EU-US trade relations

Blog
Marietje

Almost a year ago, President Trump announced he would be imposing steep tariffs on the import of steel and aluminum into the United States. By offering a number of countries a (temporary) exemption to these tariffs, Trump clearly sought to gain concessions in return. The carrot and stick payed off - at least partly. Both Canada and Mexico accepted quotas to their export of steel and aluminum under the new North America Free Trade Agreement, the new U.S.-Mexico-Canada Agreement. So did Brazil, Argentina and South Korea. 

Not the European Union. We have always been crystal clear and do not negotiate with a proverbial loaded gun to our head. So when the US imposed tariffs on the import of European steel and aluminum as well, trade Commissioner Malmstrom responded immediately, and imposed rebalancing measures targeting 2.8 billion euros worth of US imports. At the same time, our commitment to the rules-based multilateral trading system was illustrated by bringing a case before the WTO to challenge the legitimacy of Trump’s measures. They are illegally based on national security arguments. Given we are NATO allies, and the Trump administration continuously reminds us of the responsibilities of paying into the pot, the two do not add up.  

Since the end of the second world war, the EU and US have  closely worked together to build the international trade system that we know today. While that system is urgently in need of reform, the US and EU should join forces to accomplishing such change and to ensure global trade rules are fit for the 21st century. We should not break but build.  Instead, we witness increases in Transatlantic trade tensions.  

In an attempt to de-escalate, on July 25th, President Juncker and Commissioner Malmstrom succeeded in easing tensions by agreeing with President Trump to work together, rather than against each other. Their plan amongst others included a commitment to work together toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods. They also agreed to work to reduce barriers and to increase trade in services, chemicals, pharmaceuticals, medical products, as well as soybeans.    

Following up from this, Commissioner Malmstrom in January presented mandates to open negotiations with the US on a trade agreement focused on the removal of tariffs on industrial goods, excluding agricultural products and a second conformity assessment agreement that would make it easier for companies to prove their products meet technical requirements on both sides of the Atlantic.  

These mandates do not intend to take the negotiations on a Transatlantic Trade and Investment Partnership (TTIP) which we negotiated under President Obama out of the freezer, nor are they the result of a loaded gun to our head. Instead, they are agreements of a limited scope that intend to uphold our side of the agreement reached in July.  

As we have witnessed over the past two years, President Trump loves nothing more than playing the blame game. It is now essential that we do not allow him to place the blame for the collapsing of the so-called July statement on the EU. Someone should be the adult in the room.   

Given all the political sensitivities, the negotiations have been put under a magnifying glass. To the question whether or not we should open  negotiations with the US administration there can only be one answer: Yes, these negotiations are our end of the bargain that aims to prevent a trade war. Whether or not those negotiations will actually be concluded is a different question. That will depend on the negotiation results, and can only be the case when the US also lifts the illegitimate tariffs on steel and aluminum, and if no similar tariffs are imposed against European car imports. 

These are no easy times, and it is important for Europe to stand together, and to deescalate. Therefore I support Commissioner Malmstrom and her negotiating team. Voting against the negotiating mandates she presented will only into the hands of Trump, and that is not in our interest.

Please find the plenary intervention here.