Trade between the US and Europe accounts for nearly 40% of the world’s trade. Approximately, 25% of the US-European trade total is with firms that have a stake on each other’s side of the pond. Despite the obvious success there are vexing trade issues: beef versus Brie or why can’t we all just get along?By George Lauriat, AJOTSTATE OF PLAY There is no doubt that Europe is mired in the same economic recession as the US and its other main trade partner China. But a downturn in Europe is different in character to the US. European nations have far more comprehensive healthcare and support packages for workers during layoffs than the US. Secondly, there is a far different attitude towards debt and growth. The US has hitched its economy to a growth model with debt and inflation being secondary concerns. Europe worries first about debt, inflation and then growth when addressing economic problems. To the Europeans, the debt that the Obama Administration’s stimulus package stands to create is worrisome. It appears like the White House issued an open decree to print money with little concern about how it will be spent or more importantly, what will back the greenback. (In a widely quoted interview, EU President, Czech Prime Minister Topolanek labeled the US bailout plan a “road to hell.”) Europe’s not really concerned about the $586 billion stimulus package in China. China has the monetary reserves to spend, so debt isn’t an issue. Although dumping, human rights, IP law and protectionism remain thorny problems between Europe and China. But both the US and China stimulus packages focus on domestic infrastructure and developing domestic business and for that reason, Europe is naturally wary of the impact. Back in February, President Barack Obama made a policy speech that emphasized “Buy American” reiterating a position he extolled on the campaign trail. Under the original proposed package only US-made iron, steel and manufactured goods would be used in public works projects funded by the bill. The suggestion appalled European leaders (and many US businessmen engaged in international trade), who were looking for a more conciliatory approach to mutual economic problems. President Obama subsequently backed off the “Buy American” position before his March/April foray through Europe. At the “Group of 20” meeting in London, on April 2nd, President Obama appeared to quell, at least for the time being, the European angst. Still Europeans leaders, particularly the French and Germans are leery of what Washington’s stimulus plans will mean for them. There is a latent anti-Americanism. According to reports in the German press the country’s Chancellor Angela Merkel, has already started a re-election campaign that plays on that sentiment. The reach of Merkel’s “realpolitik” ploy is difficult to measure. Will it have an influence on trade between the US and Germany or the US and EU as a whole? Europe and the European Union, very much want the new Obama Administration engaged in the WTO Doha Round. The dough that backs Doha will not be available without US support. Nevertheless, the US stimulus plan, which promotes jobs and growth over all else, could give rise to another contentious round of trade disputes. GROWTH IN EXPORTS Collectively, Europe is the United States’ largest export and arguably, most complex market. Nearly twenty-five percent of all US-European trade is conducted by businesses with stakes in each other’s countries. According to Census and statistics, sales of services in the EU by majority US-owned affiliates were $402.5 billion in 2006 (latest data), while sales of services in the US by majority EU-owned firms were $336.0 billion. Although the US has for many years run a trade deficit with Europe, in recent years there has been a noticeable increase in US exports to [Western] Europe. In 2004 the US trade deficit with Europe was $124.2 billion. Four years later, the US trade deficit with Europe was $88.5 billion. Over the past five years, US ex