent and settle these disputes cooperative transatlantic
trade conferences and organizations have adopted some methods, the most
important of these methods are:
Transatlantic Economic Partnership (TEP)
The function of TEP is to provide the agreements that address non-tariff
barriers to trade providing the similar standard for both the parties. It helps
to minimize the cost to business by recognizing each other’s technical
regulations and conformity assessment procedures.
Early
Warning Mechanism (EWM)
The EWM is designed to provide the officials of both sides a “heads up” when
sensitive legislature is under consideration, especially which might have the
negative impact on bilateral trade. It is designed to signify the early and
regular dialogues between the members of the European parliament and the US
Congress.
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Transatlantic Dialogue on Biotechnology Issues
It is important to have dialogue on biotechnology issues both at the government
and at the common people level. It is a good suggestion for the future, to
manage sensitive and complex issues.
Solution of Political Disputes
There has to be an attitude change. For many years the EU was just like the
offspring of the US, but the time has changed now. The US has to admit that it
has no unchallenged leadership over European foreign policy anymore.
It is the right time for the US to demand EU to help it to shoulder some of its
responsibilities of global economy. For example in the field of defense, the EU
Rapid Reaction Force will be given chance to replace US troops in some
geographical areas.
In this manner, the relationship between United States and the European Union
will become better as they both recognize each other’s position.
Conclusion
There is great need of recognizing each other’s position to maintain good
relationship between the US and the EU. The United States and the European Union
need to consult each other and to help each other on the matters of common
interest. It is important for both the parties to recognize the importance of
strengthening the trading system by applying the principles of GATT. The time
has come for the US to admit that EU is a power itself and it is better for both
these parties to shoulder each other’s responsibilities; such as the
proliferation of nuclear, chemical and biological weapons or to replace US
troops from some areas with European Rapid Reaction Force etc. There is an
urgent need for both the parties to try to avoid any bilateral trade dispute,
and if it occurs try to resolve them. If they invent a new and better bilateral
framework for their trade it would be beneficial not only for them, but also for
the whole world at large. As far as the trade disputes are concerned, it is
better for both the parties to stick to the rules and principles of the GATT and
WTO. Hence the above discussion showed that the good business and political
relationship between the US and the EU is much better, not only for both the
parties, but also for the whole world. But, on the contrary, the policymakers of
the Western Europe have come to the conclusion that improving relations between
EU and the US will be longer and more difficult than imagined.
References
Nick Beams, First bananas, now beef fuels US-EU trade war, 14 May 1999,
http://www.wsws.org/articles/1999/may1999/wto-m14.shtml
Paul Brown, New trade war looms over GM labeling, The Guardian, Monday July 31,
2000,
http://www.guardian.co.uk/gmdebate/Story/0,2763,348944,00.html
Preston Brown and David A. Baron, WTO PROCEEDINGS ON THE HELMS-BURTON ACT
SUSPENDED, May 1997,
http://www.cm-p.com/publications_newsletters_1997_may_wto.htm
Dr. Sarah Witham Bednarz, Banana Split: The U.S./E.U. Trade War
Continues, February 14, 2001,
http://worldroom.tamu.edu/BRBananaTradeWar.htm
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