Europe Said to Seek WTO Revamp in Face of Trump Trade Challenge

(Bloomberg) -- European Union leaders plan to push for improvements in the way the World Trade Organization operates, saying it’s important to uphold the global commercial order amid “growing” tensions prompted by U.S. President Donald Trump’s tariffs.

At a June 28-29 meeting, EU government chiefs will repeat criticism of U.S. metal-import duties that Trump has justified on national-security grounds and express support for the bloc’s retaliatory measures, according to a draft statement prepared for the summit. Planned European tit-for-tat tariffs, known as “re-balancing” measures, are due to take effect as soon as this week.

The U.S. levies of 25 percent on steel and 10 percent on aluminum “cannot be justified on the grounds of national security,” the 28 leaders will say at the Brussels meeting, according to the text dated June 19 and seen by Bloomberg News.

The stance highlights the EU’s desire to prevent Trump’s protectionist tilt from undermining the global trade order that the U.S. was instrumental in building after the Second World War. It comes as China, the EU’s No. 2 trade partner after the U.S., fights not only Trump’s metal tariffs but also his vow to hit a slew of other Chinese goods with import duties.

The Brussels summit will also lend backing to the EU complaint at the WTO against the U.S. steel and aluminum levies and to the European Commission’s evaluation of possible “safeguard” curbs on the bloc’s own metal imports to prevent Europe from being flooded by shipments diverted away from the American market, according to the draft statement.

The group of heads of government or state, known as the European Council, “fully supports the re-balancing measures, potential safeguard measures to protect our own markets, and the legal proceedings at the WTO,” according to the text.

The commission, the EU’s executive arm, is due to give final approval any day to an initial retaliatory step centering on a 25 percent duty on 2.8 billion euros ($3.2 billion) of EU imports of a range of U.S. products including Harley-Davidson Inc. motorcycles, Levi Strauss & Co. jeans and bourbon whiskey. The first-stage plan also includes a separate 10 percent levy on U.S. playing cards imported into the bloc.

The draft EU summit statement includes a list of areas where the WTO could become more effective and asks the commission to take the lead in proposing improvements.

“In a context of growing trade tensions, the European Council underlines the importance of preserving and deepening the rules-based multilateral system,” says the text. “It invites the commission to propose a comprehensive approach to improving, together with like-minded partners, the functioning of the WTO in crucial areas such as more flexible negotiations, new rules that address current gaps, including in the field of subsidies, reduction of trade costs, a new approach to development and effective and transparent enforcement, with a view to ensuring a level playing field.”

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