The EU Commission is embarking on a massive mission of garnering sought after revenue by suing major US companies including; Google, Amazon, Starbucks, Qualcomm and Apple. The woman behind the coup is Denmark’s, Margreth Vestager, a Socialist Liberal. Vestager was the primary instigator in leveling a fine on Cyprus Airlines that ultimately resulted in their going bankrupt and the loss of 550 jobs. By all accounts, she is – brutal.
The Google fine is heavy, weighing in at an astounding $5.1 billion as well as a demand that they change their business model to allow greater competition in the European market. Whether this affects the share price is debatable, but the fact that the EU is specifically targeting US firms is of more interest as the Commission revenues have floundered and an appeal for funds is most likely the driving force, especially when BREXIT is finalized and 14 billion euro’s result in a significant shortfall.
The Trade War Behind The Trade War
This is not the first time the EU Commission has made headlines and enemies in trade disputes. IN 2004 Microsoft was ordered to pay $497 million which was the largest fine to date. In 2006, they again attacked Microsoft and imposed an additional $448 million for competition violations. And again in 2009 imposed $1.44 billion in fines. And again in 2013, 561 million Euros. In 2009, the EU Commission fined Intel $1.45 billion.
It would seem that the EU Commission is pocketing quite a bit of revenue from fines which, according to Article 83 of the EU Commission Protocol, are not reported as revenue but instead are held in a ‘special fund’ portfolio of high quality sovereign bonds with no designated purpose.
In 2014, the Commission reported that of 70 separate fines imposed on various businesses, they collected $2.2 billion in ‘funds’. In 2016, the EU Commission expenditures topped 136.4 billion Euros with roughly 8 billion going toward ‘Administration’. Of course, it is important to note that administration is not an all inclusive of salaries and wages given that each sub-section absorbs costs that are ‘allocated’ to the specific project. The two largest projects are; Sustainable Growth Natural Resources, and Smart and Inclusive Growth which combined absorb over 90% of expenditures.
What the heck?
Smart and Inclusive Growth is supposedly targeting infrastructure and jobs in the least developed EU countries. Sustainable Growth targets increased agriculture productivity.
In 2013, an external audit revealed that £109 billion out of a total of £117 billion spent by the EU in 2013 was “affected by material error”. In fact, the audits for the previous 19 years all revealed similar deficits. At the same time, the Commission was demanding additional sums from the UK in the amount of 1.7 billion creating a havoc of hypocrisy and distrust.
The newly released budget for the Commission is slated at 1.14 trillion Euro. The largest expenditure is applied to ‘foreign aid’ for countries wishing to become EU members – 123 billion Euros.
Given such an astronomical budget, what exactly has the EU Commission accomplished over it’s lifetime?
1) It ratified the Paris Climate Accord
2) It initiated the phasing out of export subsidies to allow poorer countries the opportunity to compete in agriculture
3) It banished the death penalty
4) It created a single market
5) It ‘theoretically created open borders that meant passports were not necessary – although in reality due to the EU’s refuge and immigrant abject failures this open border policy is no longer being followed.
But most of the funding supports Research and studies that tackle various concerns including a project that determined cargo ships use less fuel than lorries, a mobile app to monitor weight loss, a publication of our galaxy, the design of an electric car for aging people, continuing research to expand renewable energy supply which now accounts for 5% of all energy output, and a project in which busses were subjected to a three year trial to determine if hydrogen fuel is a viable alternative…
While these projects all have relevance, it would seem the cost of funding the commission is rather extraordinary in comparison to the actual economic benefits achieved.
BY contrast, it would appear the US does not reciprocate in embarking in lawsuits against EU businesses that violate trade competition.