Trade

Malmström meets US counterpart in effort to avert trade war

The EU’s trade chief Cecilia Malmström will meet her American and Japanese counterparts in Brussels Saturday in an effort to carve out exemptions from steep steel and aluminium tariffs and avert a global trade war.

The meeting between Malmström, U.S. Trade Representative Robert Lighthizer and Japanese Trade Minister Hiroshige Sekō had initially been scheduled as part of broader trilateral talks to tackle unfair trading practices by China. But it has been overshadowed by U.S. President Donald Trump’s announcement this week that he intends to impose national security tariffs of 25 percent on steel and 10 percent on aluminum.

The EU has threatened retaliation should it be included in those tariffs.

Ahead of Saturday’s talks, Malmström said there was still no “clarity” whether key allies of the U.S., like the EU, would be exempted from Trump’s trade restrictions.

“We hope that we can get a confirmation that the EU is excluded from this and that we can go on to continue our dialogue on how to deal with the problem [of steel and aluminum overcapacity], with the U.S. and Japan and others,” she said Friday.

Trade experts have indeed warned that the tariffs risk to blow up the entire order of global trade rules.

Trilateral talks which are due to begin shortly before noon will then be followed by a bilateral meeting between Malmström and Lighthizer.

The EU, U.S. and Japan issued a trilateral statement in December to jointly work on addressing trade issues such as overcapacity, market-distorting subsidies and forced technology transfer — demands from China that Western firms turn over technology to the state in return for market access. Although the statement fell short of directly naming China, it is clearly the target of the joint action by EU, U.S. and Japan.

However, EU officials have made clear that it was not possible to continue this sort of cooperation should Europe also be hit by Trump’s tariffs. “It is certainly not the right way to include Europe in that, because we are friends, we are allies,” Malmström said. She added that the steel and aluminium tariffs were “not in compliance” with the multilateral rules of the World Trade Organization (WTO), which Brussels seeks to strengthen.

Trade experts have indeed warned that the tariffs, which appear to be an attempt to protect domestic U.S. steel and aluminum producers but are justified under the ultimate vindication of national security, risk to blow up the entire order of global trade rules. The Trump administration is also blocking the nomination of judges for the WTO’s dispute settlement body, an internationally respected mechanism to solve trade disputes in court and avoid escalation, which is often described as “the crown jewel” of the WTO.

French Trade Minister Jean-Baptiste Lemoyne told POLITICO that Europe will not hesitate to push ahead without the U.S. in order to preserve, together with allies, the global trade order.

“It is necessary to think about all the forms of Plan B, which make it possible to maintain” the World Trade Organization and its dispute settlement system, he said. “There is still a very strong majority of WTO countries that wish to continue to have this type” of trade rules, he added.

Malmström said she expects difficult talks with her U.S. counterpart: “It could be a long day.”

Jakob Hanke contributed reporting.

Original Article

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