Merkel: Competition Authorities Might Need To Look At Big U.S. Platforms

The dominance of big internet platforms from the United States raises the question of whether competition authorities in Germany and Europe should intervene to defend Europe’s economic and social model, German Chancellor Angela Merkel said.“The platform economy is a big problem,” she said at an event celebrating the 70th anniversary of Germany’s “social market” economic model. Amid deep tensions between the U.S. and Europe over trade, Merkel said that Europe needed to see the fate of its car industry as a security matter, just as the U.S. had when it threatened punitive tariffs on imports of German cars.
 

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Trade wars inevitable - many has too much to lose..

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Exports account for Germany is 50%/ GDP, China around 40% and many other European countries between 30%-50%. 
 

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You are living in the 1800’s if you think any country has the ability to isolate itself.  No one can't say  U.S. will  win a trade war with Canada and Europe. This will fast track a economic collapse....

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2 minutes ago, rainman said:

You are living in the 1800’s if you think any country has the ability to isolate itself.  No one can't say  U.S. will  win a trade war with Canada and Europe. This will fast track a economic collapse....

No one said isolate, but we can focus on more things that matter here than what people in Europe want. 

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Once ago it was G8...years later G7...tomorrow maybe G6.

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On 6/15/2018 at 8:12 AM, rainman said:

You are living in the 1800’s if you think any country has the ability to isolate itself.  No one can't say  U.S. will  win a trade war with Canada and Europe. This will fast track a economic collapse....

Actually, probably not, at least not in the USA. Let's look at the history.

Go back to about 1956 during the Eisenhower Administration and the total value of imports to the US was about 7% of GNP.  Now, I don't have a breakdown of how much of that was raw materials and how much was finished goods, but my guess is that a good chunk of the value is finished goods.  SO ask yourself: can the US operate comfortably with that model?  And the answer is "yes, it can." 

The reason the USA can operate with limited, even no, imports/exports is that the US has this staggeringly vast market. If you are a manufacturer somewhere else, if you want to have a chunk of the largest industrial-goods and consumer-goods market, you have to come to America. Yet the Americans don't need you!  So the requirement to have access to another market is totally lopsided. 

Take, just for example, the situation with Canada and dairy products - milk and cheese.  Canada has this "supply-management" system where, strictly for political reasons, all milk and cheese consumed there is domestic, and from dairy farms in ONtario and Quebec.  As these dairymen are potent voter blocs  (and the Liberal Party draws its strength from those blocs, not totally, but enough to tip the scales in their parliamentary system), the Dairymen are untouchable, and that supply-management structure is here to stay.  Now in fact that costs every Canadian family some $287 in excess costs due to the higher pricing that supply management creates, but such is life in Canada.  Meanwhile, the only way to keep those dairymen happy is to create this total blockade against US dairy producers, or the entire inefficient Canadian system would be shut down.  US pricing would just hammer the Canadians. 

When Donald Trump tweets and complains about Canadian dairy tariffs, it is all true, but in reality is a nothing for the American dairy industry.  The entire population of Canada from coast to coast is perhaps 26 million, roughly the population of New York State (20 million), Rhode Island (1 million) and Connecticut (3.5 million).  OK, so toss in Delaware (another million) to round it off.  Can the US dairy industry survive with the loss of those customers?  Of course it can; it can shrug that off and not notice it. And that is the thing about huge markets: you can lose or gain good-size chunks that would be absolutely crucial for some European country but barely a blip in the USA. 

Another illustration:  the SAAB motor company built this utterly practical hatchback called the Model 900.  But, SAAB autos could only survive if it could sell into the US market, which accounted for some 50% of sales.  SAAB only had a 4-cylinder motor, and Americans demanded bigger engines - at least a V-6.  It would cost some $400 million to develop that larger motor, which SAAB did not have and could never afford.  It attempted to sell their more upscale version, the Saab 9000, with a turbo-charged 4-cyl., but that just could no compete in the upscale end of the auto market - so the Swedes sold the company to GM.  And GM simply dropped in a V-6 from their Vauxhall operations in the UK in order to have that V-6 the Americans wanted.  [Even then, GM screwed it up and SAAB brand went bust, but it would have done so anyway without the GM V-6]. 

There are lots and lots of these industrial and consumer goods built in Europe and Canada that absolutely need access to the USA market.  But the USA does NOT need access to those European markets in order to do well.  All that is, is icing on the cake.  And here is the kicker: the US trade representatives know this perfectly well.  So do the Japanese.  So do the Koreans.  And the European businessmen understand this - the politicians, not so much. 

Would the USA suffer if there was a total ban on imports?  Probably not.  Sure, some disruptions in the short term, but the US market is just so huge that it can do fine without any imports at all. A sobering thought, to be sure. 

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