US, EU Officials to Examine Next Steps for Trade Ties
The US and the EU are planning to develop a “joint action plan” on trade, reports suggest, after leaders met in Brussels, Belgium, late last week.
US President Donald Trump met with European Council President Donald Tusk and European Commission President Jean-Claude Juncker in the Belgian capital. The meeting came as part of a larger trip that the new American president was making overseas, which also included attending the G7 leaders’ summit in Taormina, Italy, among other stops. (For more on the G7 meeting, see related story, this edition)
“My feeling is that we agreed on many areas. First and foremost, on counterterrorism, and I am sure that I do not have to explain why. But some issues remain open, like climate and trade,” said Tusk following his discussions with the American leader.
Meanwhile, Juncker told journalists that officials from both sides would meet again over the next several weeks, in a bid to examine what options may lie ahead. “We insisted on the importance of having free and fair competition,” said the EU Commission chief, according to comments reported by EurActiv.
The meetings, he said, are needed “because we estimated that there are too many divergences in approach and analysis between these two big economic blocs.”
Implications for TTIP unclear
However, what was not clear after the Brussels discussions was whether the two trading giants would be moving towards reviving their existing trade deal negotiations, known as the Transatlantic Trade and Investment Partnership (TTIP).
The TTIP talks were launched in 2013 under the administration of then-US President Barack Obama. Negotiators held 15 formal rounds in the years since, seeking to address issues such as market access and regulatory coherence, among others. The negotiations were put on hold in late 2016, pending additional clarity from the Trump Administration on its stance. (See Bridges Weekly, 13 October 2016)
The EU’s top trade official has repeatedly raised the issue of TTIP, noting that while the new American leadership will need more time to settle in, the proposed trade and investment accord remains of great interest to Europe – so long as the talks yield ambitious outcomes. (See Bridges Weekly, 27 April 2017)
“Our Transatlantic Trade and Investment Partnership, TTIP, was left in the freezer in January. We have seen protectionist measures from the US,” noted EU Trade Commissioner Cecilia Malmström in Brussels last week, adding that the European Union would need to see how new US Trade Representative Robert Lighthizer approaches these issues.
Lighthizer was confirmed by the Senate in May to serve as the US’ top trade official. (See Bridges Weekly, 18 May 2017)
However, US Secretary of Commerce Wilbur Ross told CNBC this week that TTIP could still be a viable option for Washington going forward. Ross is expected to also play a large role in US trade negotiations.
“The EU is one of our largest trading partners, and any negotiations legally must be conducted at the EU level and not with individual nations… Thus, it makes sense to continue TTIP negotiations and to work towards a solution that increases overall trade while reducing our trade deficit,” said the US official.
Other open questions include how upcoming US-EU discussions might address concerns Washington has raised regarding trade deficits with key trading partners in the 28-nation bloc – along with tensions over potentially protectionist tendencies by the new US Administration. Whether differences in other policy areas – such as monetary issues – might spill over into the discussions also remains unclear.
Trump for his part, said on social media site Twitter on 28 May that the European trip was “a great success for America. Hard work but big results!” Two days later, he tweeted that the United States has a “massive” trade deficit with respect to the EU’s largest economy, Germany, putting the word in all caps.
“Very bad for US. This will change,” he said, while arguing that Berlin does not contribute sufficiently to the North Atlantic Treaty Organization (NATO), the military alliance between the US, Canada, and 26 European nations that dates back nearly 70 years.
Trump had raised the same concerns on prior occasions, including upon Chancellor Angela Merkel’s visit to Washington, where she noted that the EU has many mutually beneficial trade deals – and that legally Germany cannot conduct trade talks on its own, as the European Commission negotiates for all EU member states. (See Bridges Weekly, 23 March 2017)
Meanwhile, the formal negotiations for Brexit are expected to kick off shortly, following the 8 June elections in the United Kingdom. The EU-UK negotiations going forward are expected to be deeply complex, both in terms of extricating the UK from the European Union, along with hammering out the terms of their future trading relationship.
The United Kingdom will also have to rework its agreements on myriad issues – including trade – with non-European countries. The Financial Times this week published a database suggesting that the United Kingdom will have nearly 760 agreements to resolve with external partners as a result of Brexit.
While Trump was a supporter of Brexit as a candidate, EU officials said last week that they spoke to him about the value of avoiding another member state exit. Trump also met with UK Prime Minister Theresa May last week, and had already discussed at a prior gathering the prospects of boosting bilateral trade between their two countries – with the UK leader indicating her interest in a future trade agreement. (See Bridges Weekly, 2 February 2017)
A spokesperson for the UK leader confirmed to the Reuters news agency that the discussions with Trump last week did include the prospects of a “post-Brexit trade deal.”
ICTSD reporting; “With major deal frozen, EU, U.S. look to cooperate on trade,” REUTERS, 25 May 2017; “Donald Trump and EU leaders air differences at Brussels meeting,” FINANCIAL TIMES, 25 May 2017; “The Brexit treaty renegotiation checklist,” FINANCIAL TIMES, 30 May 2017; “May and Trump reaffirm UK-U.S. trade commitment: May’s spokesman,” REUTERS, 26 May 2017; “Ross open to reviving US, EU deal,” THE HILL, 30 May 2017; “EU says Trump agrees that Brexit ‘an incident, not a threat,” REUTERS, 26 May 2017.