Trans-Atlantic Trade Truce Tested by U.S. Official's Outburst

(Bloomberg) -- U.S. Commerce Secretary Wilbur Ross challenged a fragile trans-Atlantic trade truce by accusing the European Union of dragging its feet over market-opening pledges.

He lashed out at European Trade Commissioner Cecilia Malmstrom for saying the onus is on the U.S. to come up with proposals to lower tariffs on industrial goods. At a briefing in Brussels on Wednesday, Ross said the 28-nation bloc needed to act on product standards, which he described as equally important.

“Discussing tariffs in the absence of discussing standards is a useless exercise,” Ross said a day after he held a meeting with Malmstrom to take stock of EU-U.S. commercial relations. “Both are protectionist.”

At stake is how to carry forward a deal in July between U.S. President Donald Trump and European Commission chief Jean-Claude Juncker that put on hold possible U.S. automotive duties based on the same national-security grounds the White House used to impose controversial levies on foreign steel and aluminum.

The two leaders agreed on July 25 in Washington to work toward the elimination of tariffs and non-tariff barriers on industrial goods traded between the EU and the U.S., setting up a working group that had its political kickoff in September.

‘Not Unlimited’

“We really need tangible progress,” Ross said on Wednesday. “The president’s patience is not unlimited.”

The warning highlights the ambiguity of the July pact and the lingering threat of U.S. duties on European cars and auto parts. Such a step would mark a significant escalation of trans-Atlantic tensions following the American metal levies and tit-for-tat retaliation by the EU.

The value of EU automotive exports to the U.S. is about 10 times greater than that of the bloc’s steel and aluminum exports combined, meaning European retaliatory duties would target a bigger amount of American exports to Europe.

While Ross said the Trump administration would refrain from imposing new tariffs against the EU as long as their market-opening talks are going “satisfactorily,” he made clear the option of American automotive levies based on national-security grounds remains.

Fast Results

Ross said he pressed Malmstrom in their exchange for fast results.

“Our purpose in the meeting was to stress the need for speed and for getting to near-term deliverables, including both tariff relief and standards,” Ross said. “This is not meant to be a five-year project. This is meant to be something that was to move quickly and in a cooperative fashion.”

On Tuesday after the meeting, Malmstrom said there was “nothing really” notable about it and an EU official said she used the occasion to reiterate the bloc’s objections to the U.S. metal tariffs as well as to a separate set of American duties on Spanish olives.

At a press conference earlier on Wednesday, Malmstrom repeated the EU’s willingness to seek a “limited” market-opening accord with the U.S. covering tariffs on industrial goods while saying “so far the U.S. has not shown any big interest there, so the ball is in their court.”

Part of the complexity of the whole issue lies in institutional factors. Malmstrom’s counterpart in Washington is U.S. Trade Representative Robert Lighthizer, while Ross is responsible for an investigation into whether American imports of automotive goods pose a national-security risk.

European Barriers

Beyond stressing the need to focus on product standards, Ross on Wednesday signaled a desire to tackle European barriers to agricultural trade.

EU officials have insisted that farm products are outside the scope of the July deal between Juncker and Trump (with the exception of a European vow to buy more American soybeans, something market forces are making happen because U.S. shipments to China have been hit by a Chinese tariff imposed as part of an escalating trade conflict between Beijing and Washington).

“We’re interested in exploring all sectors where there are protectionist things,” Ross said.

Gordon Sondland, the U.S. ambassador to the EU, joined Ross at the briefing and was blunter on the question of farm goods. “Agriculture was always part of the discussion and will need to be part of the discussion to conclude an agreement,” Sondland said.

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