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Germany may file WTO suit if US increases border tax

Friday, 17 March 2017 3:00 PM [ Last Update: Friday, 17 March 2017 3:00 PM ]

This combination of pictures shows German Chancellor Angela Merkel and US President Donald Trump. (Photo by AFP)

Germany may file a suit against the United States at the World Trade Organization over President Donald Trump's proposed border tax, the German economy minister said on Friday ahead of a meeting between Chancellor Angela Merkel and Trump later in the day.

Trump has warned that the United States will impose a border tax of 35 percent on cars that German carmaker BMW plans to build at a new plant in Mexico and export to the US market.

Asked how Germany would react to the proposed tax, Economy Minister Brigitte Zypries told Deutschlandfunk radio it was very difficult because of the complexities of such a tax system.

"The other option is that we file a suit against him at the WTO - there are procedures laid out there because in the WTO agreements it is clearly laid out that you're not allowed to take more than 2.5 percent taxes on imports of cars," Zypries said.

Later on Friday, Trump and Merkel are due to hold their first meeting since the new US President took office in January.

Merkel is likely to press Trump for assurances of support for a strong European Union and a commitment to fight climate change while he is expected to seek her support for his demand that NATO nations pay more for their defense needs.

Germany's 50-billion-euro trade surplus with the United States has been a source of tension between Washington and Berlin.

German economy minister Brigitte Zypries speaks to media outside Bundestag in Berlin on March 6, 2017 on the takeover of the German car maker Opel by French auto maker PSA. (Photo by AFP)

"The Americans need our machines and our plants ... and the other point is that we only have an export surplus in the machines and plants sector; in the service sector it's the other way round," due to big Internet companies in the United States, Zypries said.

Carl Martin Welcker, the president of Germany's VDMA engineering industry association, warned in an interview with newspaper Tagesspiegel about the "poison of protectionist measures".

He said any such measures would hit Germany's engineering sector hard at a time when there is widespread concern, following Britain's decision to leave the European Union and calls from French far-right candidate Marine Le Pen for a referendum on France's EU membership.

(Source: Reuters)

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