European Union Trade Relations: Issues and Policy Challenges
U.S.-European Union Trade Relations: Issues and Policy Challenges
SUMMARY
The United States and European Union
(EU) share a huge and mutually beneficial economic partnership. Not only is the U.S.-EU trade and investment relationship the largest in the world, it is arguably the most important.
Agreement between the two economic superpowers has been critical to making the world trading system more open and efficient. Given a huge level of commercial interactions, trade tensions and disputes are not unexpected. In the past, U.S.-EU trade relations have witnessed periodic episodes of rising trade tensions and even threats of a trade war, only to be followed by successful efforts at dispute settlement. This ebb and flow of trade tensions has occurred again last year and this year with high-profile disputes involving steel, tax breaks for U.S. exporters, and the EU ban on approvals of GMO products. Resolution of
U.S.-EU trade disputes has become increasingly difficult in recent years. Part of the problem may be due to the fact that the U.S. and the EU are of roughly equal economic strength and neither side has the ability to impose concessions on the other. Another factor may be that many bilateral disputes now involve clashes in domestic values, priorities, and regulatory systems where the international rules of the road are inadequate to provide a sound basis for effective and timely dispute resolution. How foreign policy discord over the Iraq war may affect economic relations is a major new unknown. In order to build a smoother relationship, Brussels and Washington may have to resolve a number of these disputes and avoid an outbreak of tit-for-tat retaliatory actions. The agreement to launch a new round of multilateral trade negotiations at the World Trade Organization (WTO) trade ministerial held November 2001 in Doha,
Qatar has facilitated this effort. But the recent passage of U.S. legislation increasing farm
subsidies,
SUMMARY
The United States and European Union
(EU) share a huge and mutually beneficial economic partnership. Not only is the U.S.-EU trade and investment relationship the largest in the world, it is arguably the most important.
Agreement between the two economic superpowers has been critical to making the world trading system more open and efficient. Given a huge level of commercial interactions, trade tensions and disputes are not unexpected. In the past, U.S.-EU trade relations have witnessed periodic episodes of rising trade tensions and even threats of a trade war, only to be followed by successful efforts at dispute settlement. This ebb and flow of trade tensions has occurred again last year and this year with high-profile disputes involving steel, tax breaks for U.S. exporters, and the EU ban on approvals of GMO products. Resolution of
U.S.-EU trade disputes has become increasingly difficult in recent years. Part of the problem may be due to the fact that the U.S. and the EU are of roughly equal economic strength and neither side has the ability to impose concessions on the other. Another factor may be that many bilateral disputes now involve clashes in domestic values, priorities, and regulatory systems where the international rules of the road are inadequate to provide a sound basis for effective and timely dispute resolution. How foreign policy discord over the Iraq war may affect economic relations is a major new unknown. In order to build a smoother relationship, Brussels and Washington may have to resolve a number of these disputes and avoid an outbreak of tit-for-tat retaliatory actions. The agreement to launch a new round of multilateral trade negotiations at the World Trade Organization (WTO) trade ministerial held November 2001 in Doha,
Qatar has facilitated this effort. But the recent passage of U.S. legislation increasing farm
subsidies,