EU Trade Commissioner Says Narrower Deal Needed to Rebuild Trust

As long as the trade talks are limited to industrial goods -- which does include fisheries under World Trade Organization rules -- European Union Trade Commissioner Cecilia Malmstrom said she thinks the talks could conclude before the current commission leaves office in late October. Malmstrom was visiting Washington to talk to her counterpart, U.S. Trade Representative Robert Lighthizer, and to give a speech at the Georgetown Law International Update.

The scope of the talks has become quite contentious, with Lighthizer saying that agriculture has to be part of a deal, and with Senate Finance Committee Chairman Chuck Grassley, R-Iowa, making that point even more emphatically (see 1811290030). Malmstrom said that when she was at the White House last summer with President Donald Trump and European Commission President Jean-Claude Juncker, both sides agreed that talks should focus on industrial tariffs, because those could be solved quickly. "It was very clear in the White House that agriculture would not be included," she said.

The mandate under discussion at the European Parliament does not include agriculture, and Malmstrom has to follow the mandate agreed to by the region's countries. The Parliament's vote, expected next week, is not binding, but the nations' directives are. "We will be ready within some weeks, but it takes two to tango," she said March 7.

Agriculture was on the table during the Transatlantic Trade and Investment Partnership negotiations, which lasted three years (see 1609260023), but could not overcome the political sensitivities on agriculture and U.S. government procurement (Buy American laws).

Trump agreed not to levy tariffs on European cars or car parts while new talks are underway, and now that he has the Commerce Department report (see 1902190035), he could hike tariffs on autos any time in the next few months. Malmstrom said she asked Lighthizer on March 6, when they met, what is in the report, but he didn't say. "I'm very curious about the report that's been handed over to the White House. In Europe, it would have leaked weeks ago," she quipped.

The earlier tariffs on European steel and aluminum "seriously offended" European countries, as they do not see their metals as posing a national security threat to the U.S., she said. Years earlier, "we started negotiating in something called TTIP. I still think that is a good idea, [but] the circumstances had changed. There is a lack of trust at this moment, that is why we are proposing instead of increasing tensions between us ... let us rebuild this trust. We start with industrial goods, which is much less complicated, and which will be beneficial from both sides, and maybe we can rebuild that trust. And then we'll see later about a truly comprehensive trade agreement, TTIP-style. There is no support in the European Union for that right now."

In her speech to the Georgetown Law International Trade Update, Malmstrom said Europe and the U.S. "often agree on the diagnosis ... but we do not always agree on the cure," she said. She said while the WTO has failed to stop abuses by China, "it is not a reason to tear it down." She asked the U.S. to stop blocking appointments to the dispute settlement body, because without binding dispute settlement, the WTO's rules are just an aspiration.