Paris not ready for trade détente with Washington

FILIP SINGER

New opel cars in front of the factory building of the German Opel car company in Eisenach, central Germany, 06 March 2017. US company General Motors (GM) and French PSA Peugeot Citroen Group on 06 March announced that French automobile maker PSA has signed a deal with GM to buy their European branches Opel and Vauxhall. The deal is reported to be worth 1.3 billion euros.

Paris not ready for trade détente with Washington


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In a meeting with his German counterpart on Wednesday, the French Finance Minister Bruno Le Maire for a wait-and-see attitude on the emerging trade war with the United States.

Reports on July 4 suggested that the US ambassador to Germany reached out to German car manufacturers in a deal that would avoid mutually destructive tariffs. The proposal entails the mutual elimination of tariffs. Minister Peter Altmaier is considering the proposal, which German manufacturers have apparently endorsed.

The US has in place a 2,5% tariff on European car imports and 25% on trucks; the EU has a 10% tariff across all categories. Under World Trade Organization (WTO) rules, if the EU were to lower tariffs it would have to do so vis-à-vis all its trading partners.

Bruno Le Maire wants an impact assessment of the proposed mutual elimination of tariffs on US car imports. “Before considering any solution, it’s important that France and Germany look together at the impact on the car industry and that’s what we are going to do,” Le Maire told Reuters.

In June President Trump threatened a 20% tariff on cars assembled in the EU, disproportionally hurting German exporters. Earlier this month, Axios reported that the White House has drafted a bill called “United States Fair and Reciprocal Tariff Act” that would see Washington walking away from WTO rules. Among other things, it would allow the US to differentiate tariff rates for countries that are not covered by (bilateral) free trade agreements.

The US is not a major export market for French car manufacturers. To the contrary, French exporters have been negatively affected by renewed US sanctions on Iran.

Key to any final EU trade policy decision will be the visit by the President of the European Commission Jean-Claude Juncker to Washington later this month.

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