On Friday 22 February in Bucharest, the European Trade Ministers of the Member States decided to wait for the vote of the European Parliament to validate the trade mandates with the United States, while showing unity in the European strategy towards Washington.
Meeting in an informal Council, the Trade Ministers discussed two negotiating mandates, one on a trade agreement limited to non-agricultural market access and the other on conformity assessments (see EUROPE 12175).
According to figures published two days earlier by the Commission, by 2033, the outcome of these targeted negotiations could increase EU exports to the US by 8% and US exports to the EU by 9%, with gains of €27 billion for the EU and €26 billion for the US.
European unity
By issuing these mandate guidelines, the Commission is sticking to its “positive” agenda with the United States. In this way, it seeks to formalize the technical work accomplished within the framework of the Executive Working Group since the joint statement by Presidents Juncker and Trump in July 2018.
However, the final decision to enter into these negotiations with Washington rests solely with the Member States.
According to several European sources, they are generally in favour of the Commission's initiative (see EUROPE 12185). However, the Romanian Presidency of the Council and European ministers stressed that the mandates must be validated by all EU countries before moving forward. “My intention is not to rush something through [...] but to have a large consensus” among the Member States, the German Minister of Economy, Peter Altmaier, confirmed on Friday 22 February in Bucharest.
No green light yet
The draft mandates have therefore not yet been validated, as a handful of countries, including France and Italy, have not yet concluded their internal discussions, according to these same sources.
Even if these talks would not cover agriculture, services or any form of investment protection tribunal, some States fear that the spectre of the TTIP will be disruptive. However, Mrs Malmström pointed out on 22 February in Bucharest that these negotiations are “obsolete” and their relaunch is not envisaged under “any conditions”.
Nevertheless, civil society organisations are already mobilising against the future negotiations (see other news). Paris, Rome and Brussels would therefore like to be transparent and take the time to communicate on these limited mandate projects.
There are also problems with the inclusion of fishery (and forestry) products, in line with the classifications applied by the WTO to industrial products and which would ensure sufficient coverage to cover “most trade”, as set out in Article XXIV of the GATT.
Waiting for Parliament's vote
That is also why the Commission and the Member States are equally united in waiting for the green light from the European Parliament, whose plenary vote is expected on 10 or 11 March. While it is not legally required for beginning trade negotiations, it would nevertheless legitimize the draft mandates (see EUROPE 12197, 12196). The Presidency has not yet decided how the Council's approval would be formalised once it has been validated by the Chancelleries and MEPs.
Negotiations could then move very quickly; according to Mrs Malmström, they could be concluded before the end of the Commission's mandate in November 2019.
German automotive industry under tension
On the German side, the automotive industry is concerned about the measures for increasing tariffs on European cars that Washington could impose on the EU under section 232 of the Trade Expansion Act. These would primarily affect German exporters, who would lose billions of euros in the deal (see EUROPE 12195). President Trump received an investigative report on these imports on Sunday 17 February, which was not made public. Nevertheless, there is little doubt about its contents and the US President's strategy. On 20 February, he already spoke the press about the negotiations with the EU: “We are trying to reach an agreement. It is very difficult to reach an agreement with them [...] If we do not reach an agreement, we will do the tariffs”. Mr Trump has until May 17 to decide.
“It takes two to tango”
These words from Mrs Malmström in Bucharest remind us that the future of these negotiations remains extremely uncertain: while the EU may be able to validate its mandate proposals quickly, the gap between European and US ambitions seems rather difficult to narrow (see EUROPE 12171).
There is therefore a risk that discussions will become bogged down as soon as the boundaries of the negotiations are established, and that they will lead to a further escalation of trade tensions.
President Trump might then be tempted to apply a limited tariff increase to imports of finished vehicles, shielding imports of spare parts on which the American automotive industry depends from new duties. It would thus be inspired by the 25% tariffs imposed by the United States on imports of European pick-ups and SUVs over the past 50 years, which have apparently encouraged the development of local assembly sites for these products. (Original version in French by Hermine Donceel)