POSITION | EXTERNAL ECONOMIC POLICY
A New Agenda for Transatlantic Trade Relations
July 2018 Core Recommendations 1. The European Union (EU) and United States must maintain a dialogue: This includes a common understanding of the factual basis of their trade relations and the restoration of mutual trust. 2. No tariffs under the guise of national security: Imports of steel, aluminium, automobiles, or automobile components do not constitute a threat to the national security of the United States. Consequently, those tariffs already imposed should be abolished and no further tariffs should be levied. 3. Act in accordance with the WTO: The EU’s rebalancing tariffs are an important political signal yet not without risks. Every EU decision on countermeasures must be made in accordance with the WTO rules book. We welcome the fact that the EU has filed a complaint at the World Trade Organisation (WTO). 4. Remove barriers to transatlantic trade: Numerous tariff and non-tariff trade barriers are continuing to constrain EUU.S. trade. Removing them would safeguard jobs, create prosperity, and should remain a long-term goal for the transatlantic partnership. 5. Secure a common ground for negotiations: The EU and the United States should examine whether there is a common basis for negotiations on a trade agreement. This includes a joint understanding on the content of negotiations and sociatal readiness for an agreement. Neither the EU nor the United States can afford failure. Negotiations must therefore be thoroughly prepared both politically and in terms of communication. 6. Any accord must meet the requirements of a modern trade agreement:
Abolition of all tariffs on industrial goods: In accordance with the rules of the WTO, an agreement should liberalize “substantially all the trade�. German industry champions the removal of all tariffs on industrial goods.1 Design of a modern trade agreement: In the current political environment, a resumption of the comprehensive TTIP agenda is unlikely. Nevertheless, any new agreement should meet the requirements of a modern trading partnership. Tariffs alone say little about actual market access. A mere tariff agreement with the United States would therefore not suffice. Non-tariff barriers to trade (NTBs) should be an integral part of talks and public procurement should be considered.
7. A positive agenda for the WTO: The WTO is the indispensable guardian of world trade, playing a major role in ensuring that trade relations are rules-based. However, its monitoring mechanisms and its set of rules are increasingly coming up against their limits. The EU and the United States should agree on a positive WTO agenda in order to modernise its rules and to strengthen its mechanisms for monitoring and enforcement. 8. A new agenda for dealing with China: China is a heavyweight in the global economy but does not always play according to the rules. The United States, the EU, and Japan should take joint action against market distortions, for example through the trilateral forum United States, EU, Japan. The objectives should be, among others, fair competition, restrictions on subsidies, the protection of intellectual property, and transparency in public procurement.
1
Exceptions should be made for some particularly sensitive agricultural products.
Dr. Stormy-Annika Mildner, Julia Howald, Klara Schwobe | External Economic Policy | www.bdi.eu
A New Agenda for Transatlantic Trade Relations
Background The United States is an important political and economic partner for Germany. However, since U.S. President Donald Trump assumed office, transatlantic relations have run into troubled waters. Trump has repeatedly criticised Germany for its exports surplus and threatens to protect the U.S. economy by implementing new import tariffs. Particularly the tariffs on steel and aluminium, along with the investigation into automobile imports, are imposing a considerable strain on the transatlantic relationship.2 Close Economic Relations Are in the Interest of Both Parties According to the German Federal Statistical Office, since 2015 the United States has been the most important market for German export in goods. German and U.S. companies are among the most important foreign investors in each other’s respective markets. Relations with the United States are consequently a key factor supporting jobs and prosperity in Germany. Economic relations between the two countries go far beyond trade