Economic Relations Between Italy and USA, Test d'ammissione di Economia Internazionale

Scarica Economic Relations Between Italy and USA e più Test d'ammissione in PDF di Economia Internazionale solo su Docsity! International Economic Relations – professor Christos Papazoglou Economic relations between Italy and United States Paolo Santarelli – Erasmus+ student I. Introduction. Through this paper, I will try to retrace in detail the economic relations between Italy and the US starting, first of all, with the Marshall Plan and the influence that this economic maneuver had on Italy and Europe in general. With a chronological leap up to the present day, however, I will dwell in depth on the time span of the last five years - a period full of vicissitudes which, in my opinion, are worth analyzing - with particular attention paid to the last two presidencies (that Trump and that Biden). II. When do economic relations between Italy and the US begin to be stronger? A quick look at the Marshall Plan. Although General George Marshall was neither the inspirer nor the drafter, the plan was named after that Secretary of State of the Truman administration, who was also the organizer of the Allied victory without ever having trodden the field of battle. With a short, much-quoted speech - albeit very little read - delivered at Harvard University on June 5, 1947, Marshall was rather the bearer. That text that renewed the canvas of Wilsonian idealism and summed up in a few lines the years of transformation of the US political system has become synonymous with "decisive and beneficial intervention for moments of dramatic crisis". As the law that made it effective made clear - the Economic Cooperation Act of 1948 - it was not a plan generously bestowed by the victor to countries in ruins after the Second World War conflict. It was triangulated on three connected axes destined to have a constituent meaning for the international system. The first was the reorganization of the West and the return of the "Atlantic" dimension of interdependence, which was wrecked with the First World War, that is, with the collapse of the first globalization. The second was to make the engine of Rooseveltian Grand Design work through the reconstruction of trade currents, that is the range of organizations thought up by Roosevelt's war in progress (from the UN to the IMF, from GATT to the World Bank), which would embodied the idea of "world government" which formed the background of a multilateral international system. The third was the geographical creation of a homogeneous economic field with an anti-Soviet function: a politically stable bloc aimed at fighting what was defined as the Cold War and which marked the next 40 years of international life. The Plan was many things, but its material value came essentially from two factors. First of all, its amount - about 13.2 billion dollars, equal to 1.1% of the American GDP and 2.7 of the 16 receiving countries - was financed with the money of US citizens, who were forced to accept it on the basis of a pounding campaign in which the link between the economic security of the American Republic and that of Western Europe was emphasized. Secondly, it was not composed only of subsidized loans (whose collection the United States then gave up), but of goods and raw materials that the 16 countries confiscated for free and were able to transfuse into the production system through auctions or strategic assignments. The proceeds from the sales of those goods constituted a fund tied to the launch of productivity policies and therefore, in fact, to the adoption of an extraordinary technological update with respect to the European industrial grammar. This mechanism inserted a double conditionality for the countries that implemented the Plan. The first was aimed at the development and modernization of the production system, the second, purely political, provided for the alignment of the ERP countries to the American way of life in terms of consumption and access to goods and adherence to constitutional liberal-democratic models. III. A leap up to our days. Where does the trade war came from? Airbus dispute and tariffs, let’s frame the general context. Despite the political tensions of recent years between Europe and the United States of America, economic relations between Italy and the US have not registered setbacks as has happened for other European countries. Exactly two and a half years ago, US President Donald Trump decided to impose tariffs on Made in Europe products. The use of protectionist measures by the US government, however, is nothing new: since the 1970s, in fact, only Presidents Bush Senior and Clinton have not introduced new tariffs on imported products. However, the Trump administration has been one of the most active in this regard, having imposed 283 billion dollars in import duties in 2018 alone, in order, among other things, to strengthen domestic manufacturing. Italy, as mentioned above, was one of the very few countries that was partially pardoned by Trump since the Italian government was not directly involved in the matter of state aid to the Airbus1 consortium. The US-EU dispute over aid granted to