Rising protectionism danger to Western unity

Microchips. Source: Alexandre Debiève/Unsplash

U.S. domestic support measures are looking to hamper European firms' competitive ability. While French President Emmanuel Macron said that this could lead to a divide between Western countries, Europe is just as generous when it comes to enterprise support.

President of France Emmanuel Macron recently referred to U.S. support measures as very aggressive.

Karsten Staehr, professor of macroeconomics at the Tallinn University of Technology, told ERR that the Americans are pouring money into microchips, the auto industry and the green energy sector. "It could mean European companies losing out," he admitted.

"But there is not much to Macron's concern. While the European Commission has tried to limit state aid, which Estonia has also felt in not always being able to support Estonian Air, the EU has really given up in the last two to four years and allowed state aid in many sectors," Staehr explained.

However, Western countries taking steps to protect their markets will have an inevitable effect on Western unity.

"Thinking back five or ten years, the West always favored lifting trade restrictions. We also wanted the developing countries to do that. By now, state support and stronger industrial policy have become commonplace on both sides of the Atlantic again. It means that politicians are back to talking about trade and relevant restrictions," Staehr said.

For example, if the Americans want to decouple their microchip industry from Chinese supply chains, the side-effects of these measures will also hit European companies. Joe Biden admitted the need to avoid such developments during his press conference with Macron. "I wrote the legislation and never intended to exclude folks who were cooperating with us," Biden said. "That was not the intention." The president of USA assured that the U.S. would continue to create manufacturing jobs, but not at the expense of Europe.


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Editor: Marcus Turovski

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