BRUSSELS — Most thumbs were up. Some smiles were uneasy. And, in the middle of it all, the EU’s top trade official, Sabine Weyand, wore the kind of look that told the whole story: The bloc had gotten itself into a tricky spot.
The photo, taken as the European Union and the United States sealed a fragile tariff truce at President Donald Trump’s Scottish golf resort on July 27, captured the discomfort on the European side over an agreement that was merely “the best it could get.”
The two sides have finally firmed up Trump’s handshake deal with European Commission President Ursula von der Leyen into a joint statement that sets a 15 percent baseline U.S. tariff; promises a reduction in tariffs on European cars; caps levies on pharmaceuticals and semiconductors; and fully exempts EU exports of aircraft.
Throughout, Europe has been engaged in a delicate dance with Trump — seeking to hold him to his trade promises while its leaders lobby him to commit to security guarantees for Ukraine against Russian aggression.
“We’re still hostage to American military and strategic protection with a horribly neuralgic point, which is Ukraine,” said Pascal Lamy, a former EU trade commissioner.
“And if we laid into Trump, which we have the economic capacity to do, he would have been able to say: ‘Well, if Europeans are enemies, now I don’t see why I should continue to help Ukraine.’ Nobody wants to take responsibility for that.”
A less pressing, yet more awkward, task will be for Brussels to show the world it didn’t break the very rules of international trade that it helped to craft. After all, it has lectured Beijing, Washington and New Delhi for years on the importance of the World Trade Organization as an umpire of rules-based commerce.
“We have completely sat on the rules that we helped to create, together with the Americans, and we will be accused of continuing to undermine them in the future if things continue as they are,” said Lamy, who after his stint in Brussels went on to helm the Geneva-based WTO between 2005 and 2013.
Von der Leyen’s admission at Trump’s Turnberry golf club that the EU had a “surplus” with the United States that the deal would help “rebalance” was the last nudge the Trump administration needed to declare victory and bury a system it had long seen as obsolete.
“By using a mix of tariffs and deals for foreign market access and investment, the United States has laid the foundation for a new global trading order,” Trump’s top trade negotiator Jamieson Greer wrote in a newspaper op-ed days after the agreement.
“[T]he Turnberry system is by no means complete, but its construction is well underway,” he added.
Credibility crunch
The transatlantic trade accord, say leading trade authorities, risks undermining the very principles that Brussels has long championed at the WTO in a world increasingly shaped by no-holds-barred geopolitical confrontation.
“It is going to be very difficult for the EU to say, ‘We are defending the multilateral trading system,’ because they are one of many members that decided to negotiate a bilateral deal with the United States,” said Marco Molina, a trade lawyer and a former senior diplomat who led talks on reforming the WTO’s dispute settlement body until 2024.
The core problem of the deal is that it goes against the basic principles of the multilateral trading system: reciprocity and nondiscrimination.
For one, the two partners need to give each other roughly equivalent concessions — which the framework agreement currently hardly does. Nondiscrimination, set in the WTO’s most-favored nation rule, requires that any benefit granted to one trading partner needs to be immediately extended to all members — unless their agreement covers “substantially all trade.”
So while the EU has agreed to eliminate all tariffs on U.S. industrial goods and on cars, it has to do it under a full-blown trade accord.
The Commission insists the agreement will eventually meet that bar.
Because most tariffs are set to be phased out over time, Brussels argues, the deal will ultimately respect the established rules of global trade.
A senior Commission official told reporters on Thursday that the opening passage of the joint statement spelled out a “commitment for both sides to make an effort of progressive liberalization.”
They stressed it was “ongoing work that will also help us to meet the standards of the World Trade Organization rules around these issues.”
On the record, the Commission’s commitment is unequivocal.
“The European Union is and will remain a champion and supporter of WTO and rules-based trade — this will not change,” said Olof Gill, the Commission’s spokesperson for trade.
Yet even former Commission officials aren’t buying it.
“The EU’s credibility as a linchpin of the WTO rules-based system would be seriously compromised if it decides to implement tariff reductions on a preferential basis,” said Ignacio García Bercero, who was the Commission’s point person for the transatlantic relationship and was responsible for its WTO policy until 2024.
“There is zero credibility behind the argument that the EU-U.S. ‘deal’ is a step toward a WTO compatible [free-trade agreement],” added García Bercero, who is now a nonresident fellow at Brussels think tank Bruegel.
Outbullying the bully
So what do you do when the biggest kid on the playground stops playing by the rules?
For the EU, the response is increasingly: You don’t stand alone — you build a gang.
At first, Brussels resisted the idea of coordinating with other countries hit by Trump’s tariffs, such as Canada or Mexico. But it eventually changed course.
“The main criticism that can be made against the Commission is that it did not seriously try to build an international anti-Trump coalition,” former WTO chief Lamy said.
That’s something that Brussels tried to fix in late June, when at a leaders’ summit, von der Leyen floated the idea of a new club in which the EU’s 27 countries would join forces with the members of the Pacific-focused Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, bloc, which counts the U.K., Canada, Japan, Mexico and Australia among its members.
This was met with enthusiasm from the leader of the bloc’s biggest economy, German Chancellor Friedrich Merz. “If the WTO is as dysfunctional as it has been for years and apparently remains so, then we, who continue to consider free trade important, must come up with something else,” he told reporters.
Talks between EU and CPTPP negotiators are now expected later this year, with the goal of coordinating efforts to defend rules-based trade in the face of Trump’s tariff offensive, a top New Zealand finance official told POLITICO.
“The only way the EU can rebuild trust in the system is by coordinating with other members, beyond the U.S., to ensure WTO rules are respected,” said Molina, who now heads up his own law firm, Molina & Associates.
“That will require leadership and teamwork — and the hope that Washington eventually realizes this trade war hurts American interests and consumers.”
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