Boeing and Airbus aircraft manufacturers dates back to October 2004 when both the United States, on the one hand, and France, Germany, the United Kingdom and Spain, on the other, filed applications. consultation with the dispute settlement body of the WTO to 1 https://www.dw.com/en/airbus-boeing-wto-dispute-what-you-need-to-know/a- 49442616 companies introduce products to the European market at a price much lower than the market price9. This artificial price is due to the presence of state subsidies to companies in the country of origin, or to the overproduction of a certain product by companies that sell such surplus goods abroad. Dumping is a form of unfair competition as products are sold at a price that does not accurately reflect the cost of production. It is very difficult for European companies to remain competitive under these conditions and in the worst cases they are forced to close down and lay off workers. As a result, just a month later, the Trump presidency introduced the first US tariff block on steel and aluminum, which also affected Italy. The trade policy measures implemented by the Trump administration were, on paper, aimed at protecting domestic companies from foreign competition through the imposition of taxes on imported goods. However, as far as Italy is concerned, the duties did not have the desired effect, since they did not decrease Italian exports of these products to the USA between 2017 and 2018. Paradoxically, exports in percentage terms increased (+13.9% for steel and 22.4% for aluminum)10: this is because, despite the tariffs, the US production of these goods was unable to replace their imports from abroad, due to production and start-up costs of new production plants still high. But how was it possible to import Italian products with the duties in force? Through a "by product" criterion, which could be invoked by US companies: for American companies that used certain steel products and which, after the introduction of duties, suffered damage as a result of the latter, it was possible to request that those products were exempted; the request was examined by the Department of Commerce, the Department of State, the Treasury and other bodies to ascertain that domestic production was not adequate to finally proceed with the importation of these products. In this way, Italy benefited from the duties by replacing other countries exporting these goods to the United States. A theoretical explanation of this phenomenon can be provided by the analysis of the trade balance: protectionist policies have the sole effect of making the real exchange rate appreciate, increasing the relative price of national goods and thus favoring imports over exports. The appreciation of the real exchange rate, in conclusion, offsets the increase in net exports attributable to the protectionist policy. More generally, despite the protectionist measures against both China and the EU implemented by Trump, the overall Italian trade balance with the US remained active, growing both in 2018 and in 2019 (+0.9% both years). However, due to the outbreak of the COVID19 pandemic - which resulted in a global 9 https://www.europarl.europa.eu/news/en/headlines/economy/20180621STO06336/ dumping-explained-definition-and-effects 10 https://www.census.gov/foreign-trade/balance/c4759.html economic recession, a drastic reduction in international trade and therefore in foreign demand for Italian companies - the contraction of Italian exports to non- EU countries in 2020 it is widespread in all the main outlet markets, but with falls below the average for Switzerland (-2.9%), the United States (-6.7%), China (-0.6%) and Japan (-7,6%). VI. How the relations between US and Italy change. Italy signs the Belt and Road Iniatitive with China. In March 2019 Italy became the first G7 country to join the Silk Road, signing a memorandum of understanding with the People's Republic of China in which it manifested its adherence to the Belt and Road Initiative, the infrastructure and connectivity project which is the flagship of Chinese President Xi Jinping. It was the then Deputy Prime Minister and Minister Luigi Di Maio who led the acceleration in relations with China of Xi Jinping. Through the signing of the Memorandum of Understanding on the Belt and Road Initiative - which did not have the value of an international agreement and therefore did not give rise to legally binding commitments - the agreements on the plate amounted to 29, ten institutional and nine between companies, for a value total of 7 billion. "Only the one between 2.5 billion companies - underlined Di Maio - which becomes 20 considering the flywheel effect". They range from trade to energy (Ansaldo, Snam, Eni involved), from infrastructures to telecommunications, from tourism to ports, up to twinning and cultural initiatives. With the Chinese giant China Communications Construction Company (CCCC) entering the rear of Trieste and between the docks of Genoa11. The plan, announced in 2013 by Chinese President Xi Jinping and explained by Prime Minister Li Keqiang during several trips to Europe and Asia, aims to involve 65 countries that collect about 65% of the world population and 40% of