EU Trade Commissioner Cecilia Malmström heads to Washington on Tuesday (8 January) for a new round of trade talks with US officials, as potential tariffs on cars loom large over the heads of European industry.
Malmström will meet US Trade Representative Robert Lighthizer within the framework of the executive working group both parties established after presidents Jean-Claude Juncker and Donald Trump met in July.
The meeting is timely as the US Department for Trade is expected to publish next month its report on whether car imports are to be considered a threat to national security, as Trump suggested, which might trigger restrictive measures targeting the European car industry.
Trade tensions erupted between the EU and the US when the Trump administration imposed extra tariffs on steel and aluminium based on a similar report.
Brussels responded then by launching a settlement case at the World Trade Organisation and putting in place retaliatory measures on US products worth €2.8 billion.
During Juncker and Trump meeting in July, the presidents agreed to work towards opening both markets and harmonizing regulations to ease trade and assess the tariffs dispute through a close dialogue.
According to the statement, parties wouldn’t do anything “against the nature of the agreement”, namely, impose further tariffs, as long as the conversations are still ongoing.
Therefore, Brussels remains optimistic about a potential car dispute, although it recognises it is still in the US government’s hands.
However, the clock is ticking and little progress has been made in the past six months, in particular, on the harmonisation of regulations, which is one of the main US priorities.
This lack of advancement has been threatening for the negotiations to collapse.
US soybeans imports on the rise
One of the main agreements as a result of the presidents’ meeting in Washington was for the EU to increase the imports of soybeans. Since then, the Commission has been communicating regularly on the trade figures.
According to the EU executive, imports of US soybeans by the EU increased by 112% from July to December 2018, compared to the same period in the previous year.
Therefore, the US remains Europe’s main supplier.
Nevertheless, this is not necessarily due to a replacement of the importers on the detriment of other partners -namely Brazil or Canada- but simply to an increase of the soybeans demand in Europe.
The Commission launched in December the process to eventually authorise the use of US soybeans for biofuels in Europe, which will further increase the imports.
WTO reform
The EU and the US committed themselves to work together to fight unfair global trade practices, including by reforming the WTO.
Brussels tabled a proposal in November last year which main aim was to address the US concerns over the functioning of the organisation. However, this was not enough for the Trump administration.
Brussels considered that even in spite of the blockage the Trump administration impossed on the new appointments to the Appellate Body of the organisation, the US – who threatened to withdraw from the WTO – is willing to negotiate.
The reform of the WTO will be in Commissioner Malmström’s agenda during her trip to Washington.
Furthermore, representatives of the US, the EU and Japan will hold a meeting on Wednesday (9 January) to assess other unlawful commercial practices affecting their markets, with their eyes put in China.
US officials are travelling to Beijing this week as well to meet their Chinese counterparts, as the truce they called on their trade war in December will soon come to an end.
Safeguards to become permanent
Following the US decision to impose extra tariffs on EU steel products, Brussels launched an investigation to find out how the decision would affect the European market and announced provisional safeguards measures.
The Commission has concluded that the restrictive measures the Trump administration imposed disrupted the EU’s market.
Therefore, Brussels has notified the WTO its intention to make those measures permanent for a period of three years.
The safeguards will target 26 steel product categories and will take the form of a tariff rate quota of 25%, to be only imposed once imports exceed the average of imports.
All WTO members that feel concerned might hold consultations with the Commission, before a final decision is taken. The measures are expected to enter into force early in February.
