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EU-China Investment Agreement Casts Europe As A Great Power – OpEd

Dr. Hasim Turker via Eurasia Review — Tue, 12 Jan 2021 13:20:47 +0000

As in many other respects, 2020 was a very turbulent year in the context of great power rivalry and transatlantic relations. The most striking examples in this context were the COVID-19 pandemic, US-China great power rivalry, and the end of the turbulent Trump era with the elections in the U.S. Troubled relations between the United States and the EU continued during this period as well, which culminated in a new development that could further strain the relationship: the signing of the EU-China Comprehensive Agreement on Investment (CAI ) in the last days of 2020.

Negotiations for the agreement took nearly seven years, and there were intense discussions between the EU Commission and top Chinese officials throughout 2020. In the last days of the year, a decision was made to go ahead with the agreement. Germany’s Chancellor Angela Merkel, acting as EU term president, and Chinese President Xi reportedly pressed to close the agreement. But there is an important nuance here: the agreement has not been actually been signed yet, as the negotiations took place via video conferencing. And for the agreement to come into force, ratification by all EU member states as well as the consent of the EU Parliament is necessary.

It is clear that this process will be quite painful and there is a good chance that it could fail. In fact, it is even possible to go further and claim that Germany is betting on this possibility.

So why has Germany followed such a path? There are three reasons: First of all, Germany is heavily dependent on its trade with China. It was its trade with China that saved Germany from the global financial crisis in 2008. Moreover, trade with China is still highly significant to Germany today, with trade volumes of around 250 billion dollars. Secondly, Germany and to a large extent France, have been particularly uncomfortable with the European Union being treated as a second-tier power by the United States under the Trump administration. Brexit has been the last straw in this context. The message given to the United States with the agreement was that Europe is far more important than the United States thought and that the EU cannot be ignored. Finally, with the CAI agreement, China has also been warned about the importance of Europe within the scope of great power competition.

At this point, it is necessary to draw attention to the race between France and Germany in order to become the dominant power in the EU after Brexit. With Brexit, France has become the EU’s sole nuclear power and its most powerful one in terms of conventional forces as well. France’s historical approach to European autonomy is a well-known phenomenon. Trump’s unilateral policies and his refusal to take Europe into account enabled France to draw Germany to its side within the scope of European autonomy. However, with the election of Biden, Germany is expected to return to its traditional approach in the context of transatlantic relations. This has been made clear in speeches by the German Defense Minister, Annegret Kramp-Karrenbauer. Kramp-Karrenbauer emphasized that an autonomous capacity in military and political matters can strengthen Europe’s hand within the context of existing transatlantic ties with the United States. She also added that Europe could not provide nuclear deterrence without the US nuclear umbrella. The main reason for this approach is to prevent France from taking the helm of the European Union in the absence of the balance provided by the United Kingdom. The struggle of these two powers to gain the leadership of Europe lies at the root of many problems in European history. It was the presence of the United States in the continent after the Second World War that kept these two powers from any conflict. The US presence has been also the most essential factor in Europe’s welfare today. For this reason, the US presence in the continent and the continuation of the transatlantic relationship have been of vital importance for Germany.

Against France’s clear military superiority, Germany has undoubted economic superiority. The economic locomotive of the European Union, so to speak, is Germany. Germany needs China and Asian economies to maintain this superiority. In this context, it does not hesitate to oppose any attempt that will jeopardize its commercial relations with China. In this respect, the attempts of the United States to cut off trade relations with China altogether cannot find any support from Germany. However, Germany also looks for ways to balance the assertive and aggressive attitude of Xi Jinping’s China. For this reason, it wants to use its relationship with the United States as leverage against China as well.

When all these elements come together, it is an indisputable fact that Germany is in a very delicate position. In fact, the CAI agreement itself is a consequence created by such a balance. Germany forced the conclusion of such an agreement for the sake of not spoiling its relations with China, and it has restored confidence in China. On the other hand, the message was given to the United States, especially to the incoming Biden administration, that Europe is an important power that cannot be ignored. Nobody will be able to blame Germany if the agreement is not implemented due to an EU member state refusing to ratify it. This means that Europe, and Germany, hold some serious leverage against the United States as well as China.