in goods. The importance of this economic relationship must be seen against the background of the close economic interdependence existing in the EU. In 2017, the value of German goods exported to the United States amounted to 111.5 billion euros and thus accounted for a proportion of 8.7 percent of total German goods exports. The United States is thus the most important export market for German companies, just ahead of France, China, and the Netherlands. Regarding imports, in 2017 the United States was Germany’s fourth most important trading partner after China, the Netherlands, and France. Germany imported goods with a total value of 61.1 billion euros from the United States.3 This made Germany the sixth largest sales market for U.S. goods just behind the United Kingdom.4 After a marked decline in the previous year of 8.7 percent5, the U.S. trade deficit with Germany widened again slightly in 2017 by 3.2 percent to stand now at 50.4 billion euros.67 For Germany, as for the whole of the EU, in 2015 the United States was the most important trading partner in the services sector,8 with regard to both imports and exports of services.9 Over a quarter of European services exports in 2016 went to the United States and just under a third of European im2
The BDI position paper of May 25 2018 U.S. Tariffs on Steel and Aluminum. What Measures Should the EU Adopt? can be found at <https://english.bdi.eu/media/publications/?publicationtype=Positions#/publication/news/us-tariffs-on-steel-andaluminum/>. 3 Statistisches Bundesamt, Fact Sheet: Außenhandel 2017 Rangfolge Handelspartner, <https://www.destatis.de/DE/ZahlenFakten/GesamtwirtschaftUmwelt/Aussenhandel/Tabellen/RangfolgeHandelspartner.pdf?_ _blob=publicationFile> (accessed 23 May 2018). 4 U.S. Department of Commerce, Fact Sheet: Top U.S. Trade Partners 2017, <https://www.trade.gov/mas/ian/build/groups/public/@tg_ian/documents/webcontent/tg_ian_003364.pdf> (accessed 23 May 2018). 5 Statistisches Bundesamt, Fact Sheet Außenhandel 2016, <https://www.destatis.de/DE/Publikationen/Thematisch/Aussenhandel/Gesamtentwicklung/ZusammenfassendeUebersichtenJ endgueltig2070100167004.pdf?__blob=publicationFile> (accessed 29 May 2018). 6 Statistisches Bundesamt, Fact Sheet: Außenhandel 2017 Rangfolge Handelspartner, <https://www.destatis.de/DE/ZahlenFakten/GesamtwirtschaftUmwelt/Aussenhandel/Tabellen/RangfolgeHandelspartner.pdf?_ _blob=publicationFile> (accessed 23 May 2018). 7 In contrast, on account of exchange rate fluctuations and possibly different methods US sources record a positive development of merchandise trade. According to US data the trade deficit with Germany fell by 1.5 percent from 2016 to 2017 from 64.7 to 63.7 billion US dollars. Source: United States Census Bureau, Trade in Goods with Germany, <https://www.census.gov/foreign-trade/balance/c4280.html> (accessed 12 May.2018). 8 European Commission, Fact Sheet: International Trade in Services by Partner, <http://ec.europa.eu/eurostat/statisticsexplained/index.php?title=International_trade_in_services_by_partner> (accessed 25 March 2018). 9 Caution is due with regard to data on services on account of different methods of calculating the volume of trade – for example, in 2015 both the EU and the United States saw themselves as net exporters in the trade in services and located the trade deficit with their trading partner. In trade in services alone between the United States and Germany, the data diverges by up to ten billion euros annually and cannot be explained simply by exchange rate fluctuations. In 2017, the American Bureau of Economic Analysis and Eurostat attempted to explain these asymmetries in a joint paper: Transatlantic Trade in Services: Investigating Bilateral Asymmetries in EU-US Trade Statistics. 2017 Edition, <http://ec.europa.eu/eurostat/documents/7870049/8544118/KS-GQ-17-016-EN-N.pdf/eaf15b03-5dcf-48dd-976f7b4169f08a9e> (accessed 24 May 2018). 2
A New Agenda for Transatlantic Trade Relations
