Europe must heed Mark Carney – and embrace a painful emancipation from the US

Paul Taylor – The Guardian:

Trump’s tariff retreat should lull nobody into dropping their guard. The EU must join forces with Canada, Japan and other like-minded countries.

EU leaders would do well to meditate on the seminal lesson that the Canadian prime minister, Mark Carney, delivered at this year’s World Economic Forum.

In an incisive analysis of the new age of predatory great powers, where might is increasingly asserted as right, Carney not only accurately defined the coarsening of international relations as “a rupture, not a transition”. He also outlined how liberal democratic “middle powers” such as Canada – but also European countries – must build coalitions to counter coercion and defend as much as possible of the principles of territorial integrity, the rule of law, free trade, climate action and human rights. He spelled out a hedging strategy that Canada is already pursuing, diversifying its trade and supply chains and even opening its market to Chinese electric vehicles to counter Donald Trump’s tariffs on Canadian-made automobiles.

Carney’s clear-eyed recognition that the age of the western-led “rules-based international order” – with all its flaws and inconsistencies – is not coming back contrasts with dithering among European leaders, many of whom still seem to believe they can flatter, bribe and appease Trump into taking their interests into account. Fear of Trump storming out of Nato or abandoning Ukraine to Russian dismemberment has so far prevented them from taking a strong stance against his bullying of allies.

The US president’s insistence on taking possession of Greenland, and his threat of punitive tariffs against European allies who sent a small reconnaissance force to Greenland last week in support of Denmark, should be the red line that finally triggers a united and firm European response. Yet nothing is less certain, with EU leaders still torn between de-escalation and bargaining on the one hand, and escalation to create a balance of power before any negotiation, on the other.

Trump muddied the waters after giving a belligerent speech in Davos, by announcing he had “formed the framework of a future deal” on Greenland in talks with Nato’s Mark Rutte and would not, after all, be imposing those threatened additional tariffs. But Europeans should not be lulled into dropping their guard.

Carney’s lesson in Davos could not have been clearer and more timely. “When we only negotiate bilaterally with a hegemon, we negotiate from weakness. We accept what’s offered. We compete with each other to be the most accommodating,” he warned. “This is not sovereignty. It’s the performance of sovereignty while accepting subordination. In a world of great power rivalry, the countries in between have a choice – compete with each other for favour, or combine to create a third path with impact.”

In other words, Europe can only hope to stop Trump’s abuse of US power if it acts with unity and strength, and joins forces with like-minded countries such as Canada, but also Japan, Australia, Brazil and India, to build new trade pacts and rules.

EU leaders hold an emergency summit on Thursday evening in response to Trump’s demand to take control of Greenland from Denmark. They must give their support for Denmark teeth by agreeing to slap retaliatory tariffs on US goods worth €93bn if Trump takes any further action against EU members. Moreover, they should begin the process of activating their “trade bazooka”, the anti-coercion instrument that allows wide-ranging economic and regulatory measures against a foreign power trying to coerce Europe. This would start with inviting the European Commission to open an investigation into US moves to coerce an EU member.

The European parliament took a first step to charge Washington an economic price for Trump’s threats this week by postponing indefinitely a vote to ratify tariff cuts on US goods that were part of the humiliating unequal trade “deal” that the US president forced on the EU last year. However, MEPs then proceeded to shoot the EU’s trade-diversification strategy in the foot by voting to send a long-delayed trade pact with four dynamic South American economies in the Mercosur group for judicial review by the European court of justice. That surrender to beef farmers who wield outsize political power will delay ratification by about two years and sends a chilling message to other countries lining up to clinch trade agreements with Brussels.

The commission now faces a sensitive decision on whether to forfeit the economic benefits of the Mercosur deal, or defy the legislature by provisionally implementing it, as provided in the agreement, pending the court’s decision and eventual ratification.

The most important message from Carney is that political leaders must deal with the world as it is, not as they wish it would be. “Nostalgia is not a strategy,” he warned. European leaders would be wrong to cling to the comfort blanket of old-fashioned Atlanticism in the misguided belief that one more compliment or concession to Trump will slake his insatiable appetite. For a start, no European leader should agree to join his so-called “board of peace”, which is a transparent attempt to cement US hegemony, outside international law and the UN.

Now is the time for Europe to embrace a painful emancipation, and seek partners around the world to keep the torch of rules-based governance and trade burning. Carney has shown the way.