Donald Trump’s recent statements threatening to “cut off all trade with Spain” have generated headlines and immediate political reactions. But beyond the media impact, the statement raises an interesting question from the point of view of law and international trade: is it really possible for the United States to suspend trade with a country like Spain?
The answer is more complex than it seems.
Spain does not trade alone: it does so through the European Union
The first aspect that is usually overlooked in these types of debates is how international trade works legally in Europe.
The United States does not trade with Spain as an isolated state, but with the European Union, which acts as a customs union with a common trade policy. Since the creation of the single market in 1993, decisions on tariffs, trade agreements or trade defense measures have been the exclusive competence of the Union.
This means that foreign trade relations are managed at European level, not national level. In fact, within the European internal market itself there is not even legal talk of “exports” between Member States. When a Spanish company sells goods to France, for example, it is a intra-community deliverynot from an export. In trade statistics, these operations are recorded as shipments from the country of origin and introductions into the country of destination.
This reflects the extent to which, in foreign trade, the European Union functions in many respects as a single economic and legal area.
The same does not happen in all areas. On security or defense issues, for example, European states continue to largely act through intergovernmental cooperation frameworks or alliances such as NATO. In foreign trade, however, the European Union does act as a bloc.
Thus, in practice, any significant trade measure directed against a country in the European Union inevitably affects the entire European market.
It will not be easy to commercially isolate a single country in Europe
Added to this legal dimension is an economic reality: the European economy largely functions as an integrated production network. Many products that circulate in international trade incorporate components manufactured in different countries before reaching the final consumer. A car assembled in Germany may include parts produced in Spain or Italy. A Spanish agricultural product can be processed or distributed from another European country before being exported.
This phenomenon – known as global value chains – characterizes much of contemporary international trade and is especially visible in the European economy, where trade between Member States forms an essential part of these productive networks.
This interdependence makes commercially isolating a single state within the European internal market much more difficult than it might seem. In deeply integrated advanced economies, completely separating a trading partner from the rest of the economic network is much more complicated than the headlines suggest.
International trade still has rules
It may seem like an obvious statement. However, in recent years, the rules-based international trading system has come under severe strain. Trade wars, economic sanctions and various unilateral measures have led some experts to question the extent to which multilateral rules continue to play a relevant role.
However, contemporary international trade continues to rely on a set of rules, especially those developed within the framework of the World Trade Organization (WTO). Among its fundamental principles are non-discrimination between trading partners and the prohibition of imposing arbitrary restrictions on trade.
Therefore, a general suspension of trade against a trading partner would raise serious questions from the point of view of international trade law.
The EU’s response will be decisive
In this context, the decisive issue is not only legal or economic, but also institutional and political at the European level. Even if the United States attempted to apply selective trade pressure – for example through punitive tariffs or product restrictions – the determining element would be the reaction of the European Union.
If Brussels considered that a measure directed against Spain affects the functioning of the internal market, it could treat the matter as a trade conflict between the United States and the European Union as a whole. In that case, the issue would cease to be a bilateral issue and become a larger-scale transatlantic trade dispute.
The opposite scenario – accepting that it be treated as a matter that strictly concerns Washington and Madrid – would have much deeper implications. It would mean treating a Member State commercially as if it were not part of the Union in an area – trade policy – that the treaties attribute precisely to the European Union.
Such a precedent has no clear precedent and would directly affect the coherence of the internal market. For this reason, the European Commission routinely reminds that trade measures directed against a Member State must be addressed at European level.
Ultimately, the real viability of such a measure would depend on one fundamental factor: the ability of the European Union to act as a single trading actor.
More than a bilateral conflict
Viewed as a whole, the threat to suspend trade with Spain raises an issue that goes far beyond a dispute between two countries. In the context of the European single market, a measure of this type would inevitably affect the functioning of the internal market and, therefore, the European Union as a whole.
Therefore, more than a bilateral problem, such a scenario would have direct implications for the European trading system. Ultimately, the question is not only whether the United States could attempt such a measure, but whether the European Union would act as the sole commercial actor that its own treaties provide for vis-à-vis third countries.
Hernán Núñez Rocha, Professor and Researcher in the area of Commercial Law, University of Alcalá
This article was originally published on The Conversation. Read the original.