ports were of U.S. origin.10 For Germany, the sixth most important export market for U.S. services, in 2017 the United States recorded services exports amounting to 32.7 billion U.S. dollars and services imports of 35.4 billion U.S. dollars, leading to a U.S. services account deficit with Germany of 3 billion U.S. dollars. In 2016, with investment stocks of 372.8 billion U.S. dollars, German firms were the fourth largest investors in the United States, while U.S. investments in Germany amounted to around 107.7 billion U.S. dollars.11 In 2015, U.S. companies were majority investors in 1,846 enterprises based in Germany and thus secured 703,200 jobs.12 In the same year, German investors and enterprises held majority stakes in 3,072 companies in the United States and thus made a contribution to 673,900 jobs, of which nearly half were in industry. In 2015, after the United Kingdom, Japan, and France, German firms were the fourth largest foreign employers in the United States.13 Earnings from foreign investment are recorded as primary income in the current account balance of a country. This covers cross-border revenue which accrues via foreign investment (such as through the subsidiaries of U.S. companies in Germany). Similar to the accounts for trade and services, the balance for primary income also shows a deficit for the United States vis-Ă -vis Germany, though at a modest level (4.4 billion euros, 2017). This deficit means that U.S. subsidiaries of German firms make a little more profit than the branches of U.S. companies in Germany.14 However, viewing the figures on a purely national level is misleading as the economies of the EU members are very closely interconnected. For example, Germany sources many services not directly from the United States but via their subsidiaries in other EU countries, especially Ireland. These transactions are registered in the Irish current account but not the German one. Consequently, it is not the bilateral balance between the United States and Germany that matters but rather the trade and investment relationship between the United States and the EU as a whole. The EU has a surplus of 153 billion U.S. dollars in trade in goods with the United States. On the other hand, it has a substantial deficit in trade in services totalling 51 billion U.S. dollars. And in addition, the EU records a very large deficit in the primary income of 106 billion U.S. dollars (2017).15 The trade and investment relationship between the EU and the United States shows that European firms supply the U.S. market with different business models than U.S. firms in Europe. The EU enterprises have greater success in exporting their goods directly to the United States than the other way round. In contrast, U.S. companies are more successful in creating branches in the EU and generating turnover and profits locally (primary income).
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European Commission, Fact Sheet: International Trade in Services, <http://ec.europa.eu/eurostat/statisticsexplained/index.php/International_trade_in_services > (accessed 24 May 2018). 11 BEA, Data Sheet: Foreign Direct Investment Position in the United States on a Historical-Cost Basis, by Country of Ultimate Beneficial Owner, 2008-2016, <https://www.bea.gov/international/di1fdibal.htm>, Data Sheet: U.S. Direct Investment Abroad: Selected Items by Detailed Country, 2009-2016, <https://www.bea.gov/international/di1usdbal.htm> (accessed 30 May 2018). 12 BEA, Selected Data for Majority-Owned Foreign Affiliates in All Countries in Which Investment Was Reported, 2015 <https://www.bea.gov/international/xls/selected_mofas_cntry.xls> (accessed 30 May 2018). 13 BEA, U.S. Affiliate Activities: Preliminary 2015 Statistics, Majority-Owned Affiliates, <https://www.bea.gov/international/xls/fdius-2015p/PartII-A1-A9.xls> (accessed 30 May 2018). 14 ifo Institut, Beobachtungen zur US-Leistungsbilanz, ifo-Schnelldienst 9/2018 <https://www.cesifo-group.de/DocDL/sd-20189-2018-05-09.pdf> (accessed 26 June 2018). 15 ifo Institut, Beobachtungen zur US-Leistungsbilanz, ifo-Schnelldienst 9/2018 <https://www.cesifo-group.de/DocDL/sd-20189-2018-05-09.pdf> (accessed 26 June 2018). 3
A New Agenda for Transatlantic Trade Relations
Barriers in Transatlantic Trade By international standards the EU import tariffs are low: the simple average tariff rate applied to industrial goods in the EU is 4.2 percent. In China, for example, it is around 9 percent. Tariff comparison EU/USA Total (in percent)
Agricultural goods (in percent)
Industrial goods (in percent)
Simple average MFN applied (2016)
Trade weighted average (2015)
Simple average MFN applied (2016)
Trade weighted average (2015)
Simple average MFN applied (2016)
Trade weighted average (2015)
EU
5.2
3.0
11.1
7.8
4.2
2.6
USA
3.5
2.4
5.2
3.8
3.2
2.3
PR China
9.9
4.4
15.5
9.7
9.0
4.0
WTO, Tariff Profiles, <https://www.wto.org/english/res_e/booksp_e/tariff_profiles17_e.pdf>.
