Trade, Tariffs in the Spotlight As French, US Presidents Meet in Washington

26 April 2018

Trade ties between the US and the European Union were in the spotlight this week in Washington, with US President Donald Trump and French President Emmanuel Macron meeting just one week before a deadline for Brussels to negotiate a permanent exemption from US steel and aluminium tariffs. 

Macron’s visit to Washington also comes just days before his German counterpart, Chancellor Angela Merkel, travels to the US for meetings with Trump. The Macron-Trump meetings were held on Tuesday 24 April, with the French leader then addressing US lawmakers in Congress on Wednesday 25 April.

The French leader’s visit has drawn intense public scrutiny, both due to the various policy issues on the agenda, as well as for the fact that Macron’s trip marked the first state visit of the Trump presidency. It saw both leaders outline their respective views on how to approach bilateral trade ties, along with debating other areas of shared interest, such as the situations in Syria and Iran, respectively.

Trade law compliance, cooperation

Tensions between the US and EU have been high in recent weeks, amid concerns over US trade policy actions that could have direct or indirect ramifications for European markets, including the bloc’s steel sector.

While the EU is one group among several countries that have been given until 1 May to negotiate with the US a permanent exemption from steel and aluminium tariffs, top EU officials have argued that this exemption should not come at the expense of trade concessions from Brussels.

The 28-nation bloc has also indicated that, even should it continue to be exempted from the tariffs, other major steel producing countries that are facing the US duties could begin selling the metal in vast quantities on the European market – thus creating additional strain on the European Union’s producers. Brussels has already announced a safeguard investigation to this effect. (See Bridges Weekly, 29 March 2018)

“Both President Macron and I understand our responsibility to prioritise the interests of our countries” Trump said ahead of their discussions. “The friendship between our two nations – and ourselves, I might add – is unbreakable.”

Speaking to reporters at a joint press conference on Tuesday, Trump initially noted that the two leaders had spoken about “the robust economic relationship between our countries” and that Washington is looking to examine “increased opportunities for bilateral trade and investment based on the principle of fairness and, importantly, reciprocity.”

Macron, for his part, responded to those comments by highlighting overcapacities in certain industrial sectors, as well as “compliance with international trade law,” without specifying further. In both respects, the French leader called for cooperation between the two economic partners, suggesting that doing so would be key towards ensuring a business environment that is built on a “long, sustainable, and stable framework.”

No announcements emerged on whether the US and EU might be able to reach common ground on a permanent exemption from global tariffs on imported steel and aluminium. The US has predicated those tariffs on alleged concerns over national security, with the investigations conducted under “Section 232” of a 1960s era trade law.

European officials have been among those arguing that the national security concern, at least regarding the EU, is unjustified, given the longstanding security alliance that the bloc has with Washington.

“When you look at the trade relationship between both countries, it is very balanced. There is no unbalanced relationship. Second, we are following and respecting the WTO rules because we are the ones who contributed to the creation of the WTO, and we think it makes sense to respect the rule you decided to create,” said Macron.

Macron also said that the industrial overcapacity issue is not one that originates with Europe – and noted that continued economic cooperation is key among allies that also work together on other challenging foreign policy areas, such as the Syrian crisis and the Iran nuclear deal.

In separate remarks, Trump also reiterated past frustrations at having to negotiate on trade issues with the EU as a whole, rather than being able to resolve issues with individual EU member states.

“[Macron] and I are working on trade.  The trade with France is complicated because we have the European Union.  I would rather deal just with France.  The Union is very tough for us.  They have trade barriers that are unacceptable,” said Trump earlier on Tuesday before an “expanded bilateral meeting” with the French leader.

The US and France have a longstanding trade relationship, which both leaders stressed repeatedly during this week’s discussions. For example, within the European Union, France ranks as America’s third-largest trade partner, according to statistics published by the White House.

Macron highlights environmental issues

Another topic that emerged during this week’s discussions was cooperation on environmental issues, including climate action, particularly in light of Trump’s stated intention to withdraw the US from the UN’s Paris Agreement on climate change when it becomes possible to do so.

While Trump did not refer to the subject in his remarks to reporters, Macron referred repeatedly to France’s own position on international climate cooperation, and indicated that the issue was discussed at leaders’ level this week.

“We also talked about the climate.  And here, also, we know where we stand.  France will continue to work on major pieces, including the global compact for the environment.  But I think I can say that…  our businesses, our researchers can continue to work on — can create solutions in the field,” Macron said.

Earlier, during the arrival ceremony on Tuesday, Macron also suggested that other environmental areas such as oceans preservation and cooperation, biodiversity, and pollution mitigation would be opportunities for both sides to work together, while recognising that Washington and Paris “do not always agree as to the solutions.”

The French leader did not indicate whether he and Trump had achieved any breakthroughs in these areas, noting only an interest to continue such discussions. Macron has similarly highlighted the imperative of greater climate action, including through trade policy, in meetings with other world leaders. He has advocated for trade agreements contingent on honouring the UN’s Paris Agreement on climate change, along with an EU floor price for carbon accompanied by a border tax, for example.

ICTSD reporting; “EU Trade Chief Says Merkel, Macron Will Push Trump on Steel,” ASSOCIATED PRESS, 23 April 2018.

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