EU-U.S. Trade: Is a Deal Doable?
The ongoing WTO aircraft subsidy disputes, resulting in both EU and U.S. retaliatory tariff announcements, and the failing EU-U.S. trade agreement negotiations certainly have strained trade relations. Nevertheless, there appears to be some hope of reaching a trade deal before the end of the European Commission’s term in October. As currently outlined, the trade agreement primarily would seek to reduce tariffs on industrial products and enhance regulatory collaboration. The EU, pressed by Member States such as France, has refused to include agriculture in the deal despite U.S. demands. This, together with the potential U.S. imposition of tariffs on European automotive goods, stalled negotiations. Determined to protect its automobile industry, however, Germany is ready to resume negotiations, at least on the less contentious issues, to potentially reach a deal before November 1. The recent EU agreement to allow for increased U.S. exports of hormone-free beef to the EU perhaps is indicative that the two parties are committed to improving their trade relations.
Should negotiations fail in the short term, however, prospects for the new Commission may be better under the leadership of Ursula von der Leyen. Commission President-elect von der Leyen was elected in a vote in Parliament on 16 July following her nomination by the EU Council. Her next task is to select a team of Commissioners which must be approved by Parliament and the Council. The new European Commission will take office on 1 November 2019.
Commission President-elect von der Leyen is considered a staunch “transatlantist” whose agenda includes crafting a trade agreement with the U.S. Von der Leyen’s Commission will put forward a “strong, open and fair trade” plan and aim to reinforce a “balanced and mutually beneficial trading partnership” with the U.S. Further, von der Leyen has cultivated important relationships with politicians and business leaders in the U.S., which may facilitate trade discussions. A former German Defense Minister, she champions the EU’s development of its own security and defense forces and sharing more of the burden and expenses with the U.S. over NATO. This may bode well for the Trump Administration and heighten EU influence and stature in the U.S.
Von der Leyen’s background, policies and leadership selection of the new Commission may indeed give her leverage to strike a deal with the U.S. and it appears that she will be better positioned than her predecessors to bring a deal to fruition. Undoubtedly, the divergence between EU and U.S. climate policies, her proposed regulation of U.S. tech companies operating in the EU, and conflicting strategies concerning Brexit and Iran, will create some challenges. Nevertheless, improvements in trade relations between the two blocks may be just around the corner and that can only increase the chances of a deal.