May 26, 2017
“The Germans are very, very bad”
This is diplomacy from hell. The dinner in Brussels last night was even worse than the public humiliation Donald Trump dished out to the other Nato leaders, who were lined up like schoolchildren and castigated in public for not putting 2% of their GDP into defence. Over dinner it got worse. This is a Trump quotation from the account by Spiegel:
“The Germans are very, very bad. Just look at the millions of cars they are selling in the US. Terrible. We will stop this.”
Süddeutsche corrobates that conversation, and adds that the only small upshot from yesterday’s talks between Trump and Donald Tusk and Jean-Claude Juncker is the agreement on a working group to identify common ground between the US and the EU. The goal is to make the tiniest of progress, the news report says. There is no way that TTIP can be revived. The differences are simply too big, Juncker is quoted as saying.
Yesterday’s events are a reminder, if any was needed, that Trump is serious about his trade agenda. He won’t implement every single threat he issued during the campaign, but his determination to reduce Germany’s bilateral trade surplus with the US seems unbroken. We note that the US Department of Commerce will finalise its report on bilateral trade imbalances in June, at which point we would expect to see retaliatory action on trade - possibly anti-dumping duties on isolated German products.
The FT quotes Trump as saying, over dinner, that the EU was a vehicle for Germany. The FT focuses mainly on his refusal to endorse Article 5 of the Nato treaty. The unveiling of a 9/11 memorial in front of Nato headquarters would have naturally invited such an endorsement, given that 9/11 was the only event in Nato’s history resulting in Article 5 being triggered.
The diplomatic nightmare is set to continue today and tomorrow, when G7 leaders meet in Taormina, Sicily. The sherpas for these meetings have been trying hard, and failing, to assemble an agenda on which the US and the other members can agree. There are unsurmountable differences over climate change, and Trumps’ rhetoric on Germany’s trade surplus suggests that the summit will not produce a joint commitment towards global free trade either. FAZ reports that the German government has set itself as the goal for this year’s G7 meeting not to fall behind the decisions made last year. The article also noted that four of seven leaders, including the host Paolo Gentiloni, are attending for the first time. Of the six separate meetings planned, the third one - on the global economy - is likely to be the most important. The main issues are free trade, anti-dumping procedures, protection mechanisms, and climate change. There is zero chance that Trump will change his position on climate change. The Germans are trying to cajole Trump into believing that climate change policies are good for jobs - pointing to a recent OECD study on the subject.
The Times reports further on the sherpas' desperate attempt to find any common ground on these issues. Early drafts had already been watered down amid US pressure. The main text is likely to be cut to a mere six pages, down from last year’s 32. Most of the annexes were also scrapped.