US, EU sketch battle lines to reset trade talks

Before the U.S. and European Union decide on a path for trade talks, they need to agree on what specifically is on the table for negotiation.

The menu is already taking shape. The EU might be prepared to scale back technical barriers to imports of American foods including shellfish, Bloomberg’s Jonathan Stearns reported over the weekend.

U.S. Agriculture Secretary Sonny Perdue is in Brussels Monday for discussions with EU Trade Commissioner Phil Hogan — a meeting that may help lay the groundwork for European Commission chief Ursula von der Leyen’s first planned visit to Washington as soon as next week to discuss transatlantic commerce with President Donald Trump.

Barely finished reading the U.S.-China deal, the trade universe is gearing up for the next fight. In a conference call on Friday, the U.S. Chamber of Commerce laid out some other areas for improvement:

• Conformity assessments. A lot of work has been done since Trump and former commission President Jean-Claude Juncker reached a political agreement in July 2018 to cut industrial tariffs and remove regulatory barriers to trade. Having the assessments would make it easier for companies to prove their products meet technical requirements on both sides of the Atlantic, and completing this could be converted to a win “in fairly short order,” said Marjorie Chorlins, the chamber’s senior vice president of European affairs.
• Civil aircraft. The U.S. imposed levies on EU products in retaliation over government aid to Airbus that was deemed illegal by the World Trade Organization. The EU, meanwhile, is pressing ahead with a plan for tariffs against the U.S. in a parallel WTO case over unlawful subsidies to Boeing.
• Digital-service taxes. The chamber is looking for some way that the U.S. and countries considering the levy can formally agree to a cessation or delay in their imposition, as France and the U.S. have.
• Agriculture. This is the trophy catch the U.S. has been hunting for years, but it’s a big red line for the Europeans. Washington’s goal is seeing U.S. soybeans and genetically modified wheat move into European markets, and the EU wants to see restrictions lifted on American imports of pears and apples.
• Defense. Europe wants to strengthen its defense profile, and U.S. companies want to compete for procurement in that area — any proactive assertion that American firms could participate would be welcomed, Chorlins said.
• The 5G network. Any commitment to cooperate on standards or otherwise to constrain participation of actors like Huawei from certain aspects of EU member states’ networks would be of interest to the U.S. The European Commission is thinking “in clear-eyed terms” about this challenge and has issued guidance to help member states, Chorlins said.

Hanging over the talks is the Trump administration’s threat to impose tariffs on European automobiles and car parts. Europeans fume at the thought of it, and the U.S. chamber sees legal barriers.

“The administration no longer has authority to impose tariffs” because the binding deadline to do so lapsed in November, said John Murphy, the chamber’s senior vice president for international policy. “In the event that there was an effort to move forward, there most certainly would be litigation and that litigation would have a high chance of success.”

Charting the Trade War

Global trade volumes fell more than 1% in November compared with a year earlier, according to figures from the CPB Bureau for Economic Policy Analysis. That’s a sixth consecutive decline and it captures what’s been a rough period for the world economy. It also leaves global trade on track for its first full-year decline since 2009, ING calculates.