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Franco-German feuds

Next thorny relationship issue for France and Germany: US tariffs

By: Handelsblatt staff

Economics ministers in Germany and France are readying for their next fight. At a meeting 10 days from now, the agenda will include the contentious issue of industrial tariffs with the US.

Source: DPA

Deep inside, behind those smiles, they're worrying about tariffs.

Source: DPA

France and Germany may have agreed on what to do about the controversial Nord Stream 2 gas pipeline but the next problem between the two European nations is already on the horizon.

It involves European trade relations with the US and the matter may well come to a head later this month, at a February 22 meeting of the EU Council of Economics Ministers.

Germany wants the EU to reach a quick agreement with the United States on industrial tariffs. The Germans want to show that the EU means what it says, with regard to the agreement that European Commission President Jean-Claude Juncker managed to wrest out of meetings with US President Donald Trump last summer.

But France is dragging its feet: Paris does not want the European Commission to begin negotiations with the US government until after May’s European elections, EU sources told Handelsblatt.

A unanimous agreement between all 28 EU states (or 27 after Brexit) is needed before the EU’s trade commissioner, Cecilia Malmström, can begin talks with the US.

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European unity should be more than just a photo opportunity, France’s Finance Minister Bruno Le Maire said in an exclusive interview. But while France is more than willing, Germany remains reluctant.

Last year, the US government repeatedly threatened to impose punitive tariffs on European car exports, which would hit German carmakers harder than their French counterparts.

Although Germany and France could end up opposed at the upcoming minsters’ meeting, both countries are determined to show public unity for the time being. Any open dispute between the two would be a shot in the arm for nationalist and populist parties, who look set to do well at the European elections. The new right wing already holds power in Italy and Poland.

France and Germany oppose the emergence of this populist nationalism and are keen to underline their friendship.

Fearing more protests

“In every relationship there are contentious issues that have been worked on,” Sabine Thillaye, chair of the European Affairs Committee in the French Parliament and a member of French president Emanuel Macron’s party, La République en Marche!, told Handelsblatt. “A culture of debate has to evolve.”

However, she also added that after the ongoing “gilets jaunes” (yellow vests) protests, Macron will not want to risk more trouble. “Trade deals are unpopular with many French people,” Thillaye points out.

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There has been a lot of togetherness between France and Germany lately. In December, German finance minister Olaf Scholz helped his French counterpart save the proposed digital tax from an early demise in European discussions. In addition, before May’s European elections, the two want to lay out a joint plan for European industrial development in an acknowledgement of the need to identify and develop industrial champions, so as to compete with the Chinese and the Americans.

But there are also plenty of contentious issues to work through. The dispute around the Nord Stream 2 pipeline will continue to be a problem and there is also disagreement on two of Macron’s favorite projects: A deeper European currency union and the digital tax. And last year, Germany unilaterally banned arms exports to Saudi Arabia, much to France’s annoyance.

“The strength of the Franco-German friendship does not depend on everyone being in agreement from the start,” Michael Roth, a German Social Democrat and a junior foreign minister responsible for Europe, told Handelsblatt. The whole point is “to forge convincing compromises that unite and strengthen Europe,” he concludes.  

Ruth Berschens heads Handelsblatt's Brussels office, leading coverage of European policy. Dana Heide is a Berlin-based correspondent for Handelsblatt where she covers the economics ministry, focusing on digital policy, innovation and the FDP party. Moritz Koch, formerly a Washington correspondent, reports on politics from Berlin for Handelsblatt, Till Hoppe is a Brussels correspondent and Tanja Kuchenbecker is a correspondent for Handelsblatt in France. To contact the authors: [email protected], [email protected], [email protected], [email protected] and [email protected]

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