The European Union has agreed to start trade agreement discussion with the U.S. and aims to reach a deal before the end of this year.
The two parties are each other’s biggest trade partners, with trade flows amounted to a third of the total global trade. A survey conducted by the European Commission estimated the agreement on industrial tariffs would boost EU exports to the U.S. by 8% and the EU imports to the U.S. by 9%.
The European Commission has permitted by the EU vote to begin two sets of negotiations. One will be to curb the tariffs on industrial commodities and the other is to ease companies in fulfilling the EU or U.S. standards of products. The EU is determined to close the deal before the European Commission President Jean-Claude Juncker’s term ends on October 31.
The EU, however, is adamant on not including the agricultural sector in the trade dialogue and is keen to pressure the U.S. to eliminate the tariffs it has applied on EU steel and aluminium. The EU also stated firmly to suspend the talks if Washington imposed new tariffs, such as on cars.
European Trade Commissioner Cecilia Malmstrom stated, “Agriculture is the red line for Europe. It will absolutely not be part of these negotiations.” Malmstrom also added that the Commission is willing to include cars in the industrial commodities talks.
On the other hand, the Trump administration has been demanding the EU open its agriculture market, as it is a significant aspect of the global economy. A U.S.-EU trade deal which is excluding agriculture would likely fail to win approval in the U.S. Congress as a majority of lawmakers are keen to gain farm access to Europe.
The U.S. Senator Chuck Grassley, chairman of the tax and trade-focused Senate Finance Committee, commented, “The removal of industrial tariff and non-tariffs barriers are only part of our goal. Moreover, we are facing major barriers to agricultural trade in the EU. Agriculture is a significant part of the global economy, it simply does not make any sense for us to leave it out of the discussion.”
The U.S. Trade Representative Robert Lighthizer also has voiced his frustration with a stall in the discussion with the EU on agriculture. He told a congressional committee in March that there would be no U.S.-EU FTA without agricultural access.
The U.S. President Donald Trump’s threat to impose a 25% tariffs on cars and auto parts on the ground of national security is now looming over the talks.
