By Philip Blenkinsop
BRUSSELS (Reuters) – As one of the European Union’s top negotiators, Sabine Weyand has battled Britain over Brexit and driven tough trade talks around the world.
But as Europe seeks a deal to avert further U.S. tariffs, the EU’s most senior civil servant for trade acknowledges one fundamental obstacle: Donald Trump’s endgame remains a mystery.
“And that, of course, is an issue,” Weyand, the German national whose European Commission department coordinates trade policy for the EU’s 27 countries, told an event this month of the struggle to work out what might placate the U.S. president.
When Trump was re-elected last November, European officials had hoped they could talk him down from a trade war – as they did in his first term with largely symbolic concessions that kept the 1.6 trillion euros ($1.75 trillion) annual transatlantic trade in goods and services generally intact.
But two months into his second term, the U.S. administration is showing little appetite to deal with officials in the Commission, despite its mandate on trade matters.
In the past week, Washington has imposed tariffs on steel and aluminium, the EU has set out plans for retaliation, and Trump has threatened 200% tariffs on EU wine and spirits. The U.S. president has promised further tariffs in April.
Trump has hosted several EU leaders already but not Commission President Ursula von der Leyen, underlining how he prefers dealing with other country heads, and not the EU – a body he said last month was invented to “screw” the United States.
“It is clear that the Trump administration would rather not engage with the EU at all,” said Aslak Berg, research fellow at the Centre for European Reform think-tank.
Weyand said the EU had made no detailed offer to Washington because the U.S. justification for the threatened tariffs kept changing, making their grievances hard to address.
“Is the motive for the tariffs protection of domestic production? Is it to get countries to change certain policies? Is it to attract investment? Is it to replace income taxes by tariffs?” she said, speaking at the event.
Unable to completely bypass the Commission on trade, U.S. officials did meet Maros Sefcovic, the European Commissioner for Trade and Economic Security, in Washington last month. He is the only commissioner so far to have had access.
Aware of Trump’s complaints about the U.S. merchandise trade deficit with the EU, he suggested the bloc could buy more U.S. liquefied natural gas (LNG) and discuss lowering car imports when he met U.S. counterparts a month ago.
However, Sefkovic said last week that Washington did not seem to be seeking a deal. After a separate call with U.S. Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer, he declared there was “a lot of work ahead”. Neither Lutnick nor Greer commented on the conversations with Sefcovic.
WHO SHOULD I SPEAK TO?
Trump officials insist they are ready to talk with the EU. But their grievances extend beyond the trade matters for which the Commission has a mandate, also targeting Europe’s value-added tax regimes and taxes on U.S. technology companies.
U.S. objections to VAT, which applies in 170-plus countries, are hard to address. Brussels says it is similar to U.S. sales tax and not a tariff. Moreover, taxes are set by individual member states and so cannot be negotiated by the Commission.
“The stated demands are far-reaching and obviously unrealistic as they touch at the heart of European sovereignty and regulatory autonomy,” said Berg. “The chances of any successful negotiation at this point are very slim.”
Senior Trump advisers also do not expect negotiations to produce much, pointing to discord among EU members as a lag.
Brussels, meanwhile, is left wondering who to speak to on U.S. trade policy – whether Lutnick, Greer or Trump’s senior trade adviser Peter Navarro. EU officials say it is hard to find U.S. counterparts lower down the chain to engage with.
At the U.S. Commerce and Treasury departments, political appointees have also run into hiring delays linked to vetting, which has created some negotiating bottlenecks, sources familiar with the process said.
U.S. Secretary of State Marco Rubio said on Sunday the Trump administration was open to negotiations on “new trading arrangements” but only when tariffs are in place. He did not give details of how such arrangements would look.
Ryan Majerus, a former senior Commerce Department official, suggested Europe could still limit the damage, particularly if it bought more U.S. farm products or cut taxes on U.S. tech firms.
“I do think there’s potential here. I think there’s the capacity, the opportunity for progress… maybe on specific parts of this, rather than the whole thing,” he said.
($1 = 0.9168 euros)
(Reporting by Philip Blenkinsop; additional reporting by Andrea Shalal and David Lawder in Washington; editing by Mark John and Rachna Uppal)
Comments