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Outlook Uncertain for U.S.-EU Trade Talks

Monday, January 14, 2019
Sandler, Travis & Rosenberg Trade Report

Months after the Trump administration announced its intent to negotiate a trade agreement with the European Union, it remains unclear when such talks might begin or what they might cover.

The U.S. and the EU announced in July 2018 an agreement to work toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods. They also agreed to lower barriers and increased trade in services, chemicals, pharmaceuticals, and medical products; increase U.S. exports to the EU of soybeans and liquefied natural gas; resolve U.S. tariffs on steel and aluminum and retaliatory EU duties; and work together on World Trade Organization reform. The Trump administration subsequently announced plans to negotiate a trade agreement with the EU in October 2018 and held a hearing and collected public comments in December.

While negotiations could begin as soon as Feb. 11, that appears increasingly unlikely. The U.S. just recently made its negotiating objectives available and Congress has 30 days to review them. In the EU, member states must unanimously agree to separate negotiating mandates that the European Commission is preparing on industrial goods tariffs and regulatory cooperation before formal talks can begin. It is unclear when the Commission will finalize those mandates or how long the approval process might take.

There also appears to be disagreement on the scope of a potential agreement. EU Trade Commissioner Cecilia Malmström said recently that the EU is willing to discuss automobile issues, even though they were excluded from the July 2018 announcement, but remains firmly opposed to including agriculture. Malmström explained that this is because the U.S. has refused to discuss controversial issues of interest to the EU such as geographic indications and government procurement. In the U.S., however, incoming Senate Finance Committee Chairman Charles Grassley, R-Iowa, expressed doubt that the Senate would approve any trade agreement with the EU that does not include agriculture.

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