Is the US right to claim the EU is not treating it fairly on trade?

Trade tensions between the United States and the European Union have been heating up since the US placed a tariff on European steel and aluminium exports in the name of national security last year.

Now, as the Trump administration's trade war with China rages on, fears that the US might impose further tariffs on EU sectors are spreading in Europe.

The EU and the US are each other's biggest export partners, and the EU cleared the start of trade talks with the US in April.

But the Trump administration wants more access than what he and EU Commission President Juncker originally agreed upon in 2018, particularly in the agricultural sector.

In an interview with Euronews on Monday, US secretary of state Mike Pompeo said the US hadn't "been treated fairly" by the EU.

Euronews spoke with three trade experts about the US secretary of state's claims.

Unfair trade relations

The US and the EU may be threatening each other with tariffs, but experts say the trade relationship is balanced.

"I find it difficult to understand exactly what the basis is for the US administration’s complaints on their trade relationship with EU," said Dr Thomas Sampson, associate professor of economics at the London School of Economics.

"It’s a little misleading to suggest that the EU has just kind of decided to not give fair access to US producers," Sampson continued. The dispute with Europe lacks "a clear objective or sticking point behind it."

There have been efforts since 2007 to strengthen economic ties between the US and the EU, but talks were suspended in 2016 in part due to the change in US administration.

"There isn't really an unfair trade relationship between the US and the EU," said Gregory Daco, chief US economist at Oxford Economics in New York. "If you look at average trade-weighted tariffs applied by the US to the EU and by the EU to the US, we’re talking essentially almost equal tariffs."

Agriculture and cars

Two sticking points for the Trump administration have been agriculture and cars.

"We can't sell our agricultural products in most countries inside the European Union yet the European Union can sell their products into the United States — that's not fair, that's not reciprocal," Pompeo told Euronews correspondent Darren McCaffrey.

In remarks in February, the US president conveyed a similar message.

"The European Union is very, very tough. Very, very tough. They don’t allow our products in. They don’t allow our farming goods in," Trump told an audience of state governors about the EU.

Experts say the EU's agricultural sector is traditionally very protected as many EU countries have a food heritage.

"There’s a different perspective on health and health management," Daco told Euronews. "Certain products from the US are considered to be of lesser quality or unhealthy for EU consumption."

But looking at trade through the lens of specific sectors is a distorted way to view it, experts say.

"Trade is always a package deal," Guntram Wolff, director of the Brussels-based economic think tank Bruegel told Euronews. "In some sectors, our tariffs are higher and yes in some sectors US tariffs are higher."

Trump threatened to impose tariffs on EU-manufactured cars in February, something he first mentioned in a 1990 Playboy interview in which he responded during a question game that the first thing he would do if elected president would be to "throw a tax on every Mercedes-Benz rolling into this country".

But tariffs on EU-manufactured cars would impact both the US and the EU.

"German car manufacturers build in the US so they do employ US workers," Daco said. Even though the impact of tariffs would be "manageable" in the United States, there could be supply chain effects.

Brexit

The UK may soon be negotiating a bilateral trade agreement with the United States, an agreement that the US secretary of state called a "priority" for the Trump administration.

He said they intend to work on an agreement that is "fair, reciprocal and based on mutual trust" so both countries can "grow their economies".

It all depends on whether or not the United Kingdom stays in the EU's customs union.

If it doesn't, the UK could negotiate with the United States, but "negotiating separately" from the EU "introduces a balance of power...the UK will be in a much weaker position," Professor Sampson said.

Standoff

Many in the EU find that the steel and aluminium tariffs imposed by the Trump administration went too far.

"Many in Europe are still shocked by the fact that the Trump administration used the security clause to basically impose tariffs on steel and aluminium," Wolff said.

"That it is even considering doing the same for cars I think is considered as absolutely unacceptable and certainly a breach of good faith and good relations," he continued.

Daco says it's at a standoff right now.

"There's a threat from the US, there's a counter threat from the EU," Daco said.

"We have a situation in which relations are tense and in which hopes were running perhaps a bit too high when President Trump and President Juncker met in the Rose Garden said they’d work towards an agreement of zero tariffs and zero barriers to non-auto industrial goods," he said.

Author: Euronews.com