Brussels puts hopes on EU-US trade talks and Brexit

EPA-EFE/OLIVIER HOSLET

European Commissioner for Trade Cecilia Malmstrom gestures during a press conference on EU-U.S. Trade Talks in Brussels, January 18, 2019. 

Commission asks for limited mandate on free trade agreement talks with Trump


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Following a tumultuous week that saw the British House of Commons shoot down a withdrawal agreement between the EU and UK ahead of Brexit, the European Union is hoping to regroup after Brussels announced its proposals for the bloc’s negotiating tactics with the US over trade and which are focused on the removal of tariffs on industrial goods, excluding agricultural products.

The EU’s plan for a limited trade deal with the US is meant to guarantee that the two sides do not get bogged down in contentious negotiations that eventually led to the abandonment of a planned agreement – as seen with the Transatlantic Trade and Investment Partnership (TTIP).

“The publication of our draft negotiating mandate is part of the implementation of a joint statement by Presidents (Jean-Claude) Juncker and (Donald J.) Trump,” said European Commissioner for Trade, Cecilia Malmström, who added that the EU will negotiate with the US for a free trade agreement that is limited in scope, but focused on industrial goods tariff.

The two strong-willed presidents buried the hatchet in July when they agreeing to restart limited trade talks. The pledge from the EU to agree to a limited free trade deal quashed Trump’s threats to introduce a planned 25% tariff increase on European cars. The move would have had a devastating effect on mega-exporters such as Germany when keeping in mind that the EU’s car exports to the US were worth €165 million in 2017.

Malmstrom presented two draft directives for the negotiations that dealt with the abolition of tariffs on industrial goods and the removal of trade barriers to regulatory standards which also underlined that the EU is not willing to negotiate about agricultural products. The second directive covers the removal of tariffs on areas of possible regulatory cooperation such as pharmaceuticals, medical devices, and cyber security.

“The EU has no indication that any willingness exists from the American side to do something that would jeopardise this particular trade negotiation,” an EU source familiar with talks told New Europe on January 18. “We are not going to do anything that is not supported by the (EU) member states or anytihng that is considered too toxic or controversial,” the EU source said.

The ‘art of the possible’

“It’s a little bit the art of the possible,” sais the EU source in reference to the narrow negotiating mandate of this draft of the free trade agreement. It seems, however, that this is a win-win strategy by the European Commission, particularly after a week of bad news that was capped off by the overwhelming rejection of the EU-UK Withdrawal Agreement.

The Commission is focusing on contingency plans and publishing even more points as a no-deal Brexit looks “less and less unlikely” French Prime Minister Edouard Philippe said. The EU-27 is now coordinating their plans

“This is work which is ongoing and developing fully. We are not taking any chances,” said European Commission spokesman Margaritis Schinas throughout the week after British Prime Minister Theresa May failed to push through her Withdrawal Agreement and survived a no-confidence vote.

No real action is expected in the coming days as May and Juncker have been talking and exchanging information as to what the next step in the process will like.

The exchanges with Juncker, either by text or by phone are part of a series of calls that the British premier has done while trying to find a majority that will be willing to accept her plan-B on Brexit after the Withdrawal Agreement no longer an option.

May spoke to German Chancellor Angela Merkel and Dutch Prime Minister Mark Rutte in the days following her defeat. The latter reportedly told May that Europan companies should prepare for all Brexit scenarios. Luxembourg’s premier, Xavier Bettel, warned May not to waste time in trying to formulate an alternative option in order to avoid a worst-case scenario of a no-deal Brexit.

“An unregulated Brexit remains the worst option, both for the rights of citizens and also economic relationships between the US and EU,” said Bettel.

According to British lawmakers, May is due to present her plan-B on January 21 if her arrangements work, with a second “Meaningful Vote” scheduled for January 29.

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