While the Trump administration this week renewed threats to impose tariffs on European autos and auto parts, European Union Commission President Ursula von der Leyen took an opposite track, expressing optimism about an agreement that could be struck “in a few weeks.”
“We don’t think it’s a good idea to have trade disputes over months but that we sit down together, we negotiate and find solutions, we exchange some numbers and views on fairness,” she told reporters on Wednesday in Davos, Switzerland, at the World Economic Forum, according to Bloomberg. “We’re expecting in a few weeks to have an agreement that we can sign together.”
She added that the deal would involve a “new approach” than the one laid out in a July 2018 joint statement issued by President Trump and von der Leyen’s predecessor, Jean-Claude Juncker, which excluded certain political sensitivities like agriculture for the EU and government procurement for the U.S.
Von der Leyen’s optimism contrasted comments made by President Trump and U.S. Treasury Secretary Steven Mnuchin at Davos, where both renewed the threat of Section 232 tariffs on European autos and auto parts. Trump, however, said progress toward a U.S.-EU deal should happen quickly, possibly even before the U.S. elections in November.
“I have a date in my mind, and it’s a fairly quick date. And if we’re unable to make a deal, then we’ll do even better,” he said at a press conference in Davos, once again accusing the EU of mistreating the U.S. “They have trade barriers where you can’t trade. They have tariffs all over the place. They make it impossible. They are, frankly, more difficult to do business with than China.”
Asked if he envisioned a deal coming before or after the election, the president said, “I think we’ll have a deal before.” Trump also insisted he had wanted to finish a deal with China — the phase-one agreement was concluded last month — before turning his attention to the EU.
Mnuchin also raised the specter of auto tariffs as retaliation for digital services tax policies, which are being contemplated or have already been implemented by some European countries. The U.S. and France this week struck a truce over a French tax where the French government will postpone collecting money until December, when the Organization for Economic Cooperation and Development is aiming to finalize negotiations on a digital tax framework.
“If people want to just arbitrarily put taxes on our digital companies, we will consider arbitrarily putting taxes on car companies,” Mnuchin said on a panel in Davos. “We think the digital tax is discriminatory in nature.”
Neither autos nor auto parts are included in the list released by the Office of the U.S. Trade Representative of possible Section 301 tariff targets in retaliation for France’s tax.
In Washington on Wednesday, the German ambassador to the U.S., Emily Haber, warned that the EU would respond in kind if “targeted” with additional tariffs. The bloc imposed retaliatory tariffs following the U.S. imposition of Section 232 tariffs on steel and aluminum. Both sides’ tariffs remain in place.
“Should we be targeted with additional tariffs, we’ll react as we did in the past. And we’ll react in the same dimension and in the same vein,” she said in remarks at the Center for Strategic and International Studies. “And this will define the relationship.”
Haber and French Ambassador to the U.S. Philippe Etienne argued at CSIS that a strong EU was in the best interest of the United States. Haber pointed to the EU single market as one major way in which U.S. benefits from a successful Europe. It would be so much more difficult and costly for American businesses and exporters to deal with 28 different rules and regulatory systems, she argued. A stronger EU is not “pitted against American interests,” she added, but is “burden-sharing” with the U.S. in a changing world.
Etienne argued in favor of negotiated solutions — which would avoid additional tariffs — for both the digital services tax issue and for the 15-year dispute over subsidies by the U.S. and EU member states to Boeing and Airbus, respectively. In the case of DSTs, he said a framework from the OECD would be the most satisfactory solution if it led to a multilateral agreement. The U.S. and EU, he added, should also work bilaterally to resolve the Boeing-Airbus dispute, which has been working its way through the World Trade Organization for years, to avoid tariffs, which Etienne said would only harm both economies.
The ambassadors and von der Leyen, in her keynote speech in Davos, highlighted digitization as a pressing issue. Von der Leyen emphasized Europe’s dedication to protecting personal data, pointing to its major digital legislation, the General Data Protection Regulation.
“For us, the protection of a person’s digital identity is the overriding priority,” she said, according to a copy of her remarks. “Be it in the physical world or the digital world — these citizens’ rights have to be protected.”
The EU’s data protection approach has been criticized by the U.S. as overly broad and restrictive of cross-border data flows. The two sides are expected to clash over their differing approaches to privacy and data protection in the WTO’s plurilateral talks on electronic commerce, which were announced in Davos last year. — Hannah Monicken (email@example.com)
Source: Inside Trade