GDP. Its construction would cost at least $ 900 billion, an enormous amount that not even the Chinese giant can manage alone. In 2014, Beijing launched the Silk Road Fund (China Investment Corporation- Export and Import Bank-China Development Bank), a $ 40 billion fund aimed at attracting foreign investment. Overseas, the reactions from the United States to the announcement that Italy was about to become the first European country to actively participate in the Belt and Road Initiative (BRI), the grandiose Chinese project aimed at implementing a network of infrastructural connections, was not long in coming that favored Euro-Asian trade. The Italian support for the initiative, in fact, was greeted with skepticism by Washington: Garrett Marquis, the then spokesman for the US National Security Council and special assistant to Donald Trump, declared himself skeptical about the possible lasting economic 11 https://www.ilsole24ore.com/art/china-italy-cooperation-the-belt-and-road-initiative- ABajqCgB benefits for the Italian people and he believed that the endorsement could "damage Italy's global reputation" by asking allies to put pressure on Beijing to comply with international standards12. A position branded as "really absurd", in the following days, by the spokesman for the Foreign Ministry of Beijing, Lu Kang. "As a large country and a large economy, Italy knows where its interests are and can make independent policies," said the spokesman. The possible support of Italy for the infrastructure connection initiative wanted by Xi Jinping has also caused discussion in the Chinese press. The fierce tabloid Global Times, in an editorial appeared online, explained that Italy's decision would have repercussions, at least "in part", on US policy towards China, taking its cue from the awaited signing of a memorandum of ' agreement on the Belt and Road between Rome and Beijing to broaden the discussion on the balance between the European Union and the United States. The memorandum was accompanied by a series of commercial agreements, including two agreements that both the Port of Genoa and the Port of Trieste have concluded with the Chinese state enterprise China Communications Construction Company (CCCC). The European Union and the United States have expressed concern over these agreements, fearing that the CCCC may eventually gain a controlling stake in the ports, similar to what happened recently between the China Ocean Shipping Company (COSCO) and the Greek port of Piraeus. However, the existing legal constraints, the open debate at international and national level and the vague nature of the agreements in question have for the moment prevented these fears from materializing. VII. Italy’s governement changes. The new Premier’s point of view about the BRI. In February 2021, following the government crisis that culminated in the resignation of the then Prime Minister Giuseppe Conte, a new executive headed by Mario Draghi was sworn in and officially took office. In June 2021, during the press conference at the end of the G7 in Carbis Bay, Cornwall, the new Prime Minister Mario Draghi reiterated Italy's Euro-Atlantic positioning and did not rule out a revision of that agreement signed by the government of his predecessor Giuseppe Conte (his deputies were the pentastellato Luigi Di Maio and the Northern League player Matteo Salvini, today again together with the guide of the country, unlike the tenant of the time of Palazzo Chigi). The agreement that made Italy the first country of the Big Seven to join the Chinese expansionist project "was never mentioned, no hint" during the G7, explained President Draghi. But, he added, "as regards the specific act, we will examine it carefully". These words were welcomed by the United States: "It is interesting" at a time 12 https://www.bbc.com/news/world-europe-47640196 had decreased by 17% in volume and 19% in value. As explained by Paolo Zanetti, president of Assolatte, although in the first two months of 2021 there was a -35% in terms of exports, already in March (with the first suspension of customs measures) exports to the USA returned to a + 39%. The United States represents one of the most important markets for the Italian dairy industry, recording sales of 340 million euros. X. American military bases in Italy. The military presence of the United States in the world, through its own bases that act as Washington's bridgehead, is a fact that dozens of states still face today. According to reports provided by the Pentagon, the US officially has 686 bases scattered in 74 different countries around the globe. The US installations are in turn classified into four different categories: air bases (Air Force), land bases (Army), naval bases (Navy) and bases with communication and surveillance tasks (Spy). All in all, these offshoots of US military power house a staff of nearly 270,000. Japan hosts the largest US contingent (about 40,000 soldiers), followed by Germany (over 34,000 soldiers), South Korea (over 23,000 soldiers) and Italy (over 12,000 soldiers)17. In the overwhelming majority of cases, the lease agreements for the bases (which are US territory in all respects) contain clauses that