- EURASIAREVIEW.COM - A la une - 28/Jul 23:49

How Trump Trounced Ursula – OpEd

By Thomas Moller-Nielsen (EurActiv) -- Perhaps the most humiliating aspect of the EU-US trade deal is that it’s not even clear just how humiliating it actually is. The so-called “framework agreement” – the EU’s preferred euphemism for yesterday’s Mafia-style shakedown – will likely see the average US tariff rate on EU exports increase from 13.5% to 16% on 1 August, according to Bloomberg Economics: about seven times higher than before Donald Trump’s return to the White House in January. In exchange for America’s beneficence, the EU pledged to reduce its already-minuscule levies on numerous products, including cars, chemicals, and food. Brussels will also boost purchases of US fossil fuels and weapons by more than $250 billion per year – an almost comically high figure that will soon turn the bloc’s €50 billion net surplus with the US into a yawning deficit. Arguably, striking a deal this bad is something of an achievement in itself: the UK, a country with an economy and population less than a fifth as large as the EU, received considerably better terms – and was mercilessly mocked by European officials for doing so. Unfortunately for Europe, the deal – which EU chief Ursula von der Leyen preposterously claimed was “the best we could get” – will probably end up being even worse than Brussels is alleging. This is for three reasons. First, the EU claims it has been granted a “quota system” for steel and aluminium exports, in which a limited amount is taxed below Trump’s 50% rate. (Somewhat pathetically, Brussels also says this provision is modelled on the UK’s deal.) Trump, however, has explicitly denied that the agreement covers these metals – a claim corroborated by senior US officials. Similarly, the bloc alleges that pharmaceuticals are also included in the agreement, and in particular that pharma products will be hit by a maximum levy of 15% once Washington’s so-called ‘Section 232’ investigation is concluded in a few weeks’ time. Once again, however, Trump yesterday flatly denied that Europe’s €120 billion worth of pharma exports are covered by the deal – a contradiction that EU officials, apparently, didn’t believe was worth clarifying before proudly announcing the "biggest trade deal ever". (Adding to the confusion, a White House “Fact Sheet” has since claimed that steel and aluminium are not included in the deal but that pharma products will be immediately hit with a 15% levy.) Finally, EU officials have offered virtually no details on the pledged $600 billion worth of “additional” investments in US infrastructure – which come on top of the energy and weapons purchases – over the next few years. As it turns out, the deal that the EU is most closely modelled on, namely Japan’s, offers worrying signs. The US has claimed, in true Godfather-fashion, that a staggering 90% of the profits from Japan’s $550 billion worth of promised investments will accrue to the US taxpayer: a claim furiously rejected by Tokyo. Asked about the profit allocation of the EU’s pledged investments, Commission officials refused to elaborate but instead sought to reassure reporters that, whatever happens, only private investors will be affected. “From our side, it's private money,” said one official. “From Japan, it's mostly public money.” There is a hint of comic (and perhaps cosmic) justice here. In her shambolic presentation of the EU budget earlier this month, von der Leyen clearly demonstrated that she didn’t care about – or, really, understand – what she was planning to do with €2 trillion in public money. Demonstrating equal ambivalence about private cash is, in contrast to yesterday’s agreement, only fair. But Sunday’s events also offer wider political lessons. Indeed, upon reflection, the deal is the almost inevitable outcome of a declining great power placing its faith in an economically illiterate, mendacious, image-obsessed narcissist – and then asking that person to negotiate with Donald Trump.