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Trade liberalisation and overall relationship

29 - Trade and investment disputes with the US

Grade: B-
Unity 3/5
Resources 3/5
Outcome 6/10
Total 12/20
Scorecard 2012: B- (11/20)

While Europeans are generally united on trade and investment issues, there is a lack of solidarity on specific disputes like the EADS case.

While the US is a major partner in trade and investment, there remain impediments to free trade and investment across the Atlantic, and disputes still capture the headlines. In 2010, on top of various issues at the WTO, and apart from the question of standards and norms (see component 30), there were confrontations about the EADS tanker contract and the “Open Skies” aviation agreement.

EADS, a European company with French, German, Spanish and British stakes, was competing with Boeing to supply $35 billion worth of refuelling tankers to the US Air Force. After losing the competition in 2008, Boeing protested and new tenders were issued. But they were seen as favouring Boeing, so EADS’s local partner Northrop Grumman dropped out. EADS decided to submit a bid on its own, in spite of fierce “patriotic” attacks against this foreign plane. (It was announced in February 2011 that EADS had lost.) While EU officials lobbied in favour of a fair process and a level playing field for European defence firms, member states other than the four main stakeholders have not been very concerned, even those with defence equipment to sell to the US.  Leaked cables have shown the extensive use of presidential lobbying to help US firms such as Boeing win contracts abroad: European firms cannot claim the same solidarity and clout.
In March, the EU signed a new “Open Skies” aviation agreement with the US. While the 2007 deal had been seen as excessively favourable to the US, the 2010 one is more satisfactory for Europeans. But it still doesn't include full freedom of investment in the other side's airlines, or the right of cabotage for European companies (whereas American ones can take passengers from the US to an EU destination, and then to a second one). This disappointing result, however, is not due to a lack of unity or combativeness, but rather to a legacy of past bilateral deals with the US. Still, Europeans should insist on holding further negotiations to reduce the remaining transatlantic imbalance.