require the host country to bear a substantial part of the costs necessary for maintenance and, if necessary, for the expansion of US military facilities. An empirical proof of all this has been obtained in recent months, with the Italian state which has committed to shelling out hundreds of millions of euros to restore and / or readjust the foundations to the needs of their demanding tenants. In the Aviano and Ghedi bases, for example, Italy has participated - with no less than 80 million - in the realization of the work to make the US atomic bombs safe. This is revealed in a long article by the magazine Mother Jones18, which quantified the Pentagon's spending in the last twenty years for the bases in Naples, Aviano, Pisa, Vicenza and those in Sicily in more than 2 billion dollars. Bases that are not officially classified as American, but as NATO outposts that now house American military material, equipment and personnel. To contradict the official lines that speak of simple "garrisons", principals, there are numbers. The Italian base in Vicenza - now renamed the barracks of the Din - has recently been expanded thanks to a project that in 8 years cost US taxpayers 304 million dollars. Two thousand soldiers at work in the base, two multi-level garages that house more than 800 17 https://www.aljazeera.com/news/2021/9/10/infographic-us-military-presence-around- the-world-interactive 18 https://www.motherjones.com/politics/2014/11/america-still-has-hundreds-military- bases-worldwide-have-they-made-us-any-safer/ military vehicles, and there is even a relaxation area called with unparalleled taste for hyperbole "Warrior Zone". In short, an avant-garde structure where inside there is "everything you expect from a 21st century installation", in the words of Colonel David Buckingam, in command of the U.S. Army Garrison of Vicenza. What you do not expect, if anything, is that the Americans are also willing to pay more than double what they spent on the Vicenza base. This is the case of Aviano, defined as the “sleeping valley” until the early 1990s, which later became fully operational thanks to the 610 million dollars spent on the expansion project with the construction of 300 new structures. A project made possible also thanks to the Italian State concession of 85 hectares free of charge and to the allocation in 2004 of another 115 million dollars. Numbers that have made Aviano the largest American air base in the Mediterranean, which hosts a flock of F-16 fighter-bombers - transferred from Spain in 1992 - and an arsenal of 50 atomic bombs. From Aviano to Naples in the F-16 is a moment, where you can land on the runways of the naval support base inside the Capodichino airport, expanded in 1996 thanks to a 300 million dollar Pemtagono loan. Here, since 2005, the European headquarters of the US Navy has been established, collaborating in full synergy with AFRICOM, the US command for Africa. But the window on Africa favored by the Americans remains Sicily for obvious geographical reasons. Since October 2001, with the start of the new fiscal year, the Pentagon has allocated 300 million dollars for the expansion works of the Sigonella base. Numbers that tell us that the United States in recent years has invested more in Sicily - with the exception of Vicenza - than in other Italian bases. An economic effort that to date has led Sigonella to be the second busiest military airport in Europe and the first runway from which the Global Hawk drones took off on patrol in 2002. The use of drones has then become regular practice thanks to an Italy-USA agreement that since 2008 has allowed Americans to use the Sigonella hangars as a base for drones19. Over the past five years, the Pentagon has shelled out an additional $ 31 million for the maintenance alone of the Global Hawks. And to stay on the subject, the drones of NATO's Alliance Ground Surveillance system program also depart from Sigonella. $ 1.7 billion project that allows you to monitor a radius of 16,000 kilometers from the Sicilian base. From 2003 onwards, another operation foresees that P3 spy patrol boats depart from the Sigonella slopes to monitor the African North-West. While in more recent times, last June a commission of the American Senate authorized the arrival in Sicily from Great Britain of special 19 https://www.ecchr.eu/fileadmin/Fallbeschreibungen/Drones_US_Italy_Sigonella_Case_Re port_en.pdf forces and transport aircraft CV-22 Ospreys, and work is being done to build the MUOS, a satellite communication system in Niscemi. wanted in Washington and Rome, a little less to the local population. The reasons for this interest are essentially geographical: Americans do not give up having direct access to international waters and the airspace of the Mediterranean, all with a speed of deployment of forces that is unmatched anywhere else on the European map. But there is more: Italy - as revealed to Mother Jones by an American official - is a country that offers operational flexibility, with few restrictions and full freedom of action. A country where, to use the words of the former US ambassador to Italy Melvin Sembler, the "government gives the Pentagon everything it wants".