Former EU Trade Comissioner: Member States Divided on Tariff Retaliation

Bloomberg

Watch Former EU Trade Comissioner: Member States Divided on Tariff Retaliation - Bloomberg on Dailymotion

Transcript

00:00So it seems as if we are heading towards some kind of deal, but help us understand the difference

00:04between a full trade deal that we might have talked about 10 years ago and what we might

00:10get here, something called a framework, perhaps. How much detail would you expect this to contain?

00:16Well, good morning. It's very different this time. If you want a full trade deal,

00:20that is comprehensive. It encompasses everything from services, goods, subsidies,

00:26energies, sustainable development, public procurement, etc. That takes years to negotiate.

00:31We tried that once with the US. It was called TTIP. Around two thirds of it is done. The rest is

00:36somewhere in the freezer. It's not on the agenda to take it out right now. What we are looking at

00:42is some sort of framework, some sort of terms of references. And having in mind the unpredictability

00:48from the US administration with new tariffs popping up and down and delays being changed all the time,

00:55it's very hard to see how something more substantial can come out of this. The EU is

00:59looking for a smaller preliminary agreement to and try to get the tariff down as much as possible.

01:07OK, so something preliminary rather than a full fully fledged trade deal is as we might have seen

01:12in the past. Can you think of given your experience, Cecilia, can you think of low hanging fruit,

01:18things that Europe could give away and not worry too much about to get this deal over the line with

01:23the United States? But the EU already very early in this process offered to take away all the

01:29tariffs on goods if the US did the same. That was rejected by the US administration. So I think that

01:34is not longer on the agenda. So what we're looking at now is probably having to live with the 10%

01:40tariffs, but seeking exceptions on cars, on aircrafts, maybe on alcohol and a few others,

01:48if that is possible. The EU has also offered to buy more LNG, more gas, more soya beans. And as

01:55everything is mixed in this administration, President Trump has also seen the commitment

02:02of the European states to invest much more in weapons and seek cooperation there in the framework

02:07of NATO. That has nothing to do with trade, but in this concept it has. So maybe this is a way

02:13forward. But we don't really know. Cecilia, it's Creedy in London. You mentioned the offer to buy

02:20natural gas, offer to buy soybeans, among other exports from the United States. Talk us through

02:26what that means from the framework perspective. Does that put the idea of quotas back on the table?

02:32No, I don't think so. The first time we dealt with Trump, that was also a small deal that was made.

02:39It also included soya beans and LNG and taking away tariffs on some seafood and porcelain,

02:48I think. So very tiny deal. So I think the commission is trying to revive that again,

02:52buying even more LNG. But this is, of course, not the commission buying gas. This is what member

02:56states does. But it can, in the name of member states, commit to increase its share that we need

03:02more gas in Europe. When it's come to opening markets, I saw there were some rumors this morning

03:08on agriculture. I think that's very difficult to do right now, because unilaterally opening the

03:15the agriculture market from the EU side would be difficult to get parliamentary support for that

03:20in the different member states. Cecilia, let's go back to talking about the actual rate itself,

03:25a little bit of a change in perspective from the European Union. We were going for zero for zero

03:30to now accept that 10 percent flat line. Do you think that there is more appetite? Should Donald

03:36Trump say, well, it's not 10 percent anymore, it's 12 percent or 15 percent? How much willingness is there,

03:41given the carve outs that may be on the table, for the European Union to be able to digest that?

03:47Well, I think it depends very much on the carve outs. Some member states are willing to go very

03:51far to get a deal if it secures a rather low tariff in key sectors, such as, for instance,

03:59steel and cars. Other member states are saying that we don't want these tariffs at all. We didn't

04:05start this trade war. We want to trade on equal terms. We want to increase and facilitate trade

04:11even more between us, because we do depend on each other and we have a historic good relationship in

04:16trade. So they are more likely to want to retaliate. And there are different kinds of lists of products

04:23for retaliation ready should things get very nasty. But what exactly that breaking point is, is very hard

04:29to judge. Cecilia, as the EU is perhaps getting these retaliation measures ready, do you think this is

04:37having an impact for the EU, for the other trading partners it deals with? You know, von der Leyen was just

04:43speaking to European Parliament talking about how it's dragging them closer to Canada, to Switzerland.

04:48We've also had lines from China just in the last hour saying the EU needs a rebalance mindset

04:56towards China trade. How do you view the trade situation, I guess, outside of the US for the EU?

