During an informal dinner on Wednesday 16 May, ahead of the EU-Western Balkans summit in Sofia, the European leaders defined a strategy based on four elements to put an end to the trade tension with the USA. The strategy is subject to the strict condition that the European Union be permanently exempt from the US taxes of 25% on imports of steel and of 10% on imports of aluminium.
"We want an unlimited exemption from the proposed tariff measures. If Europe obtains an unlimited exemption from the proposed tariff measures, we are ready to engage in talks with our transatlantic partner, focusing on four specific points", European Commission President Jean-Claude Juncker summed up on Thursday 17 May.
Firstly, the EU is open to discussions aiming at a reciprocal tariff reduction on certain industrial products, but not on agricultural products, and the opening of public procurement.
These talks would focus in particular on vehicles, a strategic sector both for Germany and Italy. The EU taxes on US automobiles stand at 10%, whilst the USA imposes duties of 25% on European pick-ups and lorries.
In order to conduct these negotiations on behalf of the EU, the European Commission would need a mandate from the member states. Germany and Italy are very much in favour of this, but the Europeans do not want to relaunch the TTIP negotiations, which have been at a standstill since the end of 2016.
Secondly, the EU proposes voluntary cooperation on regulation, which is demanded by industry on both sides of the Atlantic. This work on voluntary cooperation between the regulators of the two parties would be done on an ad hoc basis, outside the framework of the trade negotiations.
Transatlantic regulatory convergence, especially sanitary and phytosanitary, was a key element of the TTIP negotiations.
Thirdly, the EU proposes carrying out joint work with a view to reforming the WTO in order to ensure fairer rules and to fund mutually acceptable solutions to lift the USA's current blockage of the appointments of new judges within the WTO's Appellate Body.
In addition, the EU proposes to deepen the transatlantic energy relationship, especially in the area of liquefied natural gas (LNG), a sector that has become strategic for the USA as it seeks to compete with Russia, the EU's main supplier, on the European market.
"These talks will be based on the principles of reciprocity and WTO compatibility and with the objective of avoiding a trade war. We will not negotiate with the Sword of Damocles hanging over our heads", Juncker insisted.
"Things can be improved. We can do this in a framework that is calmed. But the precondition for any discussions is the unconditional lifting of the US tariffs", France's President Emmanuel Macron stated.
Without this, the EU will implement its package of counter measures to the possible imposition of the US taxes. These counter measures are compatible with WTO rules and provide especially for customs duties on US exports up to €2.8 billion (see EUROPE 11983), the European leaders again warned. (Original version in French by Emmanuel Hagry)