Looking ahead, both great powers will have to play the game by taking Europe into account. In fact, the European Union, and especially Germany, could gain a crucial position in playing a balancing role that will keep the great power rivalry between the US and China from getting out of hand. Hopefully, the result will be a more balanced and stable global order. Such will be one of the most important tasks of the new administrations in the United States and Germany in the coming period.

The views expressed in this article are those of the authors alone and do not necessarily reflect those of Geopoliticalmonitor.com or any institutions with which the authors are associated.

Source: https://www.eurasiareview.com/12012021-eu-china-investment-agreement-casts-europe-as-a-great-power-oped/

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Once a Trump Favorite, Harley Now Feels the Pinch From Trade War

Gabrielle Coppola — Mon, 25 Jun 2018 01:23:12 +0000

Bike maker will shift production from U.S. due to EU tariffs.

President tweets he’s surprised the company has surrendered.

Not long ago, President Donald Trump pointed to Harley-Davidson Inc. as an example of what was going to go right for manufacturing in America. Now, Harley seems to encapsulate a lot of what’s going wrong.

Citing tariffs tied to escalating tension between Trump and the European Union, the iconic motorcycle maker will further retrench its U.S. operations. Bikes destined for the EU were made less viable by levies that’ll boost costs for the company by about $100 million a year.

“Surprised that Harley-Davidson, of all companies, would be the first to wave the White Flag,” Trump tweeted Monday. The president said he has “fought hard” for the company and said it ultimately won’t have to pay the tariffs, urging it to “be patient!”

Already, Harley had announced plans to close a factory in Missouri and build one in Thailand, after Trump pulled the U.S. out of the Trans-Pacific Partnership, the free-trade agreement with a bloc of Asian countries that would have lowered barriers to key markets. Now, Harley joins iconic American companies including Levi Strauss & Co. and even Germany’s Daimler AG in getting caught in the middle of Trump’s trade skirmishes with major trading partners.

“A company that is as connected to America, and Americana, as Harley is probably going to be laying off U.S. workers in favor of foreign workers and going to be losing money as a result of this,” James Hardiman, an equity analyst with Wedbush Securities, said of the trade battle between the U.S. and the EU. “There’s a lot of irony here, to put it mildly.”

Harley shares fell 6 percent, the biggest drop in almost five months, to close at $41.57. The stock is down 18 percent this year.

The EU’s retaliation to Trump’s steel and aluminum levies will cost about $2,200 per motorcycle shipped to Harley’s second-biggest market in the world, the company estimated in a filing Monday. So it’s shifting production of bikes for European riders to unspecified overseas plants.

The move conflicts with the Trump administration’s touting of the U.S. economy’s strength. “The results of President Trump’s tax cuts can be seen in our Nation’s business environment, as American companies start investing once again,” the White House said in a post that the president’s @POTUS account retweeted to 23.5 million followers.

Easy Win

While Trump has repeatedly claimed that the U.S. can easily win trade wars, victims are starting to pile up at home and abroad. Daimler, the maker of Mercedes-Benz luxury vehicles, warned last week that escalating tension between the U.S. and China will impair earnings from its Alabama sport utility vehicle plant and lower profit this year.

Harley plans to eat much of the cost increase tied to the EU’s tariffs because trying to pass it on to dealers or customers would make an “immediate and lasting detrimental impact” on its business, it said in the filing.

The EU’s levies are only the latest blowback Harley has faced from Trump’s trade policies. A year after Trump pulled the U.S. out of the TPP in January 2017, Harley announced it would close its factory in Kansas City and consolidate production in York, Pennsylvania, eliminating about 260 jobs.

Trump hosted Chief Executive Officer Matt Levatich and other Harley executives and union leaders for a White House listening session in February 2017 and hailed the motorcycle maker as “a true American icon” and “one of the greats.”

“Thank you, Harley-Davidson, for building things in America,” Trump said at the time. “I think you’re going to even expand. I know your business is now doing very well and there’s a lot of spirit right now in the country that you weren’t having so much in the last number of months that you have right now.”

