EU Wants Trade Dialogue but Stands Ready to Rebuff Trump

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By Bengt Ljung

European trade ministers agreed to a dual approach against the Trump administration, engaging in a dialogue for free trade and preparing to react strongly against protectionism, such as the border adjustment tax.

Representatives of the 28 EU countries were meeting March 3 in Valletta, Malta, to discuss trade issues.

The atmosphere for trade policy as “very challenging,” with anti-trade protesters in the European Union and growing protectionism in the rest of the world, according to Malta’s economics minister, Christian Cardona, the chairman of the meeting.

“We’re waiting to hear a solid outline of U.S. goals for trade with the European Union,” Cardona told at a news conference.

EU countries agreed not to react to “every tweet” from the U.S., but if the Trump administration introduced protectionist measures detrimental to the EU, they would act swiftly.

“We’ll react hard and quickly if the U.S. introduces measures that aren’t in line with international rules, Swedish Trade Minister Ann Linde said, adding that the border adjustment tax “would not be WTO compatible.”

Possibility of Separate Agreements

Negotiations for the Transatlantic Trade and Investment Partnership (TTIP) are dormant. The ministers discussed the possibility of separate agreements in smaller areas where negotiations were far advanced, such as one recently concluded for mutual recognition of inspections of premises for medical production.

Lower-level contacts with the Trump administration revealed a misunderstanding about how the EU must proceed. EU countries can only sign trade agreements jointly, ministers from some EU countries said. The U.S. should be informed that Washington cannot conclude any bilateral trade deals with separate countries, such as Germany or France, they said.

“We should get in contact with the people responsible for trade [in the Trump administration],” German State Secretary Matthias Machnig said. “Maybe reality will be something different.”

Reacting to the Trump administration’s criticism of the World Trade Organization, EU trade ministers rallied behind the international body. Cardona said the multilateral trading system was at risk if the U.S. chose to pull out of the WTO.

“Some signals are worrying. We need an active U.S. on the multilateral scene,” European Trade Commissioner Cecilia Malmstroem said.

Others said the world would not wait for the U.S. The Trump administration must realize that the world would go forward despite the U.S.'s hesitation on free trade, said Kai Mykkaenen, Finland’s trade minister.

“In the end, I very much believe that the U.S. will find the right answer,” he said. “They benefit from globalization and free trade, so this period of cautiousness will go away.”

The EU trade ministers also gave their support to the European Commission to try to drum up interest in creating an international court to settle investors’ disputes with foreign states.

To contact the reporter on this story: Bengt Ljung in Brussels at correspondents@bna.com

To contact the editor responsible for this story: Jerome Ashton at jashton@bna.com

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