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Merkel Wants to Boost Transatlantic Trade Ties

[UPDATE: Financial Times: "US cautiously welcomes Berlin trade plans" ]
"Angela Merkel, German chancellor, will this month launch a sweeping initiative for the harmonisation of US and European legislation to boost investment flows and trade between the world’s largest economic blocs." The British Financial Times interviewed Chancellor Merkel about her thoughts for an "ever-closer" transatlantic economic partnership, the Middle East, the EU relationship with Russia, energy policy, revitalizing negotiations for an EU-constitution, EU-enlargement, and the Balkans.

Related Financial Times commentaries: "Merkel faces a Brussels road test" and "Relations with US top Merkel's agenda".

Related Atlantic Review posts:
Strong EU-U.S. Trade
Comparing Chancellor Merkel's and Schroeder's Perception of Russia and the US
"Germany's Comeback", Leadership and Exaggerations

European Union Directive: American Exporters Must Use the Metric System Only

Our reader ROA writes: "Anyone from an EU country that complains about the US being power mad, arrogant, fascist, bullying, etc.  should be ashamed of themselves.  I personally would like to see the US implement the metric system, but think the EU's attempt to block any measurements other than metric is an example of a power mad megalomaniac bureaucracy run amok." ROA refers to the European Union Metric Directive, which means according to the U.S. Government's Export Portal:
After January 1, 2000, all products sold in the EU needed to specify and label in metric measurements only. Prior to implementation, the European Commission recommended a 10-year deferral of the metric-only directive, allowing companies to use dual labeling through 2009. The delay provides time for U.S. companies to prepare for a metric-only European market beginning January 1, 2010. After the EU Directive takes effect, member and associated countries will no longer permit dual indications of measurement. U.S. exporters can no longer label or print inches, pounds, or any other non-metric measurement on shipments. This affects labels, packaging, advertising, catalogs, technical manuals, and instructions.
The US  Department of Commerce organized a public forum on the EU's Metric Directive for all interested stakeholders on October 12, 2006.
A Telegraph blog post, recommended by ROA, argues:
An extraordinary row, involving major European and US industries, is blowing up over the European Commission's determination to make it illegal, in three years' time, for any products made in or imported into the EU to carry any reference to non-metric measures. Not only will this cost industries on both sides of the Atlantic billions of dollars and euros, but it is in direct breach of US federal law. The Commission is so set on stamping out the hated non-metric system that, as of January 1, 2010, it is imposing a total ban on what it calls "supplementary indications" – ie any mention of inches, pounds or other non-metric units in advertising, labelling, catalogues, manuals and the like.
I doubt whether the directive is in breach of US law. The Telegraph blogger explains "Any European firm wishing to sell to the US will not be allowed to refer at all to the units its American customers understand. This in itself will be illegal under the US Fair Trade and Packaging Act, which permits use of metric units only so long as they are accompanied by a US non-metric "translation"." Though, I can't imagine that the EU is telling European companies that they must use metric labels only for their exports to the US. That would be bad for our companies. I think the directive concerns only imports to the EU.

Endnote: The European Commission's Press Office in London debunks Euromyths. Re Metrication:
Metrication in the UK is not the result of British membership of the EU. In 1965, eight years before joining the EEC, the Wilson Government decided to initiate the UK's metrication programme, in response to global moves in this direction – Ireland and all Commonwealth countries had already adopted the metric system.

Transatlantic Free-Trade Zone as "NATO for the World Economy"

Gabor Steingart makes "an argument for a trans-atlantic free-trade zone" in the English version of Der Spiegel:
The role NATO played in an age of military threat could be played by a trans-Atlantic free-trade zone in today's age of economic confrontation. The two economic zones -- the European Union and the United States (perhaps with the addition of Canada) -- could stem the dwindling of Western market power by joining forces.
"I find the idea fascinating," Chancellor Merkel told the EU committee in Germany's parliament, according to another Spiegel article in early October. The enormously difficult project of creating a Transatlantic Free Trade Area would be her backup plan, should the Doha trade talks ultimately prove untenable.
Related Atlantic Review post: Will Germany Promote the Creation of a Transatlantic Free-Trade Area?

Will Germany Promote the Creation of a Transatlantic Free-Trade Area?

[UPDATE: The idea is not new. Already in 1997, Germany Foreign Minister Klaus Kinkel "proposed that a transatlantic free-trade zone, TAFTA, be created in the long term."]

