Think Tank Calls for End of Tariffs Between US, EU on Medical Goods, Changes to Sanctions Policy

The European Union and the U.S. should negotiate a limited trade deal on medical supplies and equipment, and environmental goods and services that is open to other World Trade Organization members that agree to the commitments, according to a think tank report issued Oct. 6. The German Marshall Fund of the United States also called for consultation between the EU and the U.S. on financial sanctions on third countries when those sanctions “will have an adverse impact on alliance partners,” and it said those sanctions should have limits.

“We chose these recommendations not because we thought they were easy to implement” but because they offer practical solutions to some of the most vexing challenges the countries face, Marshall Fund President Karen Donfried said during an Oct. 7 webinar on the report. The report's section on trade said that Europe and the U.S. should jointly push for the WTO to revise the dispute settlement mechanism, including by instituting a higher standard of review to limit appeals.

The report said Europe and the U.S. should “agree on acceptable defensive trade remedies and a process for resolving such disputes.” It said the WTO's new director-general and the secretariat should have the right of initiative, since the membership is so frozen. The report acknowledged that would be “very controversial.”

It said the countries should put forward “criteria for countries’ graduation from developing nation status and its attendant benefits.”

They should begin negotiations “to reorient national agricultural subsidies to support more carbon-sequestration farming practices such as no-till planting, composting, methane capture, and tree planting,” it said.

“We understand that some of the initiatives we propose lack bipartisan support in the United States and may not be embraced by the next administration. Nor will they appeal to all Europeans,” the report said.

Wolfgang Ischinger, a former German ambassador to the U.S. and security expert, said during the webinar that it's unrealistic to think that under a Biden administration “some kind of trans-Atlantic paradise would be suddenly displayed for us, and all of the problems would go away.”

He said a significant number of the tensions in the EU-U.S. relationship predate the Trump administration. But, he said, there has been “serious tension” at a “personal level” among EU leaders and Trump. “I think with a different administration, a huge opportunity would arise for reestablishing or rebuilding trust.”

Both the report and Ischinger acknowledged that it would be difficult for the U.S. and the EU to reach a united front on China even though both regions “run politically troubling merchandise trade deficits with China,” and both have suffered from forced technology transfer, unfair Chinese government regulation, market-access barriers, and intellectual property theft.

“Transatlantic cooperation in dealing with China faces obstacles because European and U.S. interests frequently diverge. Europe’s export dependence on the Chinese market is greater than that of the United States,” the report said.

Ischinger said no challenge is greater than China, since it is a difficult rival as well as a driver of economic growth. “Europe would be in bad shape at this moment if China was not already at this moment buying huge numbers of European-made automobiles,” he said.