Current data show that on average U.S. import tariffs are still a little lower than EU ones. For example, EU tariffs on transportation goods average around four percent; in the United States the average is three percent.16 However, both sides have individual tariff peaks: EU tariffs on passenger cars of 10 percent;17 U.S. tariffs on light commercial vehicles of up to 25 percent.18 In addition, if the bilateral trade in industrial goods between the EU and the USA is weighted according to what was actually traded, average EU tariffs are somewhat lower than in the United States: 1.4 percent versus 1.6 percent (in 2015).19 All in all, in bilateral trade the tariff burden for most products is very similar or the same. In addition, non-tariff trade barriers impose unnecessary constraints on transatlantic trade in both directions. Within the framework of the negotiations on the Transatlantic Trade and Investment Partnership (TTIP) the EU showed that it was prepared to eliminate nearly all tariffs and to comprehensively dismantle non-tariff trade obstacles.
Current State of Transatlantic Trade Negotiations 2013 market the kick-off of the TTIP negotiations. The talks have been suspended since the election of U.S. President Donald Trump at the beginning of November 2016. However, they had been stalled even before the U.S. elections – one reason also being the opposition among the general public in many EU countries, not least in Germany. Whereas the negotiations on tariffs had made great progress, the talks on regulatory cooperation, public procurement, and investment protection proved to be very difficult. At the end of 2016, expectations were thus subdued both among the political decision-makers and in the general public as to whether TTIP could still be brought to a successful conclusion.
16
Gabriel Felbermayr, „Zölle im transatlantischen Handel: Worauf, wie viel und wie gerecht?“, in: ifo Schnelldienst, 6/2018 <http://www.cesifo-group.de/DocDL/sd-2018-06-felbermayr-zoelle-2018-03-22.pdf> 17 WTO, Data on MFN Applied Tariff for the European Union 2017, <http://stat.wto.org/idbdata/idb_eec_last_e.zip> (accessed 12 June 2017). 18 WTO, Data on MFN Applied Tariff for the USA 2017, <http://stat.wto.org/idbdata/idb_usa_last_e.zip> (accessed 12 June 2017). 19 WTO, ITC, UNCTAD, World Tariff Profiles 2017, <http://stat.wto.org/TariffProfiles/E28_e.htm>, <http://stat.wto.org/TariffProfiles/US_e.htm>. 4
A New Agenda for Transatlantic Trade Relations
German industry was united in support of TTIP. BDI, together with its member associations, campaigned vigorously in support of TTIP, together with the Association of German Chambers of Commerce and Industry (DIHK), the Confederation of German Employers’ Associations (BDA), the German Confederation of Skilled Crafts (ZDH), the Federation of German Wholesale, Foreign Trade and Services (BGA), the Federation of German Employers’ Associations in the Metal and Electrical Engineering Industries (Gesamtmetall), and the Association of Family-Owned Businesses (ASU). In view of the conflicts with the United States, voices are getting stronger calling for a resumption of the negotiations on a transatlantic trade agreement in order to move the discussion about punitive tariffs into a constructive dialogue and bring the protectionist spiral to a halt. In mid-May 2018, the EU Commission stated that it would be prepared to explore the conclusion of a trade agreement with the United States, if the EU were to be granted a permanent exemption from the tariffs on steel and aluminium.
Recommendations of German Industry in Detail 1. The EU and United States must maintain a dialogue The EU and the United States are important political and economic partners for each other. The transatlantic partners should therefore resume their talks in order to prevent a further escalation of protectionist measures. The basis of talks should be the factual situation of transatlantic trade and investment relations. Looking at trade in goods alone is inadequate. The Trump administration should take greater account of the fact that the United States records positive balances in the services trade and with primary income with the EU.