Other Woes

Harley has been dealing with woes independent of Trump’s policies. Levatich has struggled to attract younger buyers in the company’s core home market: U.S. retail sales plunged 12 percent in the first quarter, the 13th decline out of the last 14 quarters. Overseas sales also have been stalling.

The International Association of Machinists and Aerospace Workers, which represents workers at the company’s facilities in Wisconsin, Missouri and Pennsylvania, expressed skepticism that the production shift was needed.

“This latest move is in keeping with Harley’s past decisions to open plants outside of North America,” President Robert Martinez Jr. said in an emailed statement. He called the plan the “latest slap in the face to the loyal, highly skilled work force” that builds the company’s bikes.

In his tweet, Trump appeared to echo the union’s sentiment, writing that the EU’s taxes were “just a Harley excuse.”

Selling Hogs Overseas

Harley-Davidson already sells about 40% of its motorcycles outside the U.S.

Harley already had warned that Trump’s tariffs on imported steel and aluminum will drive up raw materials costs. The EU threatened that its payback for those levies would be to boost taxes on U.S. motorcycles, Levi Strauss & Co. jeans and bourbon whiskey. Paul Ryan, the Republican speaker of the House of Representatives, hails from Harley’s home state of Wisconsin, while Senate Majority Leader Mitch McConnell represents Kentucky, a major maker of bourbon.

“This is further proof of the harm from unilateral tariffs,” AshLee Strong, a Ryan spokeswoman, said Monday. “The best way to help American workers, consumers, and manufacturers is to open new markets for them, not to raise barriers to our own market.”

Harley isn’t yet identifying which international plants will boost output for EU markets. The company operates manufacturing facilities in Brazil, India and Australia, and expects to start operating the new Thailand factory this year.

“We are currently assessing the potential impact on our U.S. facilities,” Michael Pflughoeft, a company spokesman, said in an email. “We are hopeful the U.S. and EU governments will continue to work together to reach an agreement on trade issues and rescind these tariffs.”

Cruising in Europe

Harley’s share of total sales to Europe last year was the highest since 2011

Harley forecast $30 million to $45 million in costs linked to the EU tariffs for the remainder of 2018. Analysts project the company will earn about $587 million this year on $5 billion of revenue.

Ramping up output in international plants for the EU may take at least nine to 18 months. While Harley said it’s committed to making motorcycles in the U.S., it suggested it had no other choice but to move production from its home market. The manufacturer sold almost 40,000 bikes in Europe last year, and the continent’s share of total deliveries was the highest for the company since 2011.

“Increasing international production to alleviate the EU tariff burden is not the company’s preference, but represents the only sustainable option to make its motorcycles accessible to customers in the EU and maintain a viable business in Europe,” the company said in its filing.

— With assistance by Anthony Palazzo, and Anna Edgerton

(Updates with Trump tweet in third paragraph.)

Source: https://www.bloomberg.com/news/articles/2018-06-25/harley-davidson-to-shift-motorbike-production-to-counter-tariffs

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Can the EU save the Iran nuclear deal?

Massoumeh Torfeh — Mon, 19 Mar 2018 12:59:06 +0000

European leaders must continue to resist US pressures to isolate Iran.

Earlier this month, for the first time since the signing of the nuclear deal, Iran’s foreign minister, Javad Zarif, has blamed the EU for “appeasing” the US [Francois Lenoir/Reuters]

Following the unexpected sacking of US Secretary of State Rex Tillerson, EU foreign affairs chief Federica Mogherini must be more concerned than ever before about the future of the Joint Comprehensive Plan of Action (JCPOA), commonly known as the “Iran nuclear deal“.

Today, the EU is faced with having to make a choice between preserving the Iran deal that it regards as a major diplomatic achievement and breaking away with its most important political ally, the United States of America.

Since the deal was signed in 2015, the EU has been bearing the responsibility of protecting an increasingly fragile balance: safeguarding Iran’s commitment to the nuclear agreement while simultaneously trying to dissuade the US from using a language of containment and sanctions. This task became even harder when the Trump administration started pressuring European leaders into signing a “supplemental agreement” with Iran that would also regulate the Islamic Republic’s ballistic missile programme and its role in Syria.

