EconoGraphics

On October 3, 2017, the Atlantic Council hosted a conference with experts from the public and private sector to discuss the impact of Brexit on economic sanctions policymaking. The United Kingdom (UK) currently plays a considerable role crafting and implementing sanctions policy in the European Union (EU). Transatlantic cooperation and sanctions alignment are vital to ensure the effectiveness of this essential foreign policy tool. 

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Infrastructure investment stimulates economic growth. According to McKinsey & Company, an increase in infrastructure investment equal to 1 percent of gross domestic product (GDP) would convert into an additional 1.5 million direct and indirect jobs in the United States. America’s infrastructure is in a state of disrepair. The American Society of Civil Engineers scored the country’s infrastructure a collective “D+” in 2017.

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On August 2, 2017, US President Donald J. Trump signed into law H.R.3364, a new set of economic sanctions aimed primarily on Russia (with additional measures adopted against Iran and North Korea). Essential to the success of any sanctions regime is its alignment. As defined by John Forrer in an upcoming paper, economic sanctions are aligned when they “inflict a prescribed amount of economic loss… at a level to achieve the identified foreign policy goal(s) with the least amount of unwanted harm.” 

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On June 15, 2017, US President Donald J. Trump issued Executive Order 13801, which sought “to promote affordable education and rewarding jobs for American workers” by increasing the number of apprenticeship opportunities. Trump’s stated goals are ambitious. With a proposed ApprenticeshipUSA budget of $200 million (roughly double the previous amount), the president wants to increase the number of US apprenticeships from 505,000 in 2016 to 5 million by 2022.

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In March 2014, the United States and the European Union (EU) issued the first in a series of sanctions against the Russian Federation for its destabilization of Ukraine and annexation of Crimea. These restrictions, which initially focused on senior Russian government officials and private individuals, have expanded to include large corporations, financial institutions, and even entire economic sectors. In retaliation, Russia has adopted counter-sanctions of its own. With the US Treasury Department adding new sanctions in recent weeks—after the US Senate had passed its own legislation on the issue with almost unanimous support—it appears unlikely that the West will relent in the near future.

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On June 12, in US President Donald J. Trump’s first full cabinet meeting, the new US Trade Representative Robert Lighthizer briefly encapsulated the young administration’s philosophy on international trade: “Deficits do matter, and ours are coming down.” This is not a particularly partisan view; Trump’s opponent in the 2016 presidential election, former Secretary of State Hillary Clinton, spoke out against the Trans-Pacific Partnership (TPP) during her campaign despite supporting it previously.

To be sure, the United States has a perpetual trade deficit. In 2016, the country imported over $500 billion more in goods and services than it exported, and the United States has not had a surplus since 1975. Yet focusing solely on a country’s trade balance provides a sharply limited view of its economic health.

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This is the first EconoGraphic as part of our recently launched Economic Sanctions Initiative. The initiative aims to promote dialogue between the public and the private sector to investigate how to improve the design and implementation process of economic sanctions. The following text includes excerpts from our upcoming brief titled “Economic Sanctions: Sharpening a Vital Foreign Policy Tool” by our nonresident senior fellow John Forrer. Please visit our website to learn more about our work on economic sanctions.

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The global economic and financial crisis, which originated in the United States in 2008, ultimately triggered a sovereign debt crisis in Europe in 2010. As a result of sky high debts, economies lacking in competitiveness, and over lenient banking regulations, the credit ratings of the Eurozone members Cyprus, Greece, Ireland, Portugal, and Spain plummeted. These countries began facing prohibitively high interest rates when they attempted to borrow from international credit markets. As the situation worsened, Greece effectively lost access to international bond markets, and the European Commission established the European Financial Stability Facility (EFSF) to prevent sovereign defaults of Eurozone member states and to protect the common currency.

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This EconoGraphic is the final edition of a three-part series on why the United States and Europe need each other. The series highlights excerpts from the EuroGrowth Task Force’s inaugural report on European economic growth and why it matters for US prosperity. The Global Business & Economics Program launched this timely report on March 10, 2017 at the Atlantic Council. If you would like to learn more about the report, please visit: http://www.atlanticcouncil.org/publications/reports/charting-the-future-now.

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US economic ties with the European Union (27) generate the largest global bilateral trade flows, worth an estimated $2.4 billion per day. The massive volume of US-EU (27) bilateral trade promotes prosperity on both sides of the Atlantic.

In 2015, the total value of US goods and services trade with the EU (27) reached $869.5 billion. The United States had $589.7 billion in total bilateral goods trade with the EU (27), its second largest goods trade partner. US trade in services (exports and imports) with the EU (27) was $279.8 billion.

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