EU to retaliate if Trump slaps tariffs on French wine

French President Emmanuel Macron, flanked by President of the Nouvelle-Aquitaine region Alain Rousset (L) samples local produce and wine, as he tours the exhibition hall above the international press center on the opening day of the G7 summit, in Anglet, France, 24 August 2019. The G7 Summit runs from 24 to 26 August in Biarritz. [EPA-EFE/IAN LANGSDON / POOL]

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).

The summit of the selected group of developed nations, to be held over the weekend in Biarritz (France), is one the most difficult gatherings in the history of the group. 

“This is another G7 summit which will be a difficult test of unity and solidarity of the free world and its leaders,” Tusk admitted.

“There is still no certainty whether the group will be able to find common solutions,” he told reporters. “This may be the last moment to restore our political community.”

Since Trump’s arrival to the White House, the consensus on major global issues is close to impossible in any international gathering, as he already showed at the G7 summit in Canada last year.

G7 leaders to rethink capitalism as risk of recession looms

The leaders of the G7 nations will not sign a final comuniqué when they gather in Biarritz (France) this weekend, and will instead discuss how to rethink capitalism and multilateralism amid the persistent inequalities and the risk of a new recession. 

Trade, climate and foreign issues, in particular how to contain the risk of nuclearisation in Iran, were the bone of contention between the group of likeminded countries and Trump.

The latest source of tension was the digital tax, to be discussed by the leaders on Sunday.

New tariffs

Before departing for Biarritz, Trump had warned that he would pressure the host, French President Emmanuel Macron, to withdraw the digital tax recently approved by Paris. Otherwise, he would impose fresh tariffs on French wine and other national goods.

But Tusk warned that should the US punish French products, the EU “will respond in kind”.

The EU “will protect French wine with genuine determination” Tusk said, “France can count on our loyalty”.

The European Council chief explained that the last thing the EU wants is new tariffs, but the bloc will be ready to react.

The new escalation between Brussels and Washington comes as the trade dispute between the two sides is likely to worsen in the coming weeks. 

EU braces for impact in final chapter of Airbus-Boeing dispute

Despite the European efforts to find a negotiated solution, Washington is expected to introduce fresh tariffs against European products in the context of the long-standing Airbus-Boeing dispute, an EU official told EURACTIV.com

The EU and the US are expected to slap tariffs on each other in the context of the subsidies given to their plane makers, Airbus and Boeing. 

Trump is also leaning towards punishing European cars.

The global economy and trade relations will be part of the leaders’ menu tomorrow morning, when it will be decided whether there is a text of conclusions. This will depend on how the discussion goes over dinner on Saturday, with the focus mostly on foreign issues.

An EU official said the US and Japan were pushing for a final communiqué. Washington is particularly interested in having conclusions on economic matters, although the Europeans ignored the US priorities as the White House negotiators did not attend a preparatory dinner on Friday.

The start of the meeting came on the heels of the fresh tariffs Trump announced against China, which significantly escalated the global trade tensions just when the risk of a recession is increasing.

Tusk said he could agree that China is “the biggest challenge for all of us”. But he told reporters that the solution is cooperation, not confrontation. 

“If Trump uses tariffs as a political instrument, it means that confrontation can be very risky for the whole wold, including the EU”.

Amazon wildfires

Trade is not the only issue that will heat up the weekend.

The wildfires raging the Amazon will also come up during the three-day-long summit, one of the longest G7 gatherings.

“The burning Amazon rainforest has become another depressing sign of our times,” Tusk lamented.

France and Ireland threaten to vote against EU-Mercosur deal 

Irish Prime Minister Leo Varadkar has threatened to vote against a trade deal between the EU and South American trade bloc Mercosur unless Brazil, where wildfires continue to devastate the Amazon rainforest, takes its environmental obligations more seriously.

Macron and Irish Prime Minister Leo Varadkar warned this week that their countries would not ratify the Mercosur trade deal unless Brazilian President Jair Bolsonaro takes more decisive action to control the crisis.

Tusk said the “EU stands by the Mercosur agreement”. But he added it was “hard to imagine a harmonious process of ratification by the European countries as long as the Brazilian government allows for the destruction of the green lungs of Planet Earth.”

“I can understand the spontaneous and very natural reaction of the French president”, Tusk said, and added Macron “is not alone here” as that it is “quite a common opinion among citizens”.

Tusk however noted that Bolsonaro’s opinion about the wildfires is changing, and now he seems ready to cooperate.

The EU has offered financial help to fight the wildfires.

Russia in the G7?

Tusk also rejected Trump’s suggestion to include Russia again in the G7, after it was expelled in 2014 following the Crimea invasion.

Trump unsettles G7 with support for Russia return

President Donald Trump on Tuesday (20 August) gave a foretaste of his convention-wrecking diplomacy at next weekend’s G7 by calling for Russia – expelled from the group of democracies – to be readmitted.

Tusk said that not only the reasons why Russia was excluded were still valid, but there were new ones, including Russian provocations on the Azov Sea.

In addition, he said Russia was invited to the G7 two decades ago because it was believed that Moscow would pursue the path of liberal democracy, rule of law, and human rights. 

“Is there anyone among us, who can say with full conviction, not out of business calculation, that Russia is on that path?” he asked.

Brexit 

Tusk is representing the EU institutions in Biarritz, as European Commission President Jean-Claude Juncker is absent due to the recent surgery he underwent.

As part of his bilateral agenda, Tusk will meet tomorrow at noon with British Prime Minister Boris Johnson in order to find a solution to avoid a disorderly withdrawal of the UK from the EU.

Macron gives Johnson one month to produce Irish backstop alternatives

French President Emmanuel Macron put the ball squarely in Boris Johnson’s court on Thursday (22 August), urging the UK Prime Minister to present detailed proposals to re-write the Irish backstop and avoid the UK crashing out of the bloc without a deal after 31 October.

He said the EU has always been “open to cooperation” with Johnson’s predecessors.

“The one thing I will not cooperate on is no deal. And I still hope that PM Johnson will not like to go down in history as Mr No Deal.”

Tusk said the bloc would listen to ideas that are “operational, realistic, and acceptable to all member states including Ireland” if Johnson finds an alternative formula to the backstop to avoid the border on the island of Ireland.

[Edited by Zoran Radosavljevic]

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