"Spurred by concern about China's growing economic might, Germany is considering a plan for a free-trade zone between Europe and the US," writes the Financial Times (FT) in an article availabe at MSN Money:
A senior aide to Angela Merkel said the chancellor was "interested" in promoting the idea as long as such a zone did not create "a fortress" but rather "a tool" to encourage free trade globally, "which she is persuaded is a condition of Germany's future prosperity". Separately, on Friday, the US, Canada and the European Union complained to the World Trade Organisation about China's tariffs on car parts, raising the prospect of Beijing facing its first WTO dispute.
China's Prime Minister Wen Jiabao was on tour in Europe. Hopefully he was pressured on Darfur as well. Global Darfur Day was on Sunday and Jewels in the Jungle has a news round-up. Die Zeit's Kosmoblog criticizes a lack of attention for Darfur in Germany. The FT mentions only that Chancellor Merkel criticized China's poor human rights record and restrictions on foreign news agencies. [UPDATE: The Frankfurter Allgemeine Zeitung writes that Darfur was discussed and that Prime Minister said China supports UN troops in Darfur] The FT concludes:
As German perceptions of China have grown more American, Washington's approach has shifted too. Speaking before his first trip to Beijing, Hank Paulson, US Treasury secretary, this week outlined a more balanced policy mixing traditional US criticism with praise for China's reforms.
Prof. Drezner sees "many reasons to believe that TAFTA [Transatlantic Free-Trade Area] will never get off the ground", but finds the idea "very intriguing. Even if it takes ten years to negotiate, the combined weight of a TAFTA in terms of both market size and rule-setting behavior would be formidable." (HT: ROA) The FT advises caution:
Ms Merkel's aide said it was "far too early" to tell whether the project of a transatlantic free-trade zone would be part of Germany's priorities when it assumes the six-month presidency of the European Union and chairs the G8 group of leading industrial nations from January.

One Year after G8 Summit on Extreme Poverty

Foreign Policy Magazine writes:
Each year the Center for Global Development and FOREIGN POLICY look past the rhetoric to measure how rich-country governments are helping or hurting poor countries. How much aid are they giving? How high are their trade barriers against imports such as cotton from Mali or sugar from Brazil? Are they working to slow global warming? Are they making the world’s sea lanes safe for global trade?
The Netherlands wins this year's competition, followed by Denmark, Sweden and Norway. Germany ranks at the 9th place and the United States at the 13th. Japan lost again.
British Times two months ago, that little has improved since last year's G8 summit on Africa and the Make Poverty History campaign due to leadership failures and aid cuts:
Kofi Annan, the UN secretary general, is to chair an international group set up by Tony Blair to monitor pledges made to help Africa at last year’s G8 summit, the Prime Minister will announce today. Bob Geldof, the Live8 organiser, and President Obasanjo of Nigeria will also be on the Africa Progress Panel, which will be funded by Bill Gates.
The Atlantic Review wrote about the magnitude of poverty and a popular myth:
Around 29,000 under-fives die every day from causes that are easily prevented, such as diarrhoeal dehydration, acute respiratory infections, measles and malaria. According to a poll, most Americans believe that the United States spends 24 percent of its budget on aid to poor countries; it actually spends well under a quarter of 1 percent.
Related post: Fair trade and more aid.

Mas Protestas: What Connects Immigration and US-Latin-American Politics

It was the textbook example of agenda setting: As soon as President Bush restarted the debate over (illegal) immigration, the majority of US-Americans considered the matter of greater importance than the war in Iraq. Hundreds of thousands of US citizens and non-citizens, legal and illegal, demonstrated on the streets from Washington D.C. to Washington State, often broadening the protest to include anti-war and anti-Bush statements. The fact that 461 bills concerning immigration and immigrants are currently pending in 43 state legislatures underlines that this is a smouldering issue, ready to be roused before the midterm election.
In his article Latin America's Left Turn in the May/June 2006 edition of Foreign Affairs the former foreign minister of Mexico, Jorge G. Castañeda, links the US immigration debate to its and Europe's policies towards Latin America:
Continue reading "Mas Protestas: What Connects Immigration and US-Latin-American Politics"