2. No tariffs under the guise of national security Imports of steel, aluminium or automobiles and automotive components do not pose a threat to the national security of the United States. The tariffs imposed on the basis of Section 232 of the Trade Expansion Act of 1962 should therefore be abolished and no further tariffs levied.
3. Act in accordance with the WTO The compensatory tariffs which the EU has imposed in reaction to the U.S. tariffs on steel and aluminium are an important political signal but are not without risks. Compensatory tariffs can contribute to fuel protectionist tendencies. They must therefore always be applied with caution. Any EU decision on countermeasures must be taken in accordance with the WTO set of rules. The multilateral framework must be strengthened, improved and expanded; it must not be weakened any further. German industry welcomes the fact that as a first step towards a dispute settlement procedure the EU has requested consultations with the United States at the WTO. Should no solution be achieved through negotiations, a dispute settlement panel should be established.
4. Remove transatlantic trade barriers Numerous tariff and non-tariff trade barriers continue to impose a burden on trade between the United States and the EU. The removal of these would secure jobs and create wealth and should remain the long-term goal of negotiations between the transatlantic partners. In addition, negotiations between the EU and the United States could be a strong signal for open and rule-based trade and contribute to eliminating uncertainties in world markets. Moreover, a transatlantic trade agreement that covers nearly 50 percent of global economic output and a third of world trade could also strengthen the principles of the market economy and of the rule of law in the global economic order. 5
A New Agenda for Transatlantic Trade Relations
5. Secure the basis for negotiations However, the timing for new negotiations must be carefully chosen. Thus, certain preconditions must first be created.
Mutual trust: The U.S. tariffs on steel and aluminium products, the investigation whether automobile imports pose a threat to the national security of the United States and the onesided abrogation of the Iran agreement give cause for concern whether the United States is in fact interested in fair negotiations with the EU and a mutual balance of interests. The precondition for negotiations on a trade agreement is therefore firstly that the trade policy talks on the current protectionist measures are resumed and that mutual trust between the partners is restored.
Common understanding on the content and objectives of the negotiations: The goal of trade agreements is to remove trade barriers such as tariffs, quotas, and non-tariff obstacles to trade. In addition, modern trade agreements also contain obligations to comply with certain standards in trade. In contrast, it is not the goal of a trade agreement to even out the bilateral trade balances, as called for by President Trump. These depend on a wide variety of factors which cannot be influenced by a trade agreement alone. The Europeans must therefore first define which strategic, political and economic interests they wish to pursue in an agreement with the United States. Then the transatlantic partners must develop a joint understanding on the possible content and objectives of negotiations.
Societal acceptance of a transatlantic trade agreement in the EU: In some EU countries, the TTIP negotiations did not have majority backing in society. Possible negotiations must therefore be well-prepared by the European side. The initiative for a free trade agreement must originate from the member states, not merely from the EU Commission. Without sufficient political and social backing new talks on an agreement with the United States will not succeed. The EU Commission will require a new negotiating mandate from the member states. The Council should publish the draft mandate and allow for time for comments from industry and civil society. Negotiating positions should be made public and the opportunity given for comments. Furthermore, regular information and consultation rounds should take place.
6. Any accord must meet the requirements of a modern trade agreement A bilateral agreement should conform to the WTO rules and liberalise substantially all trade, measured by both the trade volume and the tariff lines. The WTO does not define “substantially all the trade� but it is customary for the EU that 90 percent of the trade volume and the tariff lines are covered.
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Removal of all tariffs on industrial goods: German industry recommends the removal of all tariffs on industrial goods.20 Transitional periods should be as brief as possible – if they are at all necessary.
Simple rules of origin: Preferential rules of origin in various free trade agreements should be more closely coordinated. This is particularly important with regard to the NAFTA region. In addition, cross-industry harmonised rules of origin would be desirable. A cross-sector rule for industrial goods is the only promising way to increase the utilisation rate for free trade agreements and to simplify market access, particularly for small and medium-sized enterprises. Such an approach does not completely exclude sector-specific rules.
