President Donald Trump's trade balance accusation ignores the digital sector
The `US president´, however, overlooks obvious facts, as it suits him just in his propaganda gossip, to satisfy his "believers". There is
also a widespread “digital trade deficit” - which is detrimental to the
European economy.
Published at HANDELSBLATT GLOBAL, October 18, 2017.
written by Friedbert Pflüger
editing by Earl of Cruise
Friedbert Pflüger is a retired German junior defense minister (Staatssekretär) and chairman of the Internet Economy Foundation.
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| APPLE, GOOGLE, AMAZON, FACEBOOK - Source: Fotolia, companies [M] |
Before the fall meeting of the International Monetary Fund, actual president is Christine Lagarde, the
German federal statistics office reported a 7.2 percent increase in
German exports over the previous month. These numbers provide new
ammunition to Donald Trump, who has repeatedly threatened his key
partners in Europe with punitive tariffs over a supposed “massive trade
deficit.” The `US president´, however, overlooks the fact that there is
also a widespread “digital trade deficit” - which is detrimental to the
European economy.
"When Donald Trump complained that there were too many BMW´s on American
roads, Sigmar Gabriel, Germany’s foreign minister, wasn’t coy with his
comeback: If the United States wants Germany to export fewer goods, it
could just “make better cars.” That point is moot. But the story of how
Germany developed the world’s largest current-account surplus is far
more complex than just ‘Made in Germany’, a trademark once invented by the British to mark unwanted German industry competition, selling well abroad."
It has been the USA during the MARSHALL PLAN, that wanted exactly Germany to become the workbench of high quality industrial products at reasonable costs, if not to be cheap. It was back then to integrate the German potential in the world economic as a peaceful partner and any longer to be a threat. Back then, it was the only time that the USA seem to have learned from the mistakes made in Versailles 1919.
Germany has the quality to adjust to critical surroundings and situations - German engineers and companies react flexible to crisis and threats.
Earl of Cruise
If the Trump administration is serious about taking
protective measures against the European steel and automotive industry,
it will inevitably trigger a debate in Europe over steps to take against
America’s digital giants. A trade war would be foolish.
German car manufacturers are producing with 100,000 employees in their factories and delivery partners in the South of USA those cars which anger the head of Jungle Camp.
Earl of Cruise
The European single market, with more than 400 million internet users
with money to spend, is almost entirely open to digital products and
services from abroad. The level of regulation is low in comparison with
other industries. European user data is still being transferred free of
charge to the United States, where it is refined by a small number of
companies into sources of innovation and user profiles. We are being
offered completely new and highly individualized services, which have
shaped everyday life for some time. However, domestic competitors and
consumers have no access to the emerging data pools and no opportunities
to derive similar added value from them.
And the above named internet giants even don´t pay the taxes they should and creat in Europe a nearly tax free income/revenue. This is aside of their dominace unsocial and anti democratic, and plays in the hands of critics. another is point is to be realized too: the tax avoiders are rising the Anti American feelings in Europe to a level higher than during the unglorious Vietnam War.
Earl of Cruise
Germany's next government and the Europe Union must press ahead with digital transformation and move to catch up to the United States.
American Internet platforms such as GOOGLE/ALPHABET, AMAZON, FACEBOOK
and APPLE have been able to grow to unprecedented dimensions in this
environment. They have improved their products and services with each
additional customer and his or her data. By creating additional digital
ecosystems around core services, the leading platforms have acquired a
controlling position in the digital world. With products such as AMAZON
ECHO, the intelligent language assistant on the kitchen table, they
penetrate deeply into our everyday lives and even shape all the
downstream services and content that we use.
GOOGLE´s algorythmics control our search habit and create a dangerous mind bubble, of which too many are unaware of. The most are too thoughtless about their intent habit.
Earl of Cruise
The digital platforms coordinate and control all central nodes on the
web when we search, buy or communicate. After a brief triumphal march,
they now represent 6 of the 10 largest companies in the world. Companies
from Silicon Valley account for more than 50 percent of the world’s
market capitalization of digital platforms. Germany and Europe only play
a role here as a sales market, representing less than 5 percent of
global market value.
While German car manufacturers produced a big mess around faked exhaust data, and clinging to old technology, the USA is ahead of the electric car manufacturing, e.g. TESLA. There is a certain threat that the German car industry may become the same as the the precarious Rust Belt in the USA ... To long waiting for a turn around, while technology is marching on and away from old technologies and yesterdays industries. Who is late has lost. No protectionism can change it.
Earl of Cruise
This has resulted in a digital US trade surplus. Marcel Fratzscher,
president of the German Institute for Economic Research, and Klaus Hommels, the venture capitalist co-founder and CEO of Lakestar, estimate
this European digital trade deficit at $68 billion (€58 billion) for
the year 2014. The US is probably even more dominant in the digital
sector, because not all digital “exports” appear in trade statistics. Is
the situation escalating into a trade war? Will Europe respond to US
tariffs for the European automotive and steel industries with a FACEBOOK
or GOOGLE tax?
If they would pay any real tax in Europe!
At the last G20 summit, European Commission President
Jean-Claude Juncker announced that he would respond to possible American
punitive tariffs within a few days.
But we must avoid the path to a trade war. Germany’s next government
and the Europe Union must press ahead with digital transformation and
move to catch up to the United States. If we want to play our part at
the top, we must address the rapidly increasing demands on digital
infrastructure and create competitive financing options for young and
rapidly growing companies. We also need to rein in American dominance in
the platform economy by means of market-compliant and competitive
regulation.
"Germany’s trade surplus is huge, the largest in the world. That much is well known. But who should do what, if anything, about it? And is anybody `to blame´? At this point the debate invariably breaks down, with Germans and others, especially "Anglo-Saxons", talking past each other. These encounters remind me of Longfellow’s metaphor: ships passing in the night, "only a signal shown and a distant voice in the darkness, […] then darkness again and a silence."
"Germany’s trade surplus is huge, the largest in the world. That much is well known. But who should do what, if anything, about it? And is anybody `to blame´? At this point the debate invariably breaks down, with Germans and others, especially "Anglo-Saxons", talking past each other. These encounters remind me of Longfellow’s metaphor: ships passing in the night, "only a signal shown and a distant voice in the darkness, […] then darkness again and a silence."
If Mr. Trump truly chooses the path of protectionism, Mr. Junker’s
warning will inevitably meet with widespread approval in Europe. To
avoid an escalation, European leaders should draw attention to our
digital trade deficit in discussions with the Trump administration. Mr.
Trump must understand that while “America first” protectionism would
affect German and European industry, it could also have serious
implications for the digital growth engine of the US economy.
While the `US president´ is trying to deliver to his "believers" he is destroying the reputation of the USA, is dividing the country and is rising Anti Americanism. In the end, his `MAKE AMERICA GREAT AGAIN´ will end in an uncontrolable desaster for the whole world.
I am a "homo politicus", studied historian and see the Menetekel at the wall: The beging of the end. The "American Century is gone"! Without any doubt.
Or has the Jungle Camp leader allready realized, what had happend, and all his gibberish rantings are the accepting of the reality and trying to turn the wheel for his believers? But which can´t be done ...
Or has the Jungle Camp leader allready realized, what had happend, and all his gibberish rantings are the accepting of the reality and trying to turn the wheel for his believers? But which can´t be done ...
Earl of Cruise
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