EU says it is ready to abolish vehicle tariffs
Apparent shift in strategy could violate global trade rules
The European Union’s top trade official said Thursday that the bloc would be willing to remove all tariffs on cars and other industrial products as part of a limited trade deal with the United States, an apparent shift that may please the Trump administration but could also violate global trade rules.
Cecilia Malmstrom, the European commissioner for trade, told members of the European Parliament that the bloc was willing to reduce “car tariffs to zero, all tariffs to zero, if the U.S. does the same.”
“It has to be reciprocal,” she said. “We would do it if they do it. That remains to be seen.”
The European Union had previously expressed a willingness to eliminate tariffs on cars, but only as part of a broad free-trade agreement.
Limiting the scope of a deal might increase the chances that ongoing talks between Brussels and the White House will be a success. But a less ambitious agreement might also run afoul of World Trade Organization rules, which allow bilateral pacts only if they cover the vast majority of trade between the two partners.
There is little anyone could do to block a deal between Europe and the United States, which form the world’s largest trading partnership.
Ignoring the rules would, however, erode the authority of the World Trade Organization, which is already under at- tack by the Trump administration.
It was not immediately clear whether Malmstrom’s proposal would conform to WTO rules.
In her remarks, she also accused the United States of undermining the trade body by blocking the appointment of judges to a panel that arbitrates disputes.
Europe has been suffering under the threat that the Trump administration would expand tariffs.
Expanding tarrifs on steel and aluminum to include cars would be a significant blow to the region, but in particular to Germany, the continent’s largest economy and a major automotive exporter.
In July, Jean-Claude Juncker, the president of the European Commission, the EU’s executive arm, struck a deal with U.S. President Donald Trump which called for talks on a broad deal, while postponing tariffs on cars. Europe and the United States also agreed to work on reform of the WTO.
Some analysts interpreted the agreement between Juncker and Trump as an attempt to reopen talks on a comprehensive free-trade deal.
But Malmstrom’s comments Thursday signalled that the European Commission was only willing to pursue a less ambitious pact to avoid further escalation of the trade war with the United States.
“We are not restarting TTIP,” she said, referring to the Trans- Atlantic Trade and Investment Partnership, the pact that foundered.
A deal is still far from certain. Malmstrom said agriculture would not be part of any agreement.
Some U.S. officials had wanted to include farm products in the talks, because they believe goods like cheese or meat are subject to unfair tariffs in Europe.