PARIS — Europe and the U.S. will not start a diplomatic war over their latest dispute, the EU’s €13 billion Apple smackdown, but they may have to resort to a classic computer fix to get rid of glitches in the transatlantic relationship: Turn it off and turn it on again.
That’s because in a climate of political uncertainty, as elections approach in the U.S., France and Germany, the Apple case adds to a list of grievances likely to require a reset of the EU-U.S. partnership. Lame-duck or contested leaders aren’t decision-inclined, so problems are likely to linger for months — until a new government is elected in Berlin in about a year’s time, and after new presidents have taken over in Washington in January and Paris in May.
The negotiations over TTIP were already moribund well before French and German ministers tried, separately, to score a few political points by declaring the transatlantic trade deal formally dead this week. Then there is “the big unknown,” as one European diplomat euphemistically described the possibility that Donald Trump might win the U.S. presidential election. The reset would then be radical, and include NATO and the strategic ties that have existed between America and Europe for nearly seven decades.
“The bad news is that nothing will happen. But it’s also the good news,” said the European diplomat, pointing out that the status quo will at least prevent politicians on both sides of the Atlantic from making things worse.
The U.S. Justice Department slapping French bank BNP Paribas with a $9 billion fine in 2014 didn’t escalate into a diplomatic crisis.
Take TTIP: If the December 2016 deadline for wrapping up negotiations isn’t met, there will be time to either resume talks or start anew at a later stage. That looks, however, like an optimistic scenario. Far-right and far-left parties have made free trade agreements the symbol of the globalization they loathe, so “the problem is how much will this anti-trade rhetoric impact getting TTIP through at the end,” said Fran Burwell, vice president in charge of the European Union and special initiatives at the Atlantic Council.
Taken separately, there’s nothing in the current list of transatlantic grudges that couldn’t be dealt with by new governments fully in charge, according to European policymakers.
A French treasury official — who said he wasn’t involved in the particulars of the EU vs. Apple case — said that it may end “as tax cases go, either a transactional compromise or a court judgment. But it will take months.” The case will remain the province of experts and tax specialists, unlikely to have much diplomatic impact. “I don’t see this becoming a theme in a Clinton-Trump TV debate,” the official said.
The U.S. Justice Department slapping French bank BNP Paribas with a $9 billion fine in 2014 didn’t escalate into a diplomatic crisis, even though the French government had discreetly tried to intervene in what was, granted, a criminal matter — contrary to the Apple tax case.
‘An entirely different animal’
The TTIP dispute cannot even be presented as the old-style struggle between free-traders and the anti-globalization crowd. It has been hard to negotiate because, to use the words of former World Trade Organization director Pascal Lamy, it is “an entirely different animal” from previous treaties such as the Trans-Pacific Partnership between the U.S. and Asia.
TPP was the last of the classical agreements addressing protectionism, whereas TTIP would be the first trade agreement addressing the problems not of protection but of “precaution” — the standards on safety, quality, traceability and the environment, Lamy said in an interview with Institutional Investor.
What is delaying any decision on the matter — and prevents any side from making significant concessions to helping clinch a deal — is the political agenda. “First, time is very short for the Obama administration,” said Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics. “Second, the types of things that the EU wants for an ambitious package are beyond what the U.S. can politically give and the same is true for what the U.S. wants from the EU.”
European leaders have made no secret of their preference for a Hillary Clinton presidency, if only for the predictability it would mean in foreign policy.
As for NATO’s future, Europeans have now lived eight years with an Obama administration that didn’t seem very interested in the Alliance, said a French government diplomatic adviser. “A Trump presidency would definitely be a game-changer, if he does what he said in his campaign, because we would have to accelerate our movement towards serious European defense capabilities,” the adviser said.
And even in that likelihood, which all European leaders deem a low-probability event (“the political black swan,” in the words of the French government adviser), NATO’s future might not be at the top of a Trump presidency agenda in the first few months. By then new governments will have taken over both in Paris and Berlin.
European leaders have made no secret of their preference for a Hillary Clinton presidency, if only for the predictability it would mean in foreign policy. But they also know that she would be unlikely to pay any more attention to Europe than Obama did. In other words, it would not allow them to ditch the fundamental debate over how to defend Europe as the U.S. withdraws.
Meanwhile, the transatlantic game of the moment is to kick political cans down the road. That’s always easier to do knowing that someone will stop them at some point in time.
Benjamin Oreskes and Adam Behsudi contributed to this article.