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EU trade commissioner criticises US-China trade deal

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Via Financial Times

Phil Hogan, the EU trade commissioner, has criticised the US-China “phase one” trade deal for offering limited economic benefits, suggesting it was mainly a political act by Donald Trump to win re-election. 

“Let’s look at the detail of what that has actually achieved, we still have 20 per cent tariffs on both sides. This is not going to be good for competitiveness or jobs, which is a desired objective of President Trump,” Mr Hogan said in Washington on Thursday. “In the short term, it might work between now and November . . . [as a] politician, I understand the way it works.”

The dismissal of the trade truce reached by Washington and Beijing and signed with great fanfare at the White House on Wednesday reflects the mixed reception the agreement has received from the two countries’ major trading partners.

At a news conference later on Thursday, after concluding a series of meetings with US officials, Mr Hogan struck a more conciliatory tone, saying the US-China deal contained some “positive elements” that — in areas like intellectual property — mirrored the terms Brussels was seeking in bilateral investment treaty talks with Beijing. 

While the US-China agreement eases fears of further escalations that could drag down the global economy this year, the bulk of levies that were imposed over the course of the trade war remain in place, and there is no certainty that the detente will hold. 

Moreover, some countries are worried that $200bn of Chinese purchases of US goods that are part of the agreement will enshrine “managed trade” between the world’s two largest economies, possibly flouting market forces, discriminating against their companies and violating WTO commitments. 

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“We haven’t analysed the document in detail, but we will. And if there’s a WTO compliance issue, of course we will take a case,” Mr Hogan said to the audience at the Center for Strategic and International Studies in Washington. 

Mr Hogan made his first visit to the US capital this week since taking over the trade portfolio at the EU Commission, having served previously as agriculture commissioner. After meeting senior lawmakers on Capitol Hill, he met with senior administration trade officials on Thursday. 

His visit coincides with fears that Mr Trump is turning his trade focus increasingly towards Brussels after securing bilateral agreements with Japan and China, as well as the revised Nafta, or USMCA, deal with Canada and Mexico, which received its final congressional greenlight from the Senate on Thursday, with broad bipartisan support.

Mr Hogan said he was in Washington to “see and explore” whether there could be a “positive agenda” on transatlantic trade, and said the EU was “willing” to entertain new concessions on agriculture — related to sanitary and physiosanitary standards — in order to “break this impasse”.

The EU’s resistance to opening up its markets to large-scale US agricultural imports has been the biggest strain with the Trump administration, and has been hanging over any attempts so far to resolve other disputes. 

On top of existing US tariffs on EU metals like steel and aluminium applied in 2018, the Trump administration moved last October to impose tariffs on $7.5bn of EU products in connection with a dispute over aircraft subsidies, following a WTO ruling. Mr Hogan said he had offered to “develop solutions around a negotiated outcome” and was seeing “engagement for the first time” from the US. 

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Since then, Washington has threatened to expand those punitive measures and separately apply tariffs on French goods in connection with a spat over digital taxation. Mr Hogan said the EU would retaliate if the US moved ahead with the additional levies, a concrete possibility since officials in Washington and Paris have given themselves until next week to resolve the dispute over the tax. In the press conference, he said the US threat to impose automotive tariffs on national security grounds had not come up in the talks, adding this was “good news for Germany”. 

On Thursday, Wilbur Ross, the US commerce secretary, told Fox Business Network that as a result of USMCA and the China trade deal, the US negotiating position towards Europe had become much stronger, because it solidified “our base” and took “pressure off” the farmers and manufacturers. 

But Mr Hogan warned the US against escalating tensions. “The European Union will stand together with France if they are coming under attack,” Mr Hogan said at the CSIS. “We will look at all options to protect our economic interests.”

Later in the day, Mr Hogan said he had developed respect for Robert Lighthizer, the US trade representative. “Sometimes we like the messages and sometimes we don’t. But at least we know where we stand and that’s my style as well,” he added. 

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