US-EU Trade Tensions Escalate as New Administration Takes Office

The European Union, led by France, Germany, and Russia, is poised to impose $4 billion in sanctions on US exports over the contentious Foreign Sales Corporations tax break, a move that will require the new President to navigate a complex web of diplomatic relationships. The trade dispute comes at a time when the US and EU are also at odds over issues like genetically modified organisms, global warming, and ballistic missile defense.

Key Takeaways:

• The EU plans to impose $4 billion in sanctions on US exports annually over the Foreign Sales Corporations tax break, citing unfair export subsidies.
• The US has re-crafted the system to meet WTO rules, but the Europeans claim it is still an unfair practice.
• EU allies like France and Germany are also at odds with the US over issues like genetically modified organisms and ballistic missile defense.
• Russia is seeking a "strategic partnership" with the EU, including a joint military force and joint peacekeeping operations.
• Russia also opposes US plans for ballistic missile defense, claiming it would destroy the ABM Treaty of 1972.
• The next US President, whether it's Bush or Gore, faces a challenging diplomatic landscape with the EU and Russia.

Statistics:

• The EU accounts for over half of the world's GDP and most of its trade, with the US being its largest trading partner.
• The EU provides 80% of the troops and 90% of the reconstruction funds in Bosnia and Kosovo.
• Russia's President Putin has signed a deal for a new pipeline to bring natural gas from Russia to Europe's consumers.
• The US and EU have a contentious history over issues like trade, climate change, and security.
• The new US President will face significant diplomatic challenges with the EU, Russia, and other allies.

Sources:

• Walker, M. (Nov. 27). Regulatory Focus.