How the Wifo boss supported the EU in the trade war against Trump

“Attack is the best defense. The aim was to carry the economic damage back to the USA. Free trade is not one-sided, you have to fight back,” argue the economists. At the time, Braml was doing his doctorate under Felbermayr at the German Ifo Institute and was commissioned to closely analyze both US trade data and that of the EU.

Surprising result: The data did not match, which mathematically should have been the case. The US data showed a large surplus for America and a deficit for Europe. The EU data showed the opposite. The reason for this was that the EU figures only partially included the services and digitalization sales of the US tech giants.

What Trump didn’t want to believe in the negotiations. The then EU Commission President Jean-Claude Juncker said after the agreement, which was publicly celebrated in the Rose Garden of the White House, that Trump had always denied these figures “until I was able to prove to him that these were the data from American statisticians, and the conversation was friendly,” say Felbermayr and Braml in her entertaining book “Free Trade is Done”.

Europe’s secret weapon in the face of impending trade wars is technological leadership to create a “balance of terror,” say the authors. The West should rely on its strengths and not try to cure all weaknesses, says Felbermayr in an interview with KURIER.

Longing goals

The EU must become more “strategic” and form an “economic NATO” with the other Western democracies. As a technology shield against the autocracies. The superiority of free societies can be seen “particularly in their innovative power, which we should continue to expand”.

In addition, demographic developments are working against autocracies such as Russia and China, which, like the West, not only suffer from alarmingly low birth rates, but also from the emigration of the well-educated in particular.

The longing destinations of the world’s emigrants are still the Western countries. “We should not underestimate the appeal of our system, consisting of democracy, the rule of law and a market economy, and thus fall for the propaganda directed against us,” conclude Felbermayr & Braml confidently.

Incidentally, the title of the book is deliberately chosen in bumpy German and is an allusion to FC Bayern coach Giovanni Trapattoni’s saying “I’m done” in 1998.

“Free trade is finished”, amalthea Verlag, 272 pages, 30 euros