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Trump Asean

Discord between the EU and the US: Fallout for the Philippines and ASEAN

By James Moran

12 September 2018

This address was given by Ambassador James Moran, Centre for European Policy Studies, at the Foreign Policy Institute in Manila on 30 August 2018

Let me declare my hand. I’m someone who has spent most of his life working for the European project, though, having studied there, some of my best friends are Americans, and I know that without the visionary generation of post-war US leaders, there probably wouldn’t be an EU today. 

Last month, Donald Trump, talking about Trade wars blustered that he thinks of the EU as a ‘foe’ on account of its trade policies. Even by his standards , this was an extraordinary remark to make about America’s closest, and oldest ally. Another, perhaps less well known Donald, that is Donald Tusk, president of the European Council tweeted back, with some irony, that ‘America and the EU are best friends’. Whoever says we are foes is spreading fake news’. 

And that hints at a nuance in EU-US relations which is often forgotten, that is that relations are not just about the Principals, but are, like any mature relationship complex and multilayered. I’ll come back to that along the way. 

That said, Since the election of Donald Trump, there have been a series of developments that, on the face of it, give real cause for concern about the state of transatlantic relations, with some lamenting, but others celebrating what they perceive as a ‘decline of the West’. These developments have consequences for many parts of the world, including right here in the Philippines and South Asia. More of that later. 

Let’s take a look at some of the more serious disputes:

First, climate change. Here, there is obviously a pretty clear parting of the ways, with the Trump administration signalling a pull out from the UN climate convention and the EU defending it tooth and nail, in the belief that for all its shortcomings it is the best way to ensure that countries live up to their commitments on emissions reduction for the good of us all. 

And the EU has not yet given up on the US: it declared earlier this year that there is a “need to continue to strengthen political outreach and public diplomacy, up to the highest official levels,” implying continued efforts to persuade the Trump administration to change direction on climate issues, and EU leaders never fail to make the point when dealing with the US. 

However, the prospects of success, at least in Washington are dim, to say the least so long as this Administration is in power. Recent moves by the US EPA to dismantle environmental regulations, added to the sort of rhetoric on display from Mr Trump at the coal mines in West Virginia a week ago show that they are not listening.The hope in Europe that, since the actually pullout from the convention cannot take place until November, after the next US presidential election, there will be, so to speak, ‘regime change’ that could allow for a change of course. But it is no more than that. A hope.

At the same time, and here I go back to those nuances, there are many US State administrations, such as California that see eye to eye with the EU position and are getting on with their own climate control measures, which given the size of their economies will make a difference. So it is not just about Trump and co. 

And just as well. The effects of climate change are surely evident everywhere, not least here where the Philippines, one of the most vulnerable countries in the world, has experienced ever more frequent bouts of extreme weather and the disasters that accompany it. 

It is good that the EU is cooperating with the Philippines in areas like renewable energy and efficiency, though I know much more needs to be done. One thing is clear: without the US fully on board, fighting climate change will be an even greater struggle than it already is. And while China has made clear that it is committed to the convention, we cannot, given its development needs, depend on Beijing to take up the strain.

Second, Trade. When I joined the European Commission back in the early 1980’s, one of my slight hesitations was that I would be working for an outfit that had garnered a reputation for protectionism, mainly as a result of the EU’s common agricultural policy. The US was then a fierce critic, and not without reason. But that all changed. 

Fast forward to today, in the age of ‘America first’, and it’s a little ironic that it is now the EU that is perhaps the prime defender of free trade and the rules-based order that underlies it, while the US has turned mercantilist. 

Here in east and South East Asia, I don’t think I need to preach about the benefits of open trade. No other region in the world in history has gained so much, and so rapidly from enhanced trade and investment. The EU has signed major FTA’s with S. Korea, Singapore and just last month with Japan and is negotiating with others, including here in the Philippines, where there is great potential. 

And let me just say that while I know these talks are far from straightforward, and have some way to go it is really good to see them get underway. The prospect of an eventual FTA was a major driver for the recently ratified EU-Philippines Partnership Agreement for which I was the EU Chief negotiator some years ago.

But we in Europe, and, I would suggest, you in ASEAN have a serious problem with Washington. 

US policy seems to have forgotten the win-win principle that all successful trade and investment depends on, and is now about win-lose, with a blizzard of unilateral tariff measures, many of them affecting the EU, and attacks on the multilateral system that threaten to derail global growth. I know that much of this is aimed at China, but the fallout will affect supply chains and the jobs that depend on them everywhere, including here in the Philippines.

