PARTNERS CLASH

Stress Test Across the Atlantic

Tim cook dpa
Tim Cook, Apple's CEO, takes on the European Union.
  • Why it matters

    Why it matters

    Over the entire postwar period up to reunification, Germany had no partner more reliable than the United States, writes the author.

  • Facts

    Facts

    • The European Commission this week demanded that Apple pay €13 billion ($14.5 billion) in back taxes to Ireland.
    • German Foreign Minister Frank-Walter Steinmeier recently advised against electing Donald Trump, the protectionist Republican presidential nominee.
    • Both Mr. Trump and Democratic nominee Hillary Clinton have said they oppose the free trade TTIP treaty.
  • Audio

    Audio

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The alienation between Europe and the United States is palpable – hardly a day passes without massive disagreements in politics or business.

The European Commission this week demanded that Apple pay €13 billion in back taxes to Ireland. Apple’s chief executive Tim Cook and the U.S. Justice Department reacted angrily.

U.S. e-commerce giant Amazon and Seattle-based Starbucks have similar tax-savings models that are running into trouble in Europe.

And Brussels is no longer loath to impose limits on powerful U.S. companies like Google when it comes to copyrights.

Politics has all the more responsibility not to exploit economic problems to promote its own interests.

The dispute over the European-American free trade agreement — the Transatlantic Trade and Investment Partnership known as TTIP — fits into this heated atmosphere. To speak of an economic war sounds harsh at this point but this isn’t what a normal commercial relationship looks like.

It’s not by chance that the timing of this confrontation coincides with the U.S. electoral campaign. In Republican presidential nominee Donald Trump, there is a danger that the White House could be occupied by a man who preaches protectionism and is certainly not a bridge-builder to Europe.

The degree to which Mr. Trump is seen as dangerous is shown by a recent statement by German Foreign Minister Frank-Walter Steinmeier. In violation of all diplomatic convention, Mr. Steinmeier advised against electing him. That has never occurred before in German-American relations.

Many Europeans are pleased to show strength in this difficult situation, though the European Commission definitely isn’t a strong player for imposing limits on the internet giants. After the Brexit, the commission should itself be stretched out on the couch.

But self-healing seldom is achieved by attacking one’s natural ally. French President François Hollande belongs in this category. If there is a need anywhere for jobs and growth, it is in France. Populism might pay off in the short term by garnering votes, but citizens then have to pay the bill.

The disputes with U.S. multinationals show how great an influence these huge companies have in Washington. The U.S. Justice Department adopts a protective stance with regard them.

It is not traditional industrial companies that now set the tone, but the Big Four from Silicon Valley – Apple, Google, Amazon and Facebook. But Apple is going too far when it pays €50 in taxes on €1 million in profits.

Yet the continent must admit that it missed the boat with regard to technological development. Where is the European Google? As long as it doesn’t exist, German consumers will turn to the technological system that works best.

China is rigorously pursuing a different course. Facebook and Google are simply excluded there. This prohibitory shadow has given rise to China’s own big players, such as Renren and Baidu.

That isn’t possible here. Germany’s big chance could lie in the digitization of industry. But it is in no way clear that the ancient German dinosaurs will win the race. Apple, Google or Tesla are strong competitors.

In this mixture of rivalry and indignation, Washington is now also expressing its irritation about the tensions over free trade.

Regardless of who is sitting in the brakeman’s cab, TTIP involves much more than simply harmonizing a car’s blinking lights. Free trade strengthens the bridge across the Atlantic. Not only would a President Trump end the TTIP project, his Democratic challenger Hillary Clinton has also opposed it.

But trade never stands for itself alone. Economic ties represent the exchange of opinions and values. Increased prosperity is one element, but the relationship extends much further.

Great effort will be required on both sides of the Atlantic to preserve this longstanding friendship. But as in a good talk with a therapist, both marriage partners should recall the beginning. Over the entire postwar period up to reunification, Germany in particular had no partner more reliable than the United States.

But it’s not enough to take a look back. You don’t have to be a prophet to predict that the future won’t be any simpler. Business is growing tougher. The United States has left Europe in the dust with respect to digitization. Now it also wants to take over the industrial segment.

Politics has all the more responsibility not to exploit economic problems to promote its own interests. If the sour mood were to damage the friendship between German and American citizens, that would be fatal.

That feeling of mutual commitment is priceless – regardless of who is elected in November. The German government will have to sit down with the new U.S. administration in order to redefine common interests. Far up on the list are security and free trade.

 

Thomas Sigmund heads Handelsblatt’s politics desk. To contact him: sigmund@handelsblatt.com.

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