Chamber Heartened by Thaw in Trade Tensions Between EU and US

Despite resumed talk about tariffs on European autos, U.S. Chamber of Commerce officials say they are heartened by the first signs of progress in months for trade talks between the European Union and the United States. Marjorie Chorlins, the Chamber's senior vice president of European affairs, said with a new team at the European Commission, and the positive comments after the meeting in Davos, Switzerland, between President Donald Trump and EC President Ursula von der Leyen, the business community is feeling new hope for an improvement in relations. The officials spoke during a Jan. 24 conference call.

“The relationship has been marred by significant tensions,” Chorlins said, adding that from the business community's perspective, it's “important to get the relationship back on track.”

She said the recent trip of EU Trade Commissioner Phil Hogan to Washington was successful, and she said he and U.S. Trade Representative Robert Lighthizer successfully worked together in the past, when Hogan was agriculture commissioner, on giving a larger quota to hormone beef raised in the U.S. “There is good rapport there,” she said. “I think they are pretty equally matched as far as negotiators.”

The largest tariff burden on EU goods right now is the retaliation for subsidies to Airbus, a program authorized by the World Trade Organization. Chamber Senior Vice President for International Policy John Murphy said he has no insight into what the administration is planning to do next, whether it will add new products to the list, or “carousel” the list, removing some products and adding others. Nor does it know whether the administration is serious about hiking tariff retaliatory rates past the 10 percent and 25 percent currently in place.

Even though the bilateral meeting in Davos went well, and Hogan said he was pleased with his trip to Washington, the president and two members of his Cabinet started mentioning this week the possibility of high tariffs on European cars -- a threat that had seemed to have subsided.

In response to question from International Trade Today, Murphy said this talk was incongruous in the context of the other positive signs. But he dismissed Commerce Secretary Wilbur Ross's comment that the November deadline for action on Section 232 measures on imported autos was “imaginary” (see 2001230047).

Murphy said: “We’ve reviewed the statute quite closely. The administration no longer has the authority to impose tariffs on autos and auto parts through the current investigation. There are binding deadlines that have passed in November.” He quoted from a Court of International Trade ruling on a motion to dismiss a case regarding Section 232 tariffs on Turkish steel. Section 232 “cabins the President’s power [quite] substantively,” he said, adding the word quite to the CIT language.

The Department of Justice, in a memo explaining why the Commerce Department would defy a law passed by Congress requiring release of the auto Section 232 report, cited the same case, and said unsuccessful negotiation is the exception to this time limit (which the government disagrees with in any case). Justice Department lawyers say there is no time limit for action following negotiation.

In response to a follow-up question, Murphy said that if tariffs or quotas were imposed under this investigation, “there almost certainly would be litigation, and that litigation would have a high likelihood of success.”