Europe rushes to woo team Biden in hope of major trade rebalance

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BRUSSELS (BLOOMBERG) – France and Germany are leading efforts in Europe to make early contact with President-elect Joe Biden’s team, with the aim of accelerating talks to normalise trade relations between the United States and the European Union.

At the top of the agenda for Paris is resolving an aircraft dispute that has seen tariffs imposed on more than €10 billion (S$15.96 billion) of transatlantic goods, while Berlin is keen to revive free-trade talks, according to senior officials in both countries.

“We’re ready and in a position to hold talks immediately,” said Mr Johann Wadephul, a foreign policy expert and deputy caucus leader in Parliament for German Chancellor Angela Merkel’s Christian Democrats.

French Finance Minister Bruno Le Maire, who had planned to speak with the President-elect’s team earlier this week, said, “I really hope that this new Biden administration will mean a new start in the relationship between Europe and the US.”

Additional EU trade priorities, which are shared by France and Germany, include removing tariffs the Trump administration put on European steel and aluminium exports; agreeing on new tax rules for digital companies that do business internationally; reaching a limited trade agreement on industrial products; and reforming the World Trade Organisation.

The European overtures come after weeks of uncertainty over the US transition that had many allies in a wait-and-see mode.

Mr Le Maire had been scheduled to speak with Mr Biden’s team on Monday (Nov 23), but the meeting was postponed, according to a French official, who asked not to be identified because the plans are private. German officials expect to make contact in the coming days, Mr Wadephul said.

Germany, which relies heavily on export markets and does US$252 billion (S$337 billion) in bilateral trade with the US each year, is particularly eager to deescalate tensions with the US, which has imposed tariffs on European exports in the name of shoring up American industries. President Donald Trump has threatened multiple times to hit the German auto sector with levies.

Indeed, pressure in Berlin has been mounting for the government to reach out to the incoming US administration on free trade talks, particularly after China sealed another large-scale trade deal in the Asia-Pacific region.

“China is moving forward with an Asian free trade agreement, this is a wake-up call for Europe,” said Mr Matthias Heider, the chief lawmaker in charge of economic affairs in Dr Merkel’s ruling CDU party. “This should be a top priority for the Chancellor.”

While many politicians in Europe expect Mr Biden will make similar demands on them as Mr Trump did in terms of stepping up security and defence efforts, the prospect of having more open ears in Washington is driving expectations.

“There is a lot of optimism on this side of the Atlantic,” Greek Foreign Minister Nikolaos Dendias said, adding that his government had hopes the incoming administration will have a more active presence in the eastern Mediterranean.

Further encouraging signs have come from Mr Biden’s Cabinet appointments, particularly that of Mr Antony Blinken, “who knows Germany and Europe well”, according to Mr Wadephul.

France is pushing for an overhaul of global tax rules to make multinational tech companies pay their fair share, but the talks at the Organisation for Economic Cooperation and Development have dragged on.

In the meantime, the US is threatening tariffs against countries – including France – that go ahead with taxes on the revenues of digital firms.

“I will have a discussion about the best way of reducing inequalities in our economic models and of course I will put on the table the question of trade and the question of digital taxation,” Mr Le Maire said in an interview, referring to talks with the incoming administration. “Our goal remains to have an OECD agreement by the first months of 2021.”

Bastion Balance Seoul.