In the news• Romania and Bulgaria poised to enter EU

– http://news.bbc.co.uk/2/hi/europe/4480677.stm

• Possible Trade Dispute with China– http://news.bbc.co.uk/2/hi/business/4478101.stm

Trade Wars: EU vs. US• Trade Wars have become a ongoing political

issue between US and EU since Maastricht– Cold War replaced by Trade War

• Economic superpowers vie for supremacy

– Marks the rise of the EU political as well economic unity

• EU representation in WTO supercedes individual countries

• Reinforcing of Euro nationalism• United States is EU’s opposite number

– Also marks the rise of European economic power as a result of its ‘solidarity’

• EU David vs. US Goliath

Banana Split• In 1999, the EU and US entered into a trade war

over the export of US-owned bananas from the Americas– Interesting that trade war was between regions that doesn’t

actually grow bananas!– Though the WTO, the US sued EU over trade practices

favoring Europe’s former colonies in 1999• Europe’s first come first served system with quotas• US won and imposed retaliatory sanctions on:

– Chandeliers, specialty cheese, bed linen without embroidered borders, plastic handbags, biscuits, coffee- and tea makers

– Worth $191 a year and designed to impact every region

• Blew over in 2001 when EU agreed to comply with WTO rules

– Other (potential) disputes remained

Steel• Nov 11, 2003 WTO ruled that US import duties on

steel products were in violation of rules– US steel was suffering decline– Bush set in place “safeguard measures”: tariffs on imports – EU set in place retaliatory measures on goods produced in

states important to Bush’s reelection bid• Oranges (FL); Harley Davidson Motorcycles (Midwest); Textiles

(South)

– Effect of tariffs probably detrimental: increasing costs for manufacturers (e.g., auto)

• Bush backed down 20 months into a 36 month program in December 2003– In time for the issue to subside for the Nov 2004 election

The Trade War that Never Was• January 2005, trade official were braced for

trade war over subsidies in the aircraft industry– EU subsidization of Airbus– US of Boeing

• Didn’t happen!– Entered into bilateral talks on – A new era?– Not really

• Both Boeing and Airbus benefit from state subsidies and would have a lot to lose from WTO ruling against such practices

http://news.bbc.co.uk/1/hi/world/europe/3727827.stm

Other Issues