Crunch time for EU-US tariffs talks

Starting on Wednesday, US Commerce Secretary Wilbur Ross and Trade Representative Robert Lighthizer are holding two days of talks in Paris, seeking to win concessions from the European Union on bilateral trade relations.

US President Donald Trump announced in March that he would impose new tariffs of 25 percent on steel and 10 percent on aluminum to curb cheap imports of the metals, notably from China, but also from the EU and other producers. The move is part of Trump's "America First" economic policy that aims to change US trade relations with the rest of the world which he deems "unfair and costing American jobs.

While China has been paying the new levies, the EU has won a small reprieve until June 1 to negotiate a settlement for the trade dispute.

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However, two days ahead of the deadline a solution seems nowhere near in sight. Shortly before the talks, EU Trade Commissioner Cecilia Malmstrom tweeted Wednesday that "the EU wants to be fully excluded from these tariffs" before engaging in a trade agenda.

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EU officials have already said that they won't negotiate with the US under blackmail, and have prepared a series of new tariffs on US imports of bourbon whiskey, orange juice and Harley-Davidson motorcycles in retaliation.

Tariffs and caps

Despite the EU's counter-threats, the bloc's trade commissioner said it was unrealistic to hope that the EU could win another exemption from the US tariffs by Friday.

"Realistically, if the US decides to refrain from applying duties I expect them nonetheless to want to impose some sort of cap on EU exports," she told European Parliament deputies on Tuesday.

Malmstrom also said that it was still unclear whether such a cap would impose a "hard" limit on the volume of European steel and aluminum allowed into the US market, or instead grant the EU a "soft" quota above which the punitive tariffs would apply.

A soft cap — known technically as a tariff-rate quota, or TRQ — would be less damaging than a strict hard cap, Malmstrom added.

US rebuff

Meanwhile, US Commerce Secretary Wilbur Ross has criticized the EU for its tough negotiating position, saying that there could be trade negotiations "with or without tariffs." Speaking at an annual forum of the Paris-based Organization for Economic Cooperation and Development (OECD) on Wednesday, Ross pointed to ongoing trade talks with China as evidence.

"China is an interesting case in point. They are paying the tariffs, they came into effect in March and they haven't used this as an excuse not to talk. It's only the EU insisting we can't negotiate if there are tariffs," he said.

Ross insisted that the benefit to the US economy of tariffs outweighed the cost increases some industries were facing as a result of the more expensive imports. "The sky has not fallen on the US and it won't," he noted, and added: "But it creates a lot of jobs in steel and aluminum, that's real. I don't see car companies closing up, I don't see can companies closing up."

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The US Commerce Secretary also expressed the Trump administration's frustration over the slow pace of dispute settlement at the World Trade Organization (WTO). "We would operate within [multilateral] frameworks if we were convinced that people would move quickly," he said.

uhe/tr (AP, Reuters, dpa, AFP)