But back to those EU-US nuances. Let me regale you with a few facts:

  • Total US investment in the EU is three times higher than in all of Asia.
  • EU investment in the US is around eight times the amount of EU investment in India and China together.
  • EU and US investments are a major driver of the transatlantic relationship, contributing to growth and millions of jobs on both sides of the Atlantic.
  • The transatlantic relationship also defines the shape of the global economy as a whole. Either the EU or the US is the largest trade and investment partner for almost all other countries in the global economy.
  • The EU and the US economies account together for about half the entire world GDP and for nearly a third of world trade flows.

 

This means that there are thousands of companies and millions of workers on both sides of the Atlantic that have a very strong interest in ensuring that commercial relations do not go off track. Sooner or later, their influence will surely be felt in the White House, especially if, as I expect, the Trump policies result in inflation in the US heartland, where he has his famous base. But in the meantime, the storm will have to be weathered, and we must put on our overcoats, do what we can to defend the rules-based system and stand up for the principle of free trade.

Third, in Security, especially the wider middle east: Yet another Trump pullout has been that from the Iran JCPOA, better known as the Iran nuclear deal. The EU, along with the other signatories, namely Russia and China, continues to robustly defend the agreement as the only show in town when it comes to preventing the development of an Iranian nuclear device, but it will difficult to keep it alive, given that the US secondary sanctions on companies doing business in Iran have sharp teeth.  

And as I’ve just explained, EU companies have huge interests in the US which they will in most cases prioritise over any interest in Iran. That in turn will block the economic development that the Iranians so desperately need, and undermine  the moderates there, putting the JCPOA in real danger. 

Again, there is the hope that the accord can somehow survive a one-term Trump presidency, but I wouldn’t bet on that. And so, there is a real danger that nuclear proliferation will flare up again in the region. The one nuclear power there is of course Israel, and the Netanyahu government wants to keep it that way, so there is the frightening prospect of an Israeli strike. Just as worrying, if Iran goes back to the nuclear course, its arch-enemy Saudi Arabia will not stand idly by. 

As if there wasn’t enough fuel on the middle eastern fire, Trump has also scotched any prospect for any meaningful return to a middle east peace process with his announcement that Jerusalem is Israel’s capital last December, and his unqualified support for Israeli policies. The EU has made it clear that we continue to support the two-state solution, however tattered it may seem, and that the US position can only be detrimental to that. 

What does this mean for this part of the world? One thing that you have suffered from here - as we have in Europe - is ISIS-related violent extremism, and despite the fact that the CT operations in Syria and Iraq have beaten ISIS back, they, along with other extremists remain very dangerous. While there is little support for them among the Palestinians, including Hamas, if US-backed Israeli policies produce another round of violence in the region, then this will be a shot in the arm for Mr Baghdadi and his ilk, and doubtless inspire Jihadis everywhere.

One area where the US and the EU seem to be on the same page is on resisting Chinese aggression in the South China sea. I know how important this is for the Philippines and ASEAN, and would hope that the EU could do a little more to contribute to keeping the international sea lanes open and enforcing international law in the area. After all, with EU-Asia trade growing quickly, the European interest is stronger than ever and we should not depend so overwhelmingly on the US for maritime security.

Last, but by no means least, on liberal democratic values. Again, this is so ironic. It was of course in Europe that the world’s worse case of anti-democratic diseases occurred, when authoritarianism and fascism led to the second world war. And, with all due respect to Mr Churchill, it was the US that to a large extent saved the day. 

And now, we have a US President who is seemingly more at home glad-handing messrs Putin, Xie and Kim Jong Un than he is with his traditional allies. The recent G7 fiasco, with his harsh criticism of the Canadian PM is only one of many cases in point. And we also see Mr Trump saying encouraging things about some of our own populist politicians in Europe, many of whom have rather dubious credentials when it comes to liberal democracy.

The case I know best is of course Brexit, where Trump has actively encouraged the anti-EU campaign and forged close friendships with its leaders. All that said, as British people wake up to the grim prospect of international isolation, there is precious little evidence that Trump will follow up his warm noises with special concessions on trade etc for a post-Brexit UK. 

But that said, I hasten to add that Brexit hasn’t happened yet, and if recent history is any guide, stand by for some surprises this autumn.

Let me conclude: The EU-US relationship is probably at its lowest point since the formation of the EU back in the early 1950’s. Never have there been so many differences, whether on global issues, values, or economic policy. 

There are reasons to believe that this is not a permanent state of affairs, and there are many people in different walks of life on both sides of the Atlantic who working to contain the damage that is being done. And that damage affects many other parts of the world, not least here in the Philippines, whether in terms of climate action, trade or the fight against violent extremism. 

The age of Trump will leave scars that might take some time to heal, and there is not much prospect of a healing so long as he is in the White House. But I thank god for the checks and balances of the US constitution, not least presidential term limits! 

Thank you for your attention.