Saturday, October 01, 2005

EU, US at Odds over Tax Breaks

The EU is threatening to impose sanctions against US imports, offering complaints against a tax break given under US law to US exporters. Let me emphasize the two key phrases in that sentence. "US law" and "US exporters." The EU took their case to the WTO who ultimately backed the EU complaint. (Seattle Times: EU considers reimposing sanctions after ruling from WTO).

What the EU seems to have trouble understanding is that the United States is governed by US law. We have no desire to be governed by a world ruling body, world trade organization, or a world court. We have a document called the US Constitution that has worked very well for the last 218 years and of which we are quite proud. We have a process for passing legislation both at the national and states levels. Nowhere in either the Constitution or in our legislative process do we have provisions for yielding to external bodies. Simply put, if the US Congress extends a tax break to US companies that are also exporters to the EU, that is our right, our prerogative, and our business. The EU can either buy their products or not buy their products as they see fit, but they are certainly not going to have a say in US law.

This latest squabble with the EU underscores a growing conflict between the US and Europe. The two are at odds more often then not, and I would be hard-pressed to actually consider the EU to be a US ally. In fact, my expectation is that the EU - if it survives, which is not a certainty - will ultimately take on the role of the former Soviet Union with regards to its relationship with the US.

The rift between the EU and the US will continue to grow as the EU seeks to extend its influence and solidify its place in world affairs. What the EU has tried to do is setup authoritative governance groups (including the WTO and the World Court) which attempt to recognize a more global approach to government. The US wants no part of that. I want no part of that. So we - the US and the EU - are definitely heading in opposite directions. Expect to see more conflict, more disagreements, more antagonism in the future between both parties. The relationship between the US and the EU is already contentious. I expect it to become outright adversarial before much longer. If, that is, the EU can hold itself together. I wouldn't be putting any money down either way on that one.

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1 comment :

Alan Fraser said...

It doesn't matter if the government subsidizes the corporations of if Tinkerbell does it. The problem isn't one of law but rather the double standard in that it's bad if other countries lowball export prices but it's ok if the US does it. After all, the US made it legal.