Nadia Calviño, the minister of economy and business for Spain, spoke in New York with Reuters Breakingviews Global Editor Rob Cox in a Reuters Newsmaker event, discussing the impact of tariffs on her country.
NEW YORK — It is not “fair or appropriate” to threaten tariffs in reaction to a judgment from the World Trade Organization, said Nadia Calviño, the minister of economy and business for Spain. In early October, the WTO allowed the U.S. to levy $7.5 billion in tariffs against the E.U. as compensation for illegal subsidies to Airbus.
Among other items, the Trump administration has chosen items important to Spain — such as olives, olive oil, and wine — as subject to tariffs, she said. Calviño’s comments came during an interview in New York with Reuters Breakingviews Global Editor Rob Cox.
Calviño said Spain was “fully aligned” with the European approach to international trade. “The multilateral system we have built after the Second World War has served us well,” she said. “It has brought prosperity and growth and welfare to citizens around the world.” She pointed out that the latest forecasts from the International Monetary Fund are showing that a long period of trade uncertainty is having a negative impact on growth, and that the uncertainty itself represents “a risk materializing.”
She said that Spain has been in contact with European Union authorities, both to establish discussions with the U.S. and to see what sort of aid could be offered to farmers and others who might be affected.
Calviño and Cox also discussed various aspects of the Spanish economy, including preparations for Brexit, Spain’s efforts to pay down its deficit, and Spain’s priorities for the European Commission, which is soon to have a new president. And, when asked, of course, Calviño gave a quick plug for why people should want to move to Madrid.
Worried about the impact of Brexit
Calviño emphasized that Spain regrets the fact that the U.K. is determined to leave the E.U., and they would very much like to avoid a hard Brexit. Given that, she said Spain is “doing as any wise person would do, which is hoping for the best and preparing for the worst.” She says large Spanish businesses have prepared relatively well, laying in stockpiles of supplies that would normally be imported from the U.K. She also noted that hundreds of thousands of U.K. citizens are living in Spain, and hundreds of thousands of Spanish citizens are living in the U.K.
The possibility of a hard Brexit has forced Spain to adopt emergency legislation to ensure “there is continuity in terms of access to health systems.” While she said that “we have done the utmost,” she is not sure it has been enough. “I cannot see that any authority would have sufficient information to get it right,” she noted.
Because of the political situation in Spain, the Spanish government has not been able to craft a budget, instead rolling over existing budgets. How has this impacted the country’s economy, Cox asked.
It has hampered the government’s ability to reduce its deficit, which stood above 100% of GDP in 2014, Calviño admitted. “We took as our top priority to reduce it as fast as possible,” she explained. “We would have liked to have passed a budget that would have allowed us to do this faster.” Calviño said she wants to knock the deficit down by four percentage points over the next three years. “Even within a politically constrained environment, we have done our utmost,” she said. “The commitment is clear.”
Focusing on economic reform
Calviño said her government has a number of priorities for economic reform, among them the digitalization of the economy and what she referred to as “the ecological transition.” She noted that Spain has invested heavily in digital infrastructure and is one of the leaders in the deployment of 5G technology. “We want to keep being at the vanguard of the digitalization process,” she said, noting that Spain is in a second wave of pilot projects with 5G and is on track to auction 5G spectrum.
She also said Spain is “strongly committed” to fighting climate change, which she said is a challenge but also “an opportunity for the economy to transform itself as well.” She also noted that the German finance minister has put through an ambitious program of investment to address climate change, as has the government of The Netherlands.
Calviño said that Spain’s priorities for the new European Commission are slightly different than those of France and Germany, which have been pushing for changes in antitrust policy.
First, she said, something that is “probably not so much on your radar screen, but has been extremely important this last four years,” is to have a coherent migration policy in Europe. The fact that there are not borders within Europe means that the external borders must be “clearly managed,” she said. Disagreements over migration, she says, have caused tensions between member states that border the Mediterranean and those that are inland. “That is a top priority for both Europe and for Spain,” she said.
Second, competition policy is “an important tool, that we need to reinforce it,” she said, adding that Spain is “not at all aligned with the approach some member states have put on the table to be less pro-competition or free markets.”
Digitalization is Spain’s third priority, and Spain “strongly supported” a European digital tax. If the E.U. can’t manage to pass such a tax, she said, Spain is ready to do it nationally.
Finally, Calviño said she would like to see the coordination of fiscal policies within the Eurozone, and said Spain would even favor a Eurozone budget. She brought up the U.S. as a parallel. The U.S., she said, “does have a federal budget corresponding to the federal currency, which is the dollar. We have the Euro, but it doesn’t have the same kind of instrument.”
As for those considering relocating, perhaps to Madrid? “It is the weather, the food, the housing, the prices,” she enthused. “The quality of life is outstanding.”