Now here is something that is rarely heard these days. A top EU Commissioner told European automakers to get out of the way of European trade deals with Asia. Europe’s carmakers must reform their industry and cannot place the blame for falling sales on foreign trade, Reuters reports.
Said EU Trade Commissioner Karel De Gucht:
“We have to sort this out independently of free-trade agreements. Let’s not try to find a scapegoat somewhere.”
Unsaid, the comment was a slap in the face of Sergio Marchionne who used his current position as the head of the European automobile manufacturers’ association ACEA to vituperate against the free trade agreement with South Korea. Easy for Sergio to rail into Asian trade partners, he doesn’t export many Fiats. The export-heavy German makers were ostentatiously quiet on the matter. For good reason, they have a lot to lose.
De Gucht’s comment also sends a strong signal in the direction of France which is rumored to be mulling a “Buy French” plan for the auto industry.
Those who recklessly start trade wars often overlook that import restrictions nearly automatically translate into lower exports. In “if you close your borders then I close mine” fashion, countries retaliate . Latest example is the escalating trade war between the U.S. and China that was triggered by an ill-advised punitive tariff on Chinese tires, enacted by an internationally inexperienced Obama administration that paid outstanding union dues to the US Steelworkers union. It lowered exports of American cars and trucks to China, because the country retaliated with a punitive tariff of its own.