Exceptions should be made for particularly sensitive agricultural products. 6
A New Agenda for Transatlantic Trade Relations
However, looking at tariffs alone says little today about actual market access. A bilateral tariff-only agreement is therefore insufficient and a bilateral sectoral approach is also inadequate. In the present environment it will surely no longer be possible to achieve the level of ambition of the TTIP negotiations. Nevertheless, an agreement ought to do justice to the demands placed on a modern trade agreement.
Regulatory cooperation: The regulatory autonomy of the state must be preserved on both sides. Nonetheless, a regulatory cooperation should be established which aims at improving the compatibility of existing regulations on both sides. Joint consultations would be beneficial, both with regard to existing regulations as well as the development of new ones. This would bring major advantages for the economic players on both sides. As a next step, consideration should be given to extending cooperation in technical regulation issues to the areas of standardisation, conformity assessment, accreditation, and market monitoring. The EU and the United States should therefore set up a regulatory dialogue on technical trade barriers. The results of this dialogue should be seriously considered but should not ultimately contain any obligation with regard to harmonisation or reciprocal recognition.
Public procurement: In the USA “Buy America� rules continue to restrict access for foreign enterprises to the procurement market. In the view of industry, non-discriminatory access to public procurement contracts should form part of talks, at least at the federal level.
7. A positive agenda for the WTO The WTO is the indispensable guardian of world trade, playing a major role in ensuring that trade relations are rules-based and fair. However, its monitoring mechanisms and its set of rules are increasingly coming up against their limits. The EU and the United States should come to an agreement on a positive WTO agenda in order to modernise the set of rules and to strengthen the mechanisms for monitoring and implementation.
Strengthening the monitoring mechanism: The WTO has a number of instruments at its disposal with which it can monitor the trade policy of its members. In particular, these include the mechanism for reviewing trade policy and the reports of the WTO Director-General. The EU and the United States should jointly work towards strengthening the WTO secretariat in order to enable it within the framework of the transparency measures to highlight undesirable developments more clearly and to deliver an unequivocal assessment of them. The EU and United States should jointly advocate that the horizontal mechanism proposed in the Doha Round for mediation in disputes over non-tariff trade barriers should be put into practice. In December 2017, the United States put forward a proposal for strengthening the notification obligations which could form the basis for a joint transatlantic proposal. For example, the EU and United States could jointly back the idea that in future WTO members will have to state reasons for not meeting a deadline and that such members must submit a schedule for notification. In addition, the WTO secretariat could be entrusted with the notification instead of the member, should the latter not prove to be cooperative.
Reform of the dispute settlement mechanism: With the help of the dispute settlement mechanism WTO members can take effective action against other members, should the latter have infringed the WTO rules. However, currently the United States is blocking the appointment of members to fill vacancies in the Appellate Body. This has already led to delayed appeals procedures and in the year 2019 could lead to the complete crippling of dispute settlement. The EU and United States should conduct a serious dialogue on the reform of the dispute settlement mechanism. The dialogue should include ways of reducing the complexity and length of the procedures. Furthermore, the dispute settlement capacities of 7
A New Agenda for Transatlantic Trade Relations
the WTO should be expanded so that its members can react more rapidly to contraventions of the rules and so that the introduction of trade discriminations can be responded to more effectively. Furthermore, the United States should also submit concrete proposals on how the legitimacy of the Appellate Body could be strengthened.
Concluding plurilateral agreements: In the past, the United States and the EU have successfully promoted plurilateral agreements under the auspices of the WTO and have implemented them in practice. With existing and new initiatives and agreements, the transatlantic partners should specifically seek common interests and make use of their joint negotiating power to achieve concrete progress. One such initiative would be to press ahead with the overdue membership of China in the Government Procurement Agreement. Moreover, they should jointly endeavour to ensure than the WTO information technology agreement is regularly extended. In addition, they should jointly promote the initiatives launched at the 11th WTO Ministerial Conference on e-commerce, investment facilitation, micro, small and medium-sized enterprises, and on the domestic regulation of services.