World Trade negotiations in crisis, EU punishes U.S., and wine deal

The negotiators at the World Trade Organization (WTO) failed to meet the April deadline to agree on ground rules for the liberalization of world markets for agricultural and industrial products. According to Oxford Analytica's op-ed in The Hill:
Progress in the Doha Round has consistently fallen short of even the most pessimistic expectations. Four years of talks in Geneva have provided the necessary technical basis for liberalization agreements, but key countries remain unwilling to make politically difficult choices necessary for progress. For example:
• The European Union's offer to cut tariffs that restrict its imports of agricultural goods is far below what the United States and other agricultural exporters are demanding.
• The United States for its part is reluctant to cut its subsidies to its own farmers.
• Major developing countries such as Brazil and India are resisting European Union and U.S. demands for big cuts in their import duties on  manufactured goods.
This triangular deadlock continues, with no indication of any imminent breakthrough. Almost the only noteworthy Doha development in the four months since WTO ministers met in Hong Kong and set the April deadline has been President Bush's apparent downgrading of the Doha Round by moving his very capable chief negotiator, U.S. Trade Representative Rob Portman, to other duties.
Likewise, the Washington Times opines:
If, as many observers argued, the Doha round on trade liberalization was on life support before highly regarded U.S. Trade Representative Rob Portman left last week to become White House budget director, it is hard to imagine what can be done to resuscitate trade negotiations now. (...) The political obstacles lined up to block an agreement in the United States pale compared to what confronts European negotiators and politicians in their homelands. If French President Jacques Chirac caved into the pressure from unions and student protesters over relatively minor reforms in France's labor law, imagine how quickly French nerve would collapse when Mr. Chirac or his successor is confronted by French farmers taken off the dole. Italy's political problems are equally daunting. With his political capital reduced, President Bush has apparently decided to cut his losses and toss the Doha failure on the heap next to Social Security reform and tax reform.
Oxford Analytica concludes that time is now "desperately short to complete the negotiations." While past trade negotiations have also been beset by crises and delays, the lack of a real commitment by many parties "makes the outcome increasingly doubtful." According to the Financial Times the US and European Union blamed each other for the setback:
Peter Mandelson, EU trade commissioner, accused the US of lacking realism on agriculture, while the US trade representative's office said it wished the EU would put the same energy into the negotiations as it did in finger-pointing.
The European Union on Monday imposed new tariffs on U.S. goods, because U.S. companies continue to benefit from the Byrd amendment. From the BBC:
The anti-dumping amendment lets US firms raise a levy from competitors' goods which it deems to be too cheap. The amendment was ruled illegal over a year ago and repealed in February, but US firms are expected to benefit from it for a further two years. This latest penalty brings the total extra tariffs imposed upon the US to $36.9m. Peter Mandelson - the EU trade commissioner - has said that while the trade dispute has been resolved, US firms are still receiving payments. (...) Since the Byrd amendment was passed in 2000, manufacturers in the metals and food businesses among others, have been the recipients of billions of dollars in payments.
Trade disputes should not be exaggerated. The IHT points out:
In a statement, the EU said the Byrd Amendment "has been a long-running irritant in the U.S.-EU trade relationship," but it added "that the huge bulk of EU-U.S. trade is trouble-free."
THE GOOD NEWS: A fine wine sometimes needs some time. After only 20 years of negotiations, the European Union and the United States signed a bilateral wine accord in March 2006, which will bring major benefits for EU wine producers, says the EU:
It will help EU winemakers to build on their current success in the US, which is by far the EU's largest export market. Annual EU wine exports to the US are worth more than 2 billion euros, around 40 percent of EU exports in terms of value. This agreement provides a clear demonstration that the US and the EU can resolve important and complex issues through bilateral negotiations and both sides are committed to doing so in the future.

Germany's Energy Summit should reduce dependence on Russian oil and gas

Industrial leaders, trade unions and politicians are meeting today to discuss long-term energy security, diversification and free-market reforms. The International Herald Tribune explains that Germany is one of the most energy dependent EU countries:
The energy sector is heavily dependent on oil and gas. Mineral oils make up 37 percent of needs, but 97 percent is imported, a third coming from Russia. Gas accounts for 23 percent of consumption, of which more than 80 percent is imported, 37 percent from Russia. (...) With growing dependence on Russia for its energy, some politicians say it is time to diversify sources. The coalition's energy experts also agree that Germany needs a policy that is much more aggressive in dealing with global warming, promoting efficiency and becoming economically competitive.
Germany's dependence on Russia is much stronger than US dependence on Saudi Arabia and Venezuela. The IHT quotes Friedemann Müller, an energy expert at the German Institute for International Policy and Security:
Germany's energy policy has for years been influenced by the big companies that have hampered competition and have done their best to prevent diversification of energy sources because it would undermine their position in the market. These policies damage our economy and our competitiveness. (...) For 20 years Ruhrgas, which has long term contracts to import gas from Russia, has owned a piece of property at one of the big harbors where it has blocked the building of such a terminal because it would undermine their monopoly on the domestic gas market.
Recently it was revealed that the Schröder government offered a government loan guarantee for the Russian pipeline project. Merkel's long-term energy concept is not expected till 2007. Today's energy summit is overshadowed by a debate to use nuclear power longer than previously decided.
If you would like to save energy and money, check out the Online Advisor for fridges, freezers, heating and pumping systems. Fulbright Alumnus Steffen Schmuck-Soldan, PhD, works for the NGO co2online, which created them.