|
||
|
TWN
Info Service on WTO and Trade Issues (Sep25/06) Geneva, 8 Sep (D. Ravi Kanth) — United States President Donald Trump on 5 September publicly rebuked the European Union for imposing multi-billion-dollar penalties on “American Tech Companies,” demanding that the EU “stop this practice against American Companies, IMMEDIATELY!” In a move widely interpreted as a threat to the economic and legal sovereignty of foreign nations, President Trump signalled his intent to retaliate against countries pursuing legal actions against the alleged unlawful practices of America’s tech giants – Google, Amazon, Facebook, and Apple – according to people familiar with the development. Expanding his trade war beyond the imposition of tariffs under global trade rules, President Trump’s latest threats – now targeting the EU, the world’s largest economic bloc – on matters of legal sovereignty risk plunging international economic governance into further lawlessness, sources said. The apparent outburst by President Trump followed a White House dinner hosted for tech CEOs on 4 September. Notably, during the White House dinner, CEOs of both Google and Apple reportedly praised President Trump for his leadership in advancing “the American Tech dream to new heights.” The next day, President Trump took to his Truth Social media platform to condemn the EU’s enforcement of a ruling by the European Court of Justice (ECJ) against Apple – issued last year – and a separate penalty against Google. The ECJ had levied fines estimated at $3.5 billion against Google for abusing its dominant market position to stifle competition in online shopping services, and $17 billion against Apple for unpaid taxes – following investigations initiated under former EU Competition Commissioner Margrethe Vestager. In what critics described as a “naked embrace” of US tech firms – despite mounting evidence of their alleged illegal practices globally – President Trump wrote on Truth Social: “Europe today “hit” another great American company, Google, with a $3.5 Billion Dollar fine, effectively taking money that would otherwise go to American Investments and Jobs.” He added: “This is on top of the many other Fines and Taxes that have been issued against Google and other American Tech Companies, in particular. Very unfair, and the American Taxpayer will not stand for it!” Although the penalties were imposed by Europe’s highest court, President Trump threatened the EU: “My Administration will NOT allow these discriminatory actions to stand.” Without addressing the legal basis for the fines, he singled out Apple: “Apple, as an example, was forced to pay $17 Billion Dollars in a Fine that, in my opinion, should not have been charged – They should get their money back!” He likened the penalties to an assault on “brilliant and unprecedented American Ingenuity,” warning that “If it [the EU] does, I will be forced to start a Section 301 proceeding to nullify the unfair penalties being charged to these Taxpaying American Companies. Thank you for your attention to this matter!” In a follow-up post, President Trump claimed that Google had previously paid $13 billion in “false claims and charges,” bringing its total to $16.5 billion. He said: “How crazy is that? The European Union must stop this practice against American Companies, IMMEDIATELY!” Several analysts warned that President Trump’s “might is right” approach risks triggering new international conflicts, forcing nations to choose between resisting what they view as unilateral US overreach or submitting to Washington’s dictates. “LITMUS TEST” Current EU Competition Commissioner Teresa Ribera – also the Executive Vice-President of the European Commission – told the Financial Times on 29 August that the time had come for the EU to defend its digital legislation against repeated US threats. She urged member states to show “courage” and reject any US attempts to dilute the EU’s landmark Digital Services Act (DSA) and Digital Markets Act (DMA). “We may be kind, polite, try to find ways to solve problems and discrepancies,” Ribera told the FT, “but we cannot accept whatever [they demand]. We cannot be subject to the will of a third country.” The EU now confronts a defining moment: whether it can withstand President Trump’s latest threats, even after signing the Framework Agreement for Reciprocal, Fair, and Balanced Trade with Washington at Turnberry, Scotland, in late July. As reported by SUNS, the agreement – formally announced by the White House on 21 August – was widely perceived as favouring US interests and legitimizing the Trump administration’s unilateral tariff regime. The Framework Agreement contains numerous “best endeavour” provisions on tariffs and investment, creating uncertainty over its implementation, particularly given the EU’s internal decision-making challenges. While the EU