France Is Said to Leave EU at Risk of Trump Backlash Over Trade

(Bloomberg) --

European Union ambassadors put off giving the green light for trade talks with the U.S. as France continues to withhold its consent, according to two officials familiar with the deliberations.

The envoys could still approve the mandate in the next several days to allow the bloc’s trade commissioner, Cecilia Malmstrom, to negotiate cuts in industrial tariffs with the U.S., the officials said on the condition of anonymity because the meeting was behind closed doors.

France is stalling over wording on the environment and on a previous, now-shelved, plan for a broader transatlantic commercial deal. The EU envoys plan to take up the matter again no later than April 11, said the two people.

Malmstrom is rushing to begin deliberations with the U.S. on slashing industrial tariffs in a bid to show Trump progress by the EU in enacting a July 2018 political accord that he reached with her boss, European Commission President Jean-Claude Juncker. The Trump administration has expressed angst at the delays from the EU and has underscored its willingness to use its leverage to speed the pace of negotiations.

The deal between Trump and Juncker suspended the threat of U.S. levies on EU cars and auto parts that would be based on the same national-security grounds used by the U.S. president to apply controversial duties last year on foreign steel and aluminum. At the same time, the pact struck almost nine months ago expressed a desire to resolve the dispute over the American metal levies, which prompted the European side to retaliate with tit-for-tat duties.

Malmstrom signaled on March 21 that she expected to receive the go-ahead in April from EU governments for negotiations with Washington. She requested the mandate in mid-January.

Once EU ambassadors give their backing, the mandate would be added to the agenda of a meeting of member-country ministers for a rubber stamp. The ministerial go-ahead could occur on April 15.

An escalation of tensions with the U.S. would come at a very bad time for Europe’s economy, which is struggling amid a global slowdown. Germany’s car industry is already facing a tough environment of tighter emissions rules and weaker demand, and surveys show manufacturing in the euro area is shrinking at the fastest pace in six years.

©2019 Bloomberg L.P.