8. A new agenda for dealings with China In the past, the problems experienced by industrial countries in their dealings with emerging nations were predominantly in the area of market access. Now that China has become a heavyweight in global markets, this impacts on the whole of the global economy. The pressure to protect the rules of the market economy and its functioning has increased. China continues to impose appreciably higher tariffs than the EU, the United States, Japan and most other industrial countries. Subsidies lead to excess capacities which thrust their way into the world markets. The forced transfer of technology and violations of the protection of intellectual property further distort competition. At the end of 2017, the EU, the Unites States, and Japan therefore joined forces in a trilateral forum which was launched by a joint declaration at the WTO Ministerial Conference in Buenos Aires. The three partners reached a common understanding on the following points:
To develop a clear set of rules for industrial subsidies and at the same time to more vigorously enforce the existing rules in order to prevent competitive distortions and overcapacities.
A joint and coordinated approach in current and new WTO disputes.
Enhancing efficiency and effectiveness in the monitoring process in the existing WTO bodies, including notification obligations.
Closer harmonisation within the three nations’ own respective governments in the field of investment screening in order to achieve closer overall coordination.
Closer coordination on drawing up new rules for the work of the International Working Group on Export Credits.
Stepping up the exchange of information on practices distorting competition.
Close coordination in further international and multilateral bodies, such as G7, G20 and OECD as well as, for example, in sector-specific forums like the Global Forum on Steel Excess Capacities or the Government/Authorities Meeting on Semiconductors (GAMS).
The trilateral forum should also be used in future to assess progress with liberalisation in China.
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A New Agenda for Transatlantic Trade Relations
The central challenge to be faced is to make the markets of the EU, the United States and Japan and the basic market economy framework more resistant in all these areas to the market distortions caused by enterprises from non-market-economy countries.
Strengthening the rules on competition: The right answer to unfair competitive practices is not to seal off one’s own economy. On the contrary, the EU and the United States should work together on strengthening the rules on competition. For example, these could include specific transparency requirements for public procurement tenders and corporate acquisitions. For instance, foreign enterprises could in general be forbidden from taking part in corporate acquisitions or public tendering if the enterprise cannot submit accounts in accordance with International Financial Reporting Standards (IFRS), if the ownership structure in not sufficiently transparent or the sources of funding for acquisitions cannot be adequately verified.
Joint complaints at the WTO against breaches of the rules: In addition, the transatlantic partners should assess joint procedures in order to deal with the infringement of WTO rules by other WTO members. In 2009 and 2016, the EU and the United States jointly took repeated and successful action against impermissible import and export practices by China in the area of raw materials. One prominent current case is China’s breach of intellectual property protection. The procedure under Section 301 of the U.S. Trade Act of 1974 lists relevant and ongoing violations of the protection of intellectual property by China, a view which is also shared by German industry. The main focus is on Chinese administrative regulations which also compel German firms to disclose technologies. Together with the United States and Japan, the EU should exploit all existing paths to demonstrate violations of rules governing intellectual property protection at the WTO and to file a complaint for the abolition of respective regulations. The trilateral forum United States – Japan – EU should be used to take up joint positions.
Strengthening the Global Forum on Steel Excess Capacity: Chinese excess capacities are putting the open world trading system under pressure. The measures adopted at the meeting of the “Global Forum on Steel Excess Capacity” in November 2017 in Berlin for identifying and reducing overcapacities must be rapidly implemented. Transparency and greater voluntary commitments are of decisive importance here.
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A New Agenda for Transatlantic Trade Relations
Imprint Bundesverband der Deutschen Industrie e.V. (BDI) Breite StraĂ&#x;e 29, 10178 Berlin www.bdi.eu T: +49 30 2028-0 Editors Dr. Stormy-Annika Mildner T: +49 30 2028-1562 s.mildner@bdi.eu Julia Howald T: +49 30 2028-1483 j.howald@bdi.eu Klara Schwobe T: +49 30 2028-1723 k.schwobe@bdi.eu
Date and Number July 2018 BDI-Publication-Nr.: D 0951
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