secured a reduction in US auto tariffs – from a peak of 27.5% (comprising the 2.5% bound rate plus a 25% sectoral tariff) to 15% – it failed to win concessions on wines, a key demand from France and Italy. The EU did secure a 15% tariff rate on pharmaceuticals and semiconductors, including on advanced lithography equipment from the Dutch firm ASML. However, the 25% sectoral tariff on steel dealt a severe blow to EU steelmakers already struggling with cheap imports and protectionist measures, according to a FT report on 7 September. The Framework Agreement (FA) places disproportionate implementation burdens on the EU, while granting US industrial, agricultural, and energy products deeper access to European markets at minimal tariffs. In exchange for enhanced defense cooperation on Ukraine, the EU now faces the difficult task of persuading member states to comply with the FA’s extensive obligations. A Joint Statement declared: “This Framework Agreement will put our trade and investment relationship – one of the largest in the world – on a solid footing and will reinvigorate our economies’ re-industrialization.” The US claimed that the FA “reflects the European Union’s acknowledgment of US concerns and our joint determination to resolve trade imbalances and unleash the full potential of our combined economic power.” In 2023, the EU exported 531.6 billion euros in goods to the US, while importing 333.4 billion euros’ worth of US goods – yielding a trade surplus of 198.2 billion euros. Both sides described the FA as a “first step” that “can be expanded over time to cover additional areas and further improve market access.” In practice, however, the EU appears poised to shoulder the heavier compliance burden – especially during a potential second Trump term, which would run until 2029. NEW TARIFF EXEMPTIONS Meanwhile, on 5 September, the Trump administration announced exemptions for certain goods, including gold, generic drugs, and semiconductors, from reciprocal tariffs first imposed on 2 April. The White House stated that President Trump had decided not to subject “bullion-related articles (gold in various forms), certain critical minerals, and pharmaceutical products” – currently under Section 232 investigations – to tariffs. However, some goods have been removed from Annex II of his Executive Order 14257, meaning that they are now subject to reciprocal tariffs. These include certain aluminum hydroxide, resin, and silicone products. The White House also established the “Potential Tariff Adjustments for Aligned Partners” (PTAAP) Annex, listing products eligible for Most-Favored-Nation (MFN) tariff rates – contingent on future reciprocal trade and security deals. These products fall into four categories: certain aircraft and aircraft parts; certain generic pharmaceuticals and their ingredients; unavailable natural resources and closely related derivatives; and certain agricultural products not grown or produced in sufficient quantity in the US to meet domestic demand. To qualify for tariff reductions under the PTAAP Annex, trading partners must conclude deals with the US that help “mitigate the national emergency relating to the trade deficit,” the White House said. The President will evaluate the extent of each trading partner’s commitments to addressing US trade concerns when determining eligibility. Implementation authority has been delegated to senior officials, including the Secretary of Commerce and the US Trade Representative. The legality – and future – of the Trump administration’s reciprocal tariff regime remains uncertain following a federal appeals court ruling that deemed them unlawful under the International Emergency Economic Powers Act (IEEPA). In a sign of urgency, the Trump administration petitioned the Supreme Court on 3 September for an expedited review to overturn the ruling. US Solicitor General John Sauer, citing a Wall Street Journal report, urged the justices to “grant review and expedite the case to the maximum extent feasible, given the enormous importance of quickly confirming the full legal standing of the president’s tariffs.” In a supporting declaration, Treasury Secretary Scott Bessent warned that the appellate ruling was “already adversely affecting ongoing negotiations,” with world leaders “questioning the president’s authority to impose tariffs, walking away from or delaying negotiations, and/or imposing a different calculus on their negotiating positions.” Bessent said that delaying a Supreme Court ruling until June 2026 – the end of the next term – could mean “$750 billion-$1 trillion in tariffs already collected,” making reversal “significantly disruptive.” “If the administration had to unwind deals with trade partners and repay US purchases or investments they have agreed to, the economic consequences would be catastrophic,” Bessent concluded. +
|
||
