May 24, 2017 | Future of the EU

Together we are strong

The member states of the European Union should not allow the new U.S. President, Donald Trump, to sow division among them. On the contrary, they should be full of confidence, assertive and demonstrate cohesion comments A.T. Kearney Central Europe’s boss Dr. Martin Eisenhut.

We’re just a few days into the administration of Donald J. Trump, 45th President of the United States of America, but already it seems like 70 years of transatlantic partnership are meaningless. With his nationalistic “America first” speech at his inauguration, his withdrawal from the Trans-Pacific Partnership (TPP) trade deal and other somewhat bizarre announcements, he’s carrying out precisely what we already knew he would, because he had told us often and loud enough throughout the long election campaign.

So why are we now hearing calls on this side of the pond for Germany’s response to be to look inward and think of itself? Some lead writers and a one-time federal minister have even responded to the new U.S. administration’s stance with a cry of “Germany first”. Other “experts” are offering advice on how we could prepare ourselves for a trade war.

For sure, with this new U.S. president in power, we have to expect the worst every day—but fear, panic and a run-for-your-lives policy are poor counsel. We need to keep a clear head and not let ourselves be distracted by diatribes on Twitter and soapbox speeches. More to the point, we should remind ourselves that while the U.S. president is the most powerful international head of state, there’s far more to the United States of America than just the White House.

Like all of its predecessors, this U.S. government will be judged by the actual consequences of its decisions and actions. The ‘most American’ car currently in production, with a U.S.-built share of value added of 75 percent, is ironically the Toyota Camry. Whatever the future holds, never again is there going to be a Tesla or GM that doesn’t pack sensor system components from a European or Asian supplier—assuming these VMs want their cars to be competitive in the marketplace.

That’s because American suppliers lag so far behind in this field that’s so crucial to autonomous driving. Whether Team Trump is actually aware of all this or the short-term hikes in the Dow Jones are clouding their senses even further is open for debate. Whatever, they certainly aren’t going to let themselves be removed from power by their opponents’ twittering alone.

When all things are said and done, this is secondary for us Europeans anyway. Our ability to influence domestic politics stateside is low from this side of the Atlantic. It wasn’t really any different under previous U.S. presidents either. Despite this, we shouldn’t make things all too easy for Trump by stepping into the very first trap he has set and allowing him to open up divisions across Europe. Inviting the U.K. prime minister and EU defector Theresa May as the first foreign head of government to visit the Trump White House was a clear signal and is probably just a prelude to what’s to come. Even if we’d done our best to ignore previous utterances, his unambiguous comments made in a recent interview given to two European newspapers mean we now know what Donald Trump thinks of the European Union in black on white—namely, nothing! Compared to Trump, even one-time U.S. Secretary of Defense Donald Rumsfeld, who back in 2003, in answer to a question about the potential invasion of Iraq by U.S. troops, referred to Germany and France as “Old Europe” and managed to split the European continent in the process, is a transatlanticist.

 

In business, it’s still the case that the only things that count are facts and results.

Trump’s “America first” strategy, therefore, will only be successful if he succeeds—by following the Machiavellian maxim of “divide and rule”—in removing the European Union, as a global player, from the field of play. For we can surely assume that even Donald Trump knows that despite the crisis it is currently going through, a united EU, with its economic clout and single market, is too powerful for him to simply ride roughshod over without inflicting massive economic damage on his own country.

After all, it wasn’t Berlin, Paris or Rome that over the last years gave the likes of Facebook and Google (regarding data protection), Apple (in its battle with Spotify) or Microsoft (read monopoly of Windows) the jitters, but Brussels.

Without the agreement of the European Union, Trump and the hawks in his staff will not get the renegotiations they want with the regime in Tehran. The possibility of alienating both China and the EU at the same time on trade issues should instill a certain degree of respect even in this U.S. president. And the speed with which loyalty to an alliance even with the mighty United States can give way to pragmatism and self-interest has been demonstrated by the example of the supposed small player Australia: immediately after Trump’s signing of his executive order to withdraw from TPP, the Australian government was openly considering simply replacing the U.S. with China. Europe, therefore, holds some powerful trump cards if it sticks together and plays them all at the same time and confidently. But this necessitates that politicians and commercial and industry bosses all sing from the same hymn sheet.

Dreams of global hegemony along the lines of “Germany first” may make a nice headline, but they are politically misguided and would most definitely hurt German businesses. The German economy is founded first and foremost on what is the world’s largest market, the European single market with its uniform rules and standards and intensive integration among the European states. This is reflected by the fact that in 2015 of the Top 10 most important trading partners of Germany seven were EU member states—with Switzerland also in there to boot. The volume of exports to these countries totaled around €530bn. By comparison, while the USA was the country’s most important single trading partner, exports amounted to just €114bn.

When it comes to business at least, the only things that count are facts and results. Let’s be honest, does anyone genuinely believe that the German government would enjoy a stronger bargaining position in Washington if the European Union has collapsed and one of the largest internal markets on the planet has fragmented into 27 national micro-markets?

Would German enterprises really be stronger if they had to completely reorganize their supply chains, production processes and trade flows in and between these 27 separate markets? At this crucial moment in automotive history with the dawning of the age of autonomous driving, would it really be beneficial to Germany’s automakers if they had to go through 27 different national approval procedures in their local European market, while their U.S. rival Tesla were able to focus solely on regulations laid down in Washington?

The only response to Donald Trump’s “America first” must be “Europe first”! Even better, “Stronger together”.

This article appeared on January 29, 2017 in Süddeutsche Zeitung: http://www.sueddeutsche.de/wirtschaft/forum-nur-zusammen-stark-1.3354488