05:03Well, the EU has trade agreements with a lot of other countries and actually 82 percent of our joint

05:08trade trade is not with the US. So, of course, we are seeking to even deepen the existing trade

05:13agreements, concluding ongoing negotiations, ratifying done negotiations with the countries

05:19of Mercosur, with Mexico, for instance. There are intense efforts to try to finalize something with India.

05:26And there are also talks about how the EU could have more organized cooperation with the CPTPP,

05:33the Trans-Pacific Alliance, where the UK just became member as well. So all this is showing that

05:38most countries of the world actually do want to trade. They want to facilitate trade. They want

05:42trade according to rules and norms and predictability. So this is a parallel action that the EU is doing,

05:48trying to expand and stabilize trade with other partners. And many other partners feel the same.

05:53China is a more complicated partner, of course. There's a summit happening next week.

05:57And we share lots of the criticism that the US has vis-à-vis China on unfair practices, subsidies,

06:05and non-market policies. So that is much more complicated. And I don't see much change there.

06:13Maybe something on the margins, but we have a lot of issues with them as well.

06:18Well, Cecilia, with that view that you just expressed on China, do you think

06:22that the EU would maybe welcome policies from the US that are trying to isolate China?

06:32Well, not totally isolate, but the EU has offered as part of a broader cooperation,

06:38some joint action vis-à-vis China, where we have joint concerns. For instance,

06:42the issue of dual use, for instance, the issue of subsidies. The main point for EU with China is

06:48that China is enabling the Russia war economy vis-à-vis Ukraine. And until that changes,

06:54I don't see any major rapprochement between the EU and China. But there are certainly things we

07:00could do jointly with the US.

07:03Cecilia, thinking about where the talks go now or what there is still time for between Europe and

07:09the United States. Obviously, we've seen a shifting timetable for some of this. August 1st,

07:15now the deadline, it would seem, for the implementation, at least, of any new tariffs.

07:21I know that South Korea yesterday was saying that they wanted the sectoral tariffs to be

07:25treated as part of this conversation before August 1st. But that doesn't seem to be the way the Trump

07:30administration is handling things. How is it possible for Europe to come to a framework agreement

07:36that doesn't include answers on pharmaceuticals and on a whole host of other sectors that are being

07:41looked at by the Trump administration? Well, ideally, we would have more clarity on this. But

07:47as you say, the deadlines are changing all the time. There are new proposals on tariffs on copper,

07:52on pharmaceuticals coming up. So we don't really know if an agreement is an agreement or if it just

07:57it stays now and then tomorrow something else will happen. And that's what makes it so difficult with

08:01the EU because we need some sort of clarity. Our businesses need some sort of clarity. And that's

08:07why I think there will only be some very small temporary agreement and the EU will signalise that

08:14we are willing to sit down and seek deepening on other areas as well. But we need to get something

08:20as well. We're not going to give up because right now we are being punished for nothing. And if we

08:25facilitate we want to facilitate trade between us and the the US needs trade and investment from Europe,

08:32we need to get something out of it as well. It's not a it's it's a it takes two to tango.

08:38And but but I'm not very optimistic. I think there will be a very small deal, kind of like the one the UK got.

08:46Cecilia, I want to circle back to one of your earlier comments that you made in terms of the European

08:50Union offering to buy some of the US's largest exports. You mentioned natural gas, you mentioned

08:56soybeans and other agricultural products, among others. There's one that you notably didn't

08:59mention, which is, I believe, the United States's second largest export in those. That's Boeing

09:04airplanes. We know there has been a question of competition, of course, between Boeing and Airbus,

09:09supply chain struggles on both sides, lots of safety struggles on both sides. Cecilia,

09:14walk us through that conversation. Is that something you think the European Union

09:17would be willing to budge on buying more Boeing aircrafts for European carriers?

09:23I haven't heard anything about this. As you said, this is a conflict that dates back

09:28almost 20 years ago. And we have been suing each other in the WTO for subsidies, Airbus,

09:34Boeing, etc. So this is a long conflict. There will be many trade books written about this.

09:39So I don't think this is on the agenda. I know the British and in the UK agenda deal,

09:44there were talks about Airbuses, but I haven't seen anything about this in the US, in Europe, sorry.

Category

Transcript

Be the first to comment

Recommended