The European Union is coming to terms with the fact that its agreement with the United States won’t turn into a comprehensive, reciprocal trade deal that respects global trade rules.
“This will not amount to a [free-trade agreement]. And I think if we were to go to the U.S. and say ‘could you agree with us that the objective is to transform this into a fully WTO-compatible FTA?’ I think the answer would be a resounding no,” the European Commission’s director-general for trade, Sabine Weyand, said on Wednesday.
“We have to accept that, at this stage, the agreement does not fulfill the conditions of article XXIV,” she told trade lawmakers, referring to the World Trade Organization rule that allows countries to remove tariffs on one another without granting the same benefits to others as long as they strike a full-blown trade deal.
The agreement, brokered in July by European Commission President Ursula von der Leyen and U.S. President Donald Trump in Scotland, has come under fire in the EU for undermining rules-based trade and casting doubt on the bloc’s commitment to the multilateral system it has continued to champion even as Washington retreats.
In particular, critics point to the fact that the pact goes against reciprocity and nondiscrimination — two principles at the heart of the rules-based system. While the EU has agreed to eliminate all tariffs on U.S. industrial goods and on cars, it should do so under a full-blown trade accord, one that covers “substantially all trade,” to be WTO-compliant.
“I don’t want to take the easy road and say, ‘yes, we are going to transform this into an FTA’ because I don’t think that that would be credible. So we have to work with what we got here,” Weyand said, adding that this is why the EU originally proposed to remove tariffs on all industrial goods in a reciprocal way. That bid was turned down by Washington.
The EU’s top trade official also stressed that Washington’s decision to expand its 50 percent tariffs on steel and aluminum to a wider range of products, such as baby gear and mobile cranes, “goes against the spirit” of the deal struck between Trump and von der Leyen.
“It hollows out what we have agreed on. So that’s why we are seeking discussions there.”
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