Trump’s decision to sack Tillerson, who was often depicted as a calming influence in the administration, and to put forward former CIA director Mike Pompeo, who has a history of ruthless partisanship and opposition to the Iran deal, as candidate for US secretary of state only added to these pressures.

Moreover, as it tried – and failed – to control the hawkish behaviour of the new US administration, the EU started losing Iran’s trust. Earlier this month, for the first time since the signing of the deal, Iran’s foreign minister, Javad Zarif, has blamed the EU for “appeasing” the US. “We now have two problems, one is the US and the other the EU,” he said.

He also accused the EU of supporting American sanctions and not keeping to its commitments with regards to improved banking arrangements with Iran. Iranian business sector remains disappointed by the level of European investment in the Islamic Republic.

Contrary to the EU’s call in January for sanctions relief to benefit Iran, on March 12, President Trump used the National Emergencies Act to order the continuation of the “comprehensive non-nuclear-related sanctions with respect to Iran”.

Also, some European Foreign Ministers seem to be edging towards a supplemental agreement.

The British foreign secretary, Boris Johnson, who has been an outspoken supporter of JCPOA in the past, began edging towards the American call for a new agreement after a meeting in January with Tillerson.

“There are some areas of the JCPOA, or some areas of Iran’s behaviour, that should be addressed,” he told reporters in London on January 22. “And most particularly, their ballistic missile programs and our concerns over the expiry of the JCPOA,” he said, referring to what the US calls “sunset clauses”, which Trump wants to address in the supplemental agreement.

If Europe is to succeed in safeguarding JCPOA it must push more vigorously for US sanctions relief.

During his visit to Iran early March, the French Foreign Minister Jean-Yves Le Drian also referred to Iran’s ballistic programme as “a great cause for concern” and questioned Iran’s presence in Syria and Yemen.

Iran was quick to respond to Le Drian’s pro-US stance.

“European countries come here and say we want to negotiate with Iran over its presence in the region,” said Iran’s spiritual leader, Ali Khamenei referring to Le Drian’s visit. “It is none of your business. It is our region. Why are you here,” he asked?

As such the French President, Emmanuel Macron, who has cordial relations with both his American and Iranian counterparts, might have lost a unique chance to hold that EU balance. In the process, he probably disappointed French companies such as Total, Airbus, Renault and Peugeot, which are eager to sign up trade deals with Iran pending US sanctions relief.

In an interview with the moderate Etemad newspaper on March 5, Iran’s Foreign Minister Javad Zarif said it was dangerous for the Europeans to mix the question of ballistic missiles and Syria with JCPOA. He also warned that Iran could stop its bilateral talks with the EU.

A report by International Crisis Group recommends that if the Trump administration is determined to breach JCPOA, the EU “should do what it can to save it”.

It said that its exclusive survey of more than 60 senior managers at multinational companies had shown this could be achieved “if Iran remains committed to its JCPOA obligations and European countries pre-emptively revive their ‘Blocking Regulations’, shielding their companies from US extraterritorial sanctions“.

This is an extremely difficult choice for Europe to make, because it may trigger a trade war with the US.

The European Council on Foreign Relations recommended that the EU must “continue to resist US pressure to once again isolate Iran”. At the same time, it must pursue “tough diplomacy” with Iran over other issues.

Yet European attempts to “tough diplomacy” has so far proved ineffective, as seen in Iran’s response Le Drian and other EU leaders.

If Europe is to succeed in safeguarding JCPOA it must push more vigorously for US sanctions relief. This is the only way that President Hassan Rouhani of Iran would get authorisation for negotiations over other issues.

JCPOA is a highly intricate international agreement that was signed after two years of painstaking negotiations. It cannot be easily “supplemented”, especially with an agreement that aims to regulate Iran’s role in an even more complex international crisis such as Syria. And as long as Israel holds the largest stockpile of ballistic missiles in the region it would be hard to persuade Iran to terminate its ballistic programme.

International diplomacy would only work if it is objective and balanced.

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial stance.

ABOUT THE AUTHOR

Massoumeh Torfeh

Dr Massoumeh Torfeh is a Research Associate at London School of Economics (LSE), specialising in Iran and Afghanistan.

Source: https://www.aljazeera.com/indepth/opinion/eu-save-iran-nuclear-deal-180318120229738.html

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