EU backs start of trade talks with US

European Union member nations have paved the way for the beginning of formal trade negotiations with the United States. The move comes amid a threat by Donald Trump to impose tariffs on the EU over Airbus subsidies.

The European Union can now begin trade negotiations with the United States after its member states on Monday voted by a clear majority to approve the negotiating mandates put forward by the European Commission.

The EU currently has a tense trade relationship with Washington, with Donald Trump threatening to levy tariffs on car imports and other European products.

Green light for trade talks

  • The EU's 28 member states, which had struggled for months to agree on negotiating mandates for the trans-Atlantic trade negotiations, gave final clearance to start formal talks with Washington.
  • France, who has tried to push trade talks until after EU elections, voted against the mandate, while Belgium abstained from the vote.
  • The European Commission's negotiating mandates include cutting tariffs on industrial goods and to make it simpler for companies to show products meet EU and US standards.
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Made in Germany | 06.03.2019

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'Win-win'

European Commissioner President Jean Claude Juncker lauded the decision by EU member states, saying the EU and the US would enter "a new phase" of their relationship.

European Trade Commissioner Cecila Malmstrom told a press conference on Monday that the EU is "ready as soon as they are" and said she would contact the US as soon as they wake up.

"If we agree to start, I think it can go quite quickly," Malmstrom said. "We are definitely determined to do everything we can to finish this during the Juncker Commission" — Juncker's term ends on October 31. The commissioner specified, however, that ultimately a deal should be limited to industrial goods and a simplification of complicance checks, which will make life easier for companies on both sides of the Atlantic. Agricultural products and public tenders were expressly left out of issues on the table, Malmstrom underlined.

Limited trade deal: Juncker and Trump agreed to pursue a limited trade deal during the European Commission president's trip to Washington in July of last year. Trump has since accused the EU of dragging its feet and has threatened to impose tariffs on auto imports, though Juncker insisted in February that the US president gave his "word" that he would not. The Commission put forward its negotiating mandates in January, but the EU's executive body needed the backing of member states to begin talks with Washington.

Read more: German car industry warns US over auto tariffs

Airbus-Boeing dispute: Last week, Trump ratcheted up his trade threats, saying the US would levy new tariffs worth €11 billion ($12.5 billion) over EU subsidies for Airbus. The EU reportedly intends to counter that tariff hike with a €20 billion one of their own. The US and EU have accused each other of illegally subsidizing their respective aviation giants, Boeing and Airbus, for more than a decade.

Resistance from France: Concerned about domestic blowback from the trade negotiations, France had led the charge against the opening of trade discussions with the US. It had sought to push the issue beyond EU parliamentary elections, scheduled for May 23-26, claiming that dealing with Trump could impact the vote. French President Emmanuel Macron has also insisted the US first sign back with the Paris climate accord, from which Trump withdrew the US in 2017. 

EU-US trade relationship

More than a trillion euros in trade

The European Union is the US' largest export market, accounting for about one-fifth of all US exports. Similarly, one-fifth of EU exports go to the United States. EU-US trade in goods and services was €1,069.3 billion in 2017. The EU imported €256.2 billion in goods from the US, and exported €375.8 billion.

EU-US trade relationship

EU trade surplus

The main exports and imports between the EU and US fall into the categories of machinery and vehicles, chemicals and other manufactured goods. Combined, they accounted for 89 percent of EU exports and imports with the US in 2017. In all three categories, as well as food and drink, the EU had a trade surplus. The US had a trade surplus in raw materials and energy.

EU-US trade relationship

Cars, machinery top exports

At €167 billion, machinery and vehicles were the largest EU export category to the US, accounting for 44.4 percent of goods exports. The €111.5 billion in machinery and transport equipment was the largest EU import from the US, accounting for 43.6 percent of imports.

EU-US trade relationship

Small part of trade pie

At the end of May 2018, the Trump administration imposed a 25 percent tariff on EU steel and 10 percent tariff on aluminum. Steel and aluminum exports to the United States were worth €3.58 billion in 2017.

EU-US trade relationship

Retaliatory tariffs

In response, the European Union developed a list of products it may subject to retaliatory tariffs. These include typical American products like peanut butter, bourbon whiskey, Harley Davidson motorcycles, jeans and orange juice. The exports targeted by the EU are worth about €2.8 billion annually, according to EU officials.

EU-US trade relationship

Services include travel, education

For services, the EU imports amounted to €219.3 billion and exports €218 billion. The top services were in professional and management services, intellectual property, travel and education. About a third of EU-US trade consists of intra-company transfers.

dv/rt (Reuters, AFP)

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