Commissioner Malmström: My successor will have a lot of work to do

"There is a great deal of unpredictability. This is something we find difficult to understand because trade wars have never been good for anyone. And in this very conflict-ridden world, where there is already a lot of uncertainty, it would be much better to work with the Americans. We already share many of their criticisms of China," outgoing EU trade Commissioner Cecilia Malmström said. [European Commission]

“My successor will have a lot of work to do,” the current EU trade Commissioner Cecilia Malmström told Efe during her visit to Madrid on Tuesday (10 September). She pointed to relations with the US and China as being among the “very long list” of challenges facing her successor. EURACTIV’s partner Euroefe reports.

Malmström’s successor is being left with major issues to solve. These include the uncertainty surrounding Brexit (to which “no one knows the end”), multilateralism as a whole and the future of the World Trade Organisation (WTO).

This inventory of challenges was laid out by the outgoing trade Commissioner in an interview with Efe on Tuesday. She was attending a “citizens’ dialogue” and the Forum of the New Economy, among other things.

“When it comes to trade, we live in difficult times. With protectionism, the lack of alignment of international institutions, the distressing situation of the World Trade Organisation, or the desire of the American administration to introduce customs duties everywhere and against everyone. The challenge is daunting,” she said.

For Malmström, it is “very difficult to understand” the strategy of US President Donald Trump. That is because he governs mostly with tweets related to trade and monetary policy and often threatens to impose or imposes customs duties. Trump has also been leading a trade war against China since March 2018.

“There is a great deal of unpredictability. This is something we find difficult to understand because trade wars have never been good for anyone. And in this very conflict-ridden world, where there is already a lot of uncertainty, it would be much better to work with the Americans. We already share many of their criticisms of China,” the Swedish Commissioner said.

According to the WTO’s latest predictions, the customs duty dispute between the US and China, the world’s two main economies, as well as doubts about Brexit, are the main factors behind the slowdown in international trade, which is set to grow at an annual rate of 2.6% in 2019 compared to 3% in 2018.

Trump’s is also imposing the aggressive trade strategy he has with China on the European Union. First, he introduced customs duties on European steel and aluminium, which he eased slightly in July 2018 when the EU increased its imports of soya and American liquid gas. His ‘protectionist’ strategy has recently regained momentum with new threats against European vehicles and French wine.

EU to retaliate if Trump slaps tariffs on French wine

The EU will react with new tariffs against US products if Donald Trump decides to impose duties on French wine, European Council President Donald Tusk said hours before the opening of what is likely to be a heated G7 summit on Saturday (24 August).

“It’s ridiculous, he never stops. We too, can impose many customs duties on them. We did so, to our great regret, in response to customs duties on steel and aluminium and in compliance with WTO rules,” said Malmström.

“We don’t like it because everyone suffers, and although we disagree with the Americans on some issues, we are nevertheless friends. Transatlantic relations are very old. Working together would be much better, but we are in a difficult situation, and we are harming European and American companies,” the Commissioner added.

Trade war starts to dent European growth

The European Commission cut expected EU growth for this year by 0.2% compared to its forecast less than three months ago, as output was weaker than expected during the first semester and external risks, especially the trade war, are on the rise.

A “worrying” attack on the CAP

This is particularly the case for the Spanish table olive sector, which has been strongly affected by the increase in US customs duties, for which a complaint has been filed to the WTO. According to the Swedish Commissioner, this hides a “worrying” offensive by Washington against the European Common Agricultural Policy (CAP).

The fate of the complaint is as uncertain as that of the WTO itself, which risks seeing its appellate body paralysed at the end of the year, on the eve of its 25th anniversary. This is due to the US systematically blocking new appointments since 2017. Although there are normally seven judges, three currently remain, two of whom will complete their terms in December.

Soybeans bring appeasement to EU-US trade war

The EU’s pledge to import more soybeans from US farmers was the ‘dealmaker’ in the agreement between European Commission President Jean-Claude Juncker and US President Donald Trump to stop the dispute and open trade talks, EU sources told EURACTIV.

“Problems are accumulating, and without an appellate body, it will be challenging to solve them. With 164 members, the WTO will not disappear, as most want the organisation to survive. But the situation remains very worrying,” said Malmström.

According to the Commissioner, the only way to deal with this high level of uncertainty is by “opening more markets” to generate trade, wealth and employment.

This is the task she has undertaken over the past five years as the trade Commissioner in Jean-Claude Juncker’s Commission. During that time, she succeeded in reaching crucial free trade agreements, including those with Canada, Japan and Mercosur states. When it comes to the EU-Mercosur deal, in particular, she said that “if there is one winner in Europe, it is Spain”.

Fortunately, European countries have been acting “in concert” lately, showing “relative harmony” in terms of trade, the Commissioner noted. They also collaborate with other states such as Mexico, Argentina, Canada, Japan, South Korea and New Zealand, sharing “the idea that multilateralism is positive, and that it is worth preserving, strengthening and modernising”.

As a closing remark, Malmström stated that countries “look to Europe, and we have a responsibility to be there”.

[Edited by Zoran Radosavljevic]

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