EU warns UK not to seek unilateral exemptions from Trump’s tariffs

Britain's Prime Minister Theresa May (L) and US President Donald Trump (R) speak during a working dinner meeting at the NATO summit in Brussels, Belgium, 25 May 2017. [Thierry Charlier/ EPA]

The European Commission stressed on Friday (9 March) that Europeans will act “as a bloc” in the face of US steel and aluminium tariffs, after the UK announced that it would negotiate directly with Washington to find a way out for itself.

The Europeans were perplexed as to why they were not part of the exemptions offered by US President Donald Trump to a few allies.

Commission Vice-President Jyrki Katainen admitted to reporters on Friday that they did not know what criteria were used to be considered an ally by the unpredictable US president, given that European countries and the US are the bedrock of NATO.

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US President Donald Trump slapped steep trade tariffs on foreign steel and aluminium yesterday (8 March), drawing sharp protests from allies at home and abroad as the contentious move raised the spectre of a global trade war.

But he stressed that if there is a “threat” against the European steel, the 28 member states would act as a “bloc”.

“We don’t want to see divisions between member states”, said Katainen, who oversees investment and jobs policies.

His comments came after UK Trade Secretary Liam Fox announced that he would travel to Washingon next week, where he will try to convince the US administration to be excluded from the punitive measures.

“We will be looking to see how we can maximise the UK’s case for exemption under these particular circumstances,” Fox said.

UK’s ‘illegal’ response

The Commission did not want to confirm whether they would take London to the EU court if it seeks a bilateral arrangement with Washington. But EU officials warned that the UK manoeuvring would be “illegal”.

The potential new fracture between the island and the continent came amid the growing tensions surrounding the EU-UK divorce process. The Irish border has become a toxic bone of contention between the two sides, while the transition period remains up in the air.

Brussels and London also disagree on the contours of the future relationship.

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By offering bilateral exemptions, the US president upholds his stance against trade relations with blocs. He already offered a bilateral trade agreement to German Chancellor Angela Merkel last March.

Officials said that Trump had asked Merkel “ten times” whether he could sign a bilateral deal with Berlin, as she had to explain the basics of the EU trade policy.

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All for one, one for all

The rift the US president may create between the UK and the rest of the member states could further complicate the Brexit talks at a very sensitive moment and jeopardise the political stability of the Union as a whole.

Is Trump using access to the attractive US market to divide the Europeans, as Russian President Vladimir Putin does with gas? “He would love to do that,” André Sapir, a senior fellow at Bruegel, told EURACTIV.

Given how small the benefit would be for the UK (less than €1 billion), and the high political price that London would pay in the Brexit talks, Sapir did not believe that London would listen to the US’s siren call.

Instead, he said that Prime Minister Theresa May could use the US-UK´s “special relationship” to work for an exemption for the EU as a whole. That diplomatic victory could earn London brownie points in the context of the Brexit negotiations.

“That would make much more sense,” Sapir said.

Not trade negotiation

Commissioner for Trade Cecilia Malmström will discuss the tariffs with US Trade representative Robert Lighthizer on Saturday.

During the meeting, which had been scheduled previously, the EU would look at options to be excluded from the tariffs.

But the Europeans are not willing to offer concessions to Trump to win an exemption on a tariff they consider unfair.

“I hope that nobody will expect that we will give some concessions on trade issues,” Katainen said.

“This is not a trade negotiation,” he stressed.

The US Administration complained in the past of the tariffs US cars have to pay to access the European market. But EU officials recalled that it is balanced, given the better deal they get with trucks.

During the signatory ceremony on Thursday, Trump linked a potential pardon to better security cooperation. But Katainen argued that “NATO-related issues and trade are completely separated”.

“We are responsible for trade”, he added.

Act soon

EU leaders will discuss the US tariffs during the next European summit on 22-23 March. The summit will coincide with the entry into force of the restrictions (15 days after they were signed by Trump).

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Warning of “a serious trade dispute” between Washington and the rest of the world, Commission President Donald Tusk said yesterday (7 March) the leaders of the bloc would hold emergency talks on the issue on the occasion of their 22-23 March summit.

After they take effect, Europe will have 90 days to notify the World Trade Organisation whether it wants to activate “rebalancing measures” and the list of products to be punished with duties of 25%, even if the implementation comes at a later stage.

An EU official argued that the bloc could activate its countermeasures, which include popular US products like jeans or bourbon, before the WTO rules on the validity of the US case.

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The Commission considers that Trump´s move is “pure protectionist” and has nothing to do with “national security” as he argued. Therefore, the Europeans have the right to “re-balance”.

“It is fully compatible with WTO rules”, the official added.

The Commission is increasingly worried about Trump’s charges against free trade and the global system.

“We must be cautious of what is going on in the world of trade,” Katainen warned.

He said that countries have to choose whether they want a rule-based trade system and world order or “the rule of the strong”.

The EU “cannot accept being bullied,” an official told EURACTIV.

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