With rising tensions, EU seeks new trade partners
The United States is in a trade war, undermining NATO and painting Europe as a foe. It’s no wonder, then, that the European Union is looking elsewhere for friends.
On Tuesday in Tokyo, it signed its largest trade deal ever, a pact with Japan that will slash customs duties on products like European wine and cheese, while gradually reducing tariffs on cars. The agreement will cover a quarter of the global economy — by some measures the largest free trade area in the world — and is the latest in a string of efforts either concluded or in the works with countries like Australia, Vietnam and even China.
The deal with Japan — and the others being negotiated — point to a more assertive Europe, one that is looking past the frosty ties with the United States, and even the upcoming withdrawal of Britain from the bloc. In recent months, EU leaders have voiced ever more confident rhetoric in favor of free trade, refusing to back down in the face of the threat of tariffs from Washington and instead aggressively courting new relationships.
But no matter how many barriers to international commerce the European Union manages to tear down, its leaders will not change one economic fact of life: The United States remains the Continent’s largest trading partner. There is no escaping the damage from the U.S. campaign against imports like cars and steel.
“The United States is the one big market,” said Holger Schmieding, chief economist at Berenberg, a bank based in Hamburg, Germany. The other accords, he said, are “damage limitation rather than compensation.”
European officials began intensifying efforts to strike trade agreements with other countries after President Donald Trump’s election delivered the coup de grâce to negotiations on a far-reaching deal with the United States. Negotiators from both sides of the Atlantic had worked since 2013 to eliminate tariffs and harmonize regulations for products likes cars and pharmaceuticals. The talks stalled during the end of the Obama administration and were postponed indefinitely at the end of 2016.
Europe did not stand still, continuing instead to pursue other deals.
While the president was threatening to rip up the North American Free Trade Agreement, the European Union was putting the final touches on a free-trade pact with Canada. It took effect late last year.
Europe also reached a deal in principle with Mexico to update an existing free-trade agreement, one that should be finalized by the end of the year. Accords with Vietnam and Singapore are going through the final stages of approval.
Negotiations are also in progress between the European Union and a long list of countries that includes Australia, Chile, Indonesia, New Zealand, Tunisia and the Mercosur countries — Argentina, Brazil, Paraguay and Uruguay. The European Union and India have restarted talks that stalled in 2013.
“It has been a very busy month,” Cecilia Malmstrom, the European commissioner for trade, said in June after returning from a visit to Australia and New Zealand.