In these complex negotiations, which are taking place in worrying, sometimes vulgar, ways, there is a problem of reducing asymmetries also in other areas that directly affect states, such as defense and its cost, which is currently unbalanced to the disadvantage of the United States. In short, the negotiations are taking place at several levels, with partly different, partly overlapping objectives.
By Sabino CASSESE
The Italian Prime Minister will meet tomorrow in Washington with the President of the United States. The latter, with a style reminiscent of that of his predecessor of two centuries ago, Andrew Jackson, has already decided on a series of tariff increases, the effectiveness of which he has then partially suspended for a short time. The Italian Prime Minister is going to America to make the authoritative voice of one of the founders of the European Union heard, but she must also take into account the different views of her allies in Italy.
The situation is so fluid that it would be good to understand what the powers of the two heads of government are, the motives and the limits of their strategies. The President of the United States was able to make such drastic unilateral decisions, in an area of the world as globalized as international trade, because he was allowed to do so based on the Trade Act of 1974 signed by Gerald Ford, the only American president never elected to that office. That law, in 203 pages, mentions the President of the United States 421 times. With that act, the two houses of the American Parliament stripped themselves of their powers in trade matters, entrusting them to the President. It has been extended several times, most recently by President Obama.
The reason for such a broad delegation to the President of the United States was the negotiation of international agreements in the various rounds of the General Agreement on Tariffs and Trade (GATT), which would later create the World Trade Organization. Here is the first paradox: a rule adopted to ensure the globalization of trade is now being used for the purpose of imposing tariffs that restrict world trade.
Anyone who has read the book written by the Vice President of the United States, James David Vance, knows that President Trump’s initiative is not a clever move or a way to reaffirm his dominant role in the world, but a reaction to the impoverishment of many areas of the United States (for example, Middletown in Ohio and the Appalachian Mountains). But you also need to read the report on foreign trade barriers recently presented by the US Trade Representative to understand that the US president’s action does not have a single motive. He is not only against imports that affect American production, but also policies, especially supranational ones (European ones above all), stricter than those of his country, which limit the universal development of American companies, starting with Big Tech, which think that now the space for them is narrower.
These are non-tariff barriers, such as the rules of the regulatory giant that is the European Union, for digital services and the market, which are accompanied by initiatives by tax authorities, the imposition of heavy fines (hundreds of millions and tens of billions) and criminal initiatives by prosecutors from various European countries.
This is the second paradox of the United States’ action, which has been too soon defined as sovereign: it is also driven by the goal of breaking down non-tariff barriers and avoiding sanctions from judges that affect the global action of companies born on American soil. Trump is also raising tariff barriers for the European Union to lower non-tariff barriers.
Therefore, what is at stake is much broader than tariffs alone. But the American effort to reduce trade asymmetries faces several obstacles. Trade depends on market structures and consumer choices. A general balance of debt and credit would also require accounting for European savings directed to the American securities market. Big Tech, born and developed in an immunity bubble, in the United States, is now surrounded by the regulatory fire of the European Union and the countries that are part of it, the only genetically global organisms, representing a challenge for many states. This is the third tangle of paradoxes that the European Union must take into account. Trump defends his globalization. A national public authority exercises its sovereignty to reduce the restrictions imposed by a supranational authority on the most important private companies that exist in the world.
America, which has taught the world about regulation, especially competition regulation, complains that the European Union has learned its lesson too well.
Finally, in these complex negotiations, which are being conducted in worrying, sometimes vulgar, ways, there is a problem of reducing asymmetries also in other areas that directly affect states, such as defense and its cost, which is currently unbalanced to the disadvantage of the United States. In short, the negotiations are taking place at several levels, with partly different, partly overlapping objectives. The European Union has many arrows in its bow: it has taken the first step and has pushed the American President to raise his voice, using the weapon at his disposal, that of tariffs. There is no opposition to the nationalistic closure of the United States and the global opening of the European Union.
The United States is very interested in world trade. The European Union, a region of the world with strong exports, can only be in favor of reducing trade asymmetry (and this is especially true for countries such as Germany and Italy).
