Top EU Legislator on Trade Says US Not Planning to Change Bound Tariffs at WTO

The European Union's Committee on International Trade Chairman Bernd Lange, in a roundtable with trade reporters Feb. 27, said that he asked officials from the Office of the U.S. Trade Representative if there's any truth to rumors that the U.S. will either pull out of the government procurement agreement at the World Trade Organization, or that it will seek to raise its bound tariffs, a process that would begin at the WTO. “I got confirmation from all stakeholders this will not happen,” said Lange, who was in Washington to talk with officials from USTR, Congress, unions and think tanks. But, he added, “sometimes decisions in the United States are taken quite quick,” so he can't be sure that answer will be true next week.

Lange, who represents a constituency in Germany in the EU Parliament, said the talks with USTR and with congressional staffers did not devote much time to agriculture, because both sides know they are at a stand-off there. The U.S. wants agriculture on the table, and the EU does not.

Lange welcomed a Washington state bill that would rescind generous tax breaks for Boeing and other aviation companies with large payrolls in the state, and said that while the EU would like to settle the WTO dispute on subsidies for Airbus and Boeing with the U.S., “there are no negotiations at the moment.”

Lange said it might be the case that the U.S. has no interest in even starting settlement talks until it sees what a WTO arbitrator authorizes in terms of EU tariffs in the Boeing case. That could still be months away. “I think this makes no sense,” Lange said. Even though the EU accepts these tariffs as legal -- unlike tariffs on European steel and aluminum, and unlike the antidumping case against Spanish olives -- that doesn't mean they are painless, for either side.

“Of course, the Airbus tariffs have a lot of victims, small and medium-size businesses,” he said, including in his own constituency -- a small tool exporter that has been completely priced out of the U.S. market, and Jaegermeister. The U.S. is the liqueur's top export market.

Although Phil Hogan, the EU trade commissioner, has talked about being able to strike a mini-deal quickly, Lange seemed more skeptical. “We're not begging for that,” Lange said, referring to a mini-trade deal. “If there is no small understanding on apples, on shellfish, on lobsters, and then, so what?”

He said the U.S. has to send a signal that it recognizes it cannot throw its weight around with the EU, and each side has to give something to get something. “It has to be an understanding that has advantages for both sides,” even in a small announcement. He said the announcement that Section 232 would extend to some finished products, even though it applies to a small dollar amount of imports, “was not really positively received in the European Parliament.”

He said politicians there look at the money spent on port infrastructure so more American LNG can be imported, and an increased quota of hormone-free beef, and wonder when the U.S. is going to do something that helps European exports. “In the European Parliament, there is a feeling they made a lot of concessions,” he said.

There are some signs that the U.S. is turning its attention to the United Kingdom as a more fruitful target for bilateral negotiations, as the USTR is headed there this week. But Lange dismissed that, given that the U.K. cannot agree to anything until it knows the shape of Brexit, and given that the U.K. has to prioritize its trading relationship with the EU, given that more than half of its exports are destined for Western Europe.

“Some problems we had in TTIP negotiations” are going to be the same in U.S.-U.K. negotiations, Lange predicted. He was a Trans Atlantic Trade and Investment Partnership negotiator. “Famous chlorine chicken is now alive in London,” he said, suppressing a grin. European countries do not accept the hygiene standards of chicken slaughtered in the U.S., believing that the need for pathogen-killing washes means the process is not sanitary.