Wednesday, July 25, 2018

Has Trump Won This Easy Trade War With Our Greatest Foe, The European Union?

So Sean Hannity would have us believe this evening after the press conference earlier today by Trump and EU Commissioner Jean-Claude Juncker.  According to Hannity they have signed a "deal" that will help US businesses, workers, and farmers. Yowzah!

As it is, what appears to have been agreed to (no signed deal) is that the US will not impose tariffs on autos imported from the EU as he had threatened to,  a proposal not supported by the US auto industry, the erstwhile beneficiary of such an action.  This means that the EU in turn will not impose a bunch of retaliatory tariffs against various American products.  So, the trade war sits where it is, with US tariffs in place on foreign steel and aluminum, with a set of retaliatory tariffs on a variety of US goods all still in place.  The war has not been won, merely that its momentum has slowed.

Ah, but then there was the dramatic announcement by Trump that there will be negotiations with the EU that will move to end all tariffs, subsidies, and other non-tariff trade barriers in all non-auto industrial sectors.  He then reeled off a set of other sectors in which negotiations would occur, although with not quite such a strong promise regarding what might result, with at the end of the list being soybeans, which Trump declared "is very important."  Indeed.

What all this brings up is how does this relate to the long-running negotiations over trade and investment that went on between the US and the EU that Trump shut down last year?  This would be the Transatlantic Trade and Investment Plan (TTIP, or T-TIP for some parties).  This negotiation began under Obama in 2013.  Between July 2013 and October 2016 there were 15 weeklong rounds of negotiation regarding 28 topic areas, some of them those mentioned in today's press conference by President Trump.  On none of those 28 was there a full agreement as of the final round of negotiations, although some were further along than others. It had been estimated that it might take until 2021 to complete this negotiation, and that made back when there still were negotiations.

So how might these revived negotiations go, and it must be noted that this past March? Commerce Secretary Ross actually raised the possibility of them being restarted, although that drew little attention at the time.  Well, back in 2014 a draft of a possible agreement was leaked and drew considerable opposition, more from the EU side than the US one.  It must be noted that the proposed TTIP had many similarities to the TPP, which Trump also withdrew from. Among issues raised involved environmental, safety, and broader regulations, along with investment issues, with the agreement supposedly granting US corporations power to challenge such rules.  As it is, however, details of the negotiations are classified; we do not know what they are, only broad indications of the degree of agreement.  So, will what Trump and Juncker agreed to today amount to a restart of these stalled TTIP negotiations, or will we see a whole new round of negotiations starting fresh that will lack all those issues or problems that have created problems in the past for the TTIP?

It should be noted that since Trump became president, the EU and Canada have ratified an agreement, and also the EU and Japan have more recently done so as well.  The US was never a part of the first negotiation, although it was a clear parallel to  the TTIP.  Regarding the latter the US withdrawal from the TPP made Japan not interested in having the US involved.  These agreements may have flaws as many (including me) think the TPP did (although its worst part was the favoritism given to the US pharmaceutical industry, which meant that many in it did  not mind seeing the US leave), but whatever lowering of actual trade barriers are occurring mean that the businesses in those nations will gain competitive advantages over US firms not a part of those agreements, quite aside the now-in-place tariffs due to Trump's supposedly "easy" trade war, even if today's announcement means that the war may not get more intense in the near future.  This is no victory in a still ongoing war.

Barkley Rosser


Barkley Rosser said...

In WaPo today no mention of TTIP. This looks like a stand alone deal, whatever it is. Mostly talk about future negotiations. No auto tariff by Trump the main biggie. On EU side, they will buy some soybeans. Also, maybe in future build some infrastructure to allow importing US LNG, "if price competitive." We shall see.

Anonymous said...

Nothing actually happened with regard to Europe, but that was what Trump needed to declare victory and move on to other conflicts.

Barkley Rosser said...

WaPo today says that Eswar Prasad says that while TTIP is officially dead, most of what is being proposed to negotiate was in TTIP. This is a sort of abbreviated neo-TTIP. said...

Der Spiegel has a report on how the negotiation worked from the perspective on Juncker. Apparently he and an aide enlisted the support of Larry Kudlow, who is much less hawkish on the trade issue than many other Trump economic advisers. Apparently Trump pushed for an expansion of lots of ag exports to the EU, but Juncker only agreed on soybeans.

An important point is that there will be no negotiations until the EU member states agree to it and also the European Parliament. This is not expected to happen before the end of the year and certainly not before the midterm elections. So Trump had a nice press conference, but there will be no expansion of soybean exports to Europe before the election. Probably the most important thing to come out of the deal is the promise by Trump not to put tariffs on EU autos, which certainly would have triggered a major retaliation and escalation of the nascent trade war. said...

I must note that quite a few GOP commentators seem to be buying whole hog the Trump story on the EU-US trade agreement, that this is some profound and unprecedented breakthrough, blah blah blah. I note in today's WaPo AEI's Mark Theissen, who is pretty pro-Trump, but not just a complete hack/shill empty shirt. He is somebody who really ought to know better, but clearly he does not. There simply has been nearly zero recognition in any US media that this is just s revival of the TTIP under a different name that Trump shot down last year as a terrible thing, none. Trump's ability to get away with pure bs seems to be increasing, I fear.