Even Trump Can’t Ruin TransAtlantic Ties

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Kenji Hosokawa
June 22, 2017

President of the European Council, Donald Tusk stated that “change in Washington puts the European Union in a difficult situation; with the new administration seeming to put into question the last 70 years of American foreign policy” in January of this year.

While Trump’s presidency is still in its beginning stages, he has shaken formal relations between the EU and U.S. throughout his recent trip. His first foreign visit to the Middle East and Europe diverged from the traditional first presidential trips in a number of ways. President Trump’s first trip abroad came during his 119th day in office, later than any other president in the last 50 years. To compare, Obama had already visited nine countries by this time in his presidency, according to CNN. In addition, every president since Reagan has made it their prerogative to first visit our neighbors, Canada and Mexico, signifying a renewed strategic commitment to our hemisphere. Trump, on the other hand, decided to first visit Saudi Arabia, indicating a strong alliance between the Saudi royals and the Trump administration.

On his trip to Europe, Trump departed from traditional presidential behavior by denouncing Germans as “bad, very bad” due to the large amounts of cars that their luxury automakers such as BMW and Mercedes-Benz have sold in the U.S. These comments indicate that Trump fails to understand the positive economic impact that these German automakers have had within American communities, one prime example being the state of South Carolina. President and Chief Executive of the South Carolina Chamber of Commerce, Ted Pitts replied to Trump’s comments stating, “I’m a little bit surprised and disappointed that the president has chosen to attack before he gets his facts straight”. According to the New York Times, South Carolina “is home to 160 German companies, where German investment from 2011 to 2016 totaled $4.6 billion, resulting in more than 10,000 new jobs”. Furthermore, one of the automakers singled out by Trump, BMW currently operates its largest plant globally in South Carolina according to The Guardian.

In addition to denouncing Germany, the president further turned away from presidential tradition by failing to endorse NATO article 5, which shook NATO, the world’s strongest military alliance. Historically, presidents have reaffirmed the U.S.’s commitment to NATO, initially to stop the USSR’s expansion into Europe and in more recent years to help fight the War on Terror in Afghanistan and elsewhere. Presidents have seen NATO as an organization with the ability to further American policy within Europe and as a means to strengthen transatlantic relations. Former President George W. Bush met with the EU leaders in 2001 and committed to NATO’s mutual defense through reaffirming Article 5, “Anyone who would choose you for an enemy also chooses us for an enemy. Never again in the face of aggression will you stand alone.” Former President Barack Obama also committed to Article 5 stating, “Article 5 enshrines our solemn duty to each other—“an armed attack against one … shall be considered an attack against them all.’ This is a binding, treaty obligation. It is non-negotiable.” In contrast, in his speech to NATO members in the newly built NATO Headquarters, Trump remarked: “We will never forsake the friends who stood by our side.” The president’s sole mention of Article 5 was with regards to the EU’s response to 9/11, and his comments quoted above indicate a complete shift from the previous commitment of mutual defense to a strategy of retaliation. Trump also further unsettled NATO members in his speech by claiming that our allies had failed to reach the NATO 2% defense spending benchmark. “Members of the alliance must finally contribute their fair share and meet their financial obligations,” stated Trump in NATO Headquarters on May 25, 2017.

“Putin loves it,” commented Kurt Volker, former U.S. Ambassador to NATO under President George W. Bush and President Barack Obama to Reuters. According to The Guardian, Trump’s lack of commitment to NATO is especially troubling in terms of Russia, “as NATO members have all been increasingly worried about since the Russian annexation of Crimea.” Even more troubling is Trump’s continued warmness towards Russia and Putin, which was evident in his most recent meeting with Romanian President Klaus Iohannis. During his meeting with President Iohannis, Trump failed to even mention the threat of Russia and any potential NATO military action in response to the continued Russian aggression along the Romanian border. According to Reuters, Putin continues to control Crimea and has made several attempts to expand into the Eastern Baltic States. The U.S.’s weakened position in NATO alongside Trump’s warm relationship with the Russian government might embolden Putin and lead him to continue to strengthen his military presence along Eastern Europe, placing NATO members at risk.

In a recent address to the National Association of Business Trade Unions, Trump painted the EU as an oppressive economic entity and the U.S. as a victim of its oppressive trade regime. The reality is that trade between the EU and the U.S. defines the global economy, with both our economies accounting for nearly half of the world’s gross domestic product (GDP) and one-third percent of trade flows, according to the European Commission’s Department on trade. For comparison, the total U.S. investment in the EU is ‘three times higher than in all of Asia’ and on the flip side EU investment in the U.S. is ‘around eight times the amount of EU investment in India and China together.’ According to The John Hopkins’ Center for Transatlantic Relations 2017 annual survey, authors Daniel Hamilton and Joseph Quinlan, state that our shared transatlantic economy “generates $5.5 trillion in total commercial sales a year, and employs up to 15 million workers in mutually “onshore” jobs on both sides of the Atlantic”.

On May 30th in a series of Tweets, Trump wrote, “We have a massive trade deficit with Germany, plus they pay far less than they should on NATO and military. Very bad for U.S. This will change.” Trump has failed in both, understanding how international capital investment into the U.S. naturally leads to a trade deficit and the benefits of investment in the U.S. and in the EU. The EU and the U.S. provide an enormous market for U.S. and European corporations alike. In 2015 alone, U.S. foreign affiliate sales in Europe topped $3.1 trillion. According to Dan Hamilton and Joseph Quinlan, these sales are “greater than the $2.3 trillion in total U.S. exports to the rest of the world”. On the other hand, in 2016 Europe accounted for “72% of global foreign direct investment (FDI) inflows into the U.S. of $385 billion”.

In 2016, The UN’s investment trade Monitor found Global FDI to have fallen 13 percent to $1.52tn due to a host of political risks and a slump in world trade. These figures are worsened by the declining FDI flows in Europe “where inflows dropped off by 29 per cent to $385bn – the worst performing continent last year according to the UN’s figure” according to the Financial Times. In the face of a Trump presidency, EU Member States have an opportunity to step out of the ‘passenger seat of global trade governance’ and rise to the occasion. The EU has the opportunity to renegotiate unfavorable trade deals, further pursue new markets, and argue for more favorable conditions outside of the U.S.

“We Europeans have our fate in our own hands,” stated German Chancellor Angela Merkel, on January 17th. The initial lukewarmness between Trump and Merkel during their meeting in January earlier this year has turned to a stark division on a number of economic and political policies. Individuals who hoped that Trump would be able to comprehend the scale and importance of transatlantic relations have only been further disappointed by his trip to Europe, where he not only failed to understand the fundamentals of trade between the U.S. and EU, but also failed to commit to a shared future together through NATO.

Kenji Hosokawa
-Editorial Assistant for TransAtlantic Magazine for Summer of 2017, Dual Citizen of U.S. and Italy
-Political Science and Italian Student at UW-Madison

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