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EU Diplomats Give Green Light to U.S. Trade Talks

EU Diplomats Give Green Light to U.S. Trade Talks

(Bloomberg) -- European Union ambassadors gave the go-ahead for trade talks with the U.S. as the bloc seeks to keep at bay the threat of American automotive tariffs, according to two officials with knowledge of the decision.

Envoys from the 28-nation EU approved a mandate for the bloc’s trade chief, Cecilia Malmstrom, to negotiate cuts in industrial tariffs with the U.S., the officials said on the condition of anonymity because the deliberations were behind closed doors.

EU Diplomats Give Green Light to U.S. Trade Talks

The green light on Thursday in Brussels came after France won concessions on wording related to the environment and to a previous, now shelved, plan for a broader transatlantic commercial deal. EU ministers still need to give their rubber stamp, which is due on April 15.

Malmstrom is rushing to begin deliberations with the U.S. on slashing industrial tariffs in a bid to show President Donald Trump progress in enacting a July 2018 political accord that he reached with her boss, European Commission chief Jean-Claude Juncker.

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 White House to apply controversial duties last year on foreign steel and aluminum. At the same time, the pact struck 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.

The all-clear for negotiations to remove industrial duties is no guarantee that the commercial truce between the EU and U.S. will last.

EU Diplomats Give Green Light to U.S. Trade Talks

As Trump seeks an accord to end his trade war with China, EU refusal to include agriculture in the transatlantic talks and an apparent U.S. desire to exclude automotive goods risk sparking renewed tensions.

And separately, the Trump administration this week announced a plan to impose tariffs on $11 billion of European goods as a result of alleged subsidies to plane maker Airbus SE. The EU reacted by saying it was preparing similar action against American products concerning aid to Boeing Co.

In a Twitter post on Wednesday, Trump called the EU “a brutal trading partner with the United States, which will change.”

A link between the mixed signals emanating about the state of transatlantic commercial ties is revealed in the negotiating mandate that the EU ambassadors gave to Malmstrom. It foresees the bloc suspending the planned talks on industrial-tariff cuts should the Trump administration impose more import restrictions, including on automotive goods.

And in a sign of the EU political constraints that Malmstrom will face, a French official in the office of President Emmanuel Macron signaled unhappiness on Thursday in Paris about the bloc’s decision to authorize the negotiations, calling the step inopportune.

No member country at the Brussels meeting of ambassadors expressed objections, according to the two other officials, and in any case France lacked veto power over the go-ahead under the EU’s weighted-majority rules on the matter.

The removal of transatlantic tariffs on industrial goods would expand U.S. exports to the EU by 13 percent and the bloc’s shipments to the American market by 10 percent, the commission said in January. The average tariff on non-farm products is 4.2 percent in the EU and 3.1 percent in the U.S., according to the commission.

--With assistance from Helene Fouquet.

To contact the reporter on this story: Jonathan Stearns in Brussels at jstearns2@bloomberg.net

To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Richard Bravo, Nikos Chrysoloras

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