What’s at stake with the European Union-U.S. trading partnership if a tariff deal isn’t reached : NPR

Scott Detrow, host:

There are only five days before a 30% rate was placed on most of the European Union goods on August 1. Negotiations are underway, and tomorrow, President Trump will meet the president of the European Commission Ursula von der Leyen in Scotland. Trump said that there were 50 to 50 chances that the EU and the United States could conclude a trade agreement, but what could it look like, and what is at stake if an agreement is not concluded? To discuss, we called Cecilia Malmstrom, former European Commerce Commissioner. Welcome to the program.

Cecilia Malmstrom: Thank you.

Detrow: Before diving into negotiations, can you simply give us an idea of the EU-US commercial partnership? What type of goods are we talking about? What is the width? How important?

Malmstrom: Well, it is one of the most important trade relations in the world. We exchange more than $ 4 billion per day and the transatlantic economy represents between 16 and 17 million jobs on both sides. It is therefore very important, and we prefer to engage in the way in which we could deepen and facilitate trade through the pond.

Detow: four billion a day.

Malmstrom: Yes, that’s a lot.

Detrow: I mean, we are talking about a wide range of goods, of course. But from the top of your head, what are the most important goods concerned here? What could be some of the immediate things that consumers on both sides see if these high rates are being put in place?

Malmstrom: Well, they are cars, steel, plane parts, chemicals, fashion, food, clothing, wood, different types of pharmaceutical products, I would say. And we buy a lot of digital services from you.

Detrow: It looks like many things that affect my daily life.

Malmstrom: Yes, indeed.

Detrow: As I mentioned, the president says that there are 50-50 chances of an agreement. Many of these pricing negotiations came and disappeared and really changed direction at the last minute. How about the best lever effect in the United States is currently?

Malmstrom: Well, this is a difficult situation, of course, when you negotiate a commercial agreement. Normally, you give and take, you find a compromise and it is a win-win situation. Here we negotiate under threat. And of course, nobody wants these prices to occur. They will harm the European economy and they will also harm the American economy. But of course, the threat is there – 30%. It was 20, then 10, and now it’s up to 30, so we will see. And then we already have prices – 50% on steel and aluminum and 25% on car and car parts. It is therefore a bad situation.

Detrow: Speaking for the EU side, what are the biggest priorities?

Malmstrom: Well, ideally, we would have no price at all, and the EU proposed to withdraw our prices from all goods on a reciprocal basis so that we have a 0 business for 0. It was not accepted by the American side, of course. So, what the EU is currently concentrating is to reduce the price as much as possible and deepen the list as long as possible for exceptions. But…

Detow: Yeah.

Malmstrom: … we don’t know if it is possible.

Detow: I’m curious. When you have conversations with people from your world, do you feel like it is a temporary thing, or do you feel like it is a permanent change to the world trading order?

Malmstrom: Well, it is definitely a transition to the world trading in the United States, but most countries in the world have really loved the order of trading. Well, not China, perhaps – but at least they admit doing it. But most countries – they want to have rules. They want to have predictability. We have WTO rules. They worked rather well. We have to update them, absolutely. But that breaks the supply chains all over the world, and it creates a lot of troubles, and we don’t need it for the moment. But 82% of EU trade is not with the United States, so of course, what we are doing right now is to try to move from the United States and increase our trade relations with the rest of the world.

Detrow: You have already mentioned that the EU is just looking elsewhere. Does China finally benefit from it? China, do you think, fill the emptiness that is created while the United States put these walls?

Malmstrom: No, we have a complicated relationship with China. Of course, we exchange a lot with China, and it will continue, but it’s complicated. We share many of the United States concerns about illegal subsidies, in terms of discharge, with regard to dual use. And of course, for Europe, the biggest problem with China is that it supports in a way the economy of the Russian war in Ukraine. So, this is likely – we will continue to exchange, but we don’t see a lot of changes.

So what the EU has just done is to try to conclude an agreement with Indonesia. We hope that we will ratify an agreement with the Mercosur countries – Brazil, Argentina, Paraguay and Uruguay. There are negotiations in progress with India. So trying to move and find new friends.

Detrow: Can I ask you a question about the negotiation of itself?

Malmstrom: MHM.

Detrow: Everyone who lives in the world and have a phone familiar with the way President Trump approaches these negotiations. There are these statements on social networks, great announcements. The numbers change. They come. They go. They are paused. There are a lot of boastful and real threats.

Malmstrom: Yes.

Detrow: How did you negotiate with this? If you were sitting at this table, what do you take seriously? What don’t you take seriously? How do you cut things down with an administration that approaches it in this particular way?

Malmstrom: Well, that’s what makes things so difficult. The last time he was president, he did the same thing and I was a commerce commissioner at that time. And we managed, in fact, to reach a small business. It was not really tall, but it was a little matter. And it was presented by President Trump as a big victory, a big concession, and there were no more prices after that. But this time, I think he is more determined. It is surrounded by very faithful people, and it is unpredictable. This is why my successor – he does an excellent job, but it is really not easy to know because it is a lot – there are a lot of threats, and there is a lot of unpredictability, and that changes all the time.

Detrow: And how much – to this end, how, how many publications on social networks and comments liked President Trump making in public? How much do they change what’s going on at the tables? Or are they sometimes ignored?

Malmstrom: Well, I think you have to choose your battles. You cannot react on each tweet there. The European Union is trying to be serious to show that, yes, we are ready to engage with the United States, but these prices must drop. And we are ready to invest more in the United States, but again, prices must drop. And if that does not happen, the EU just agreed with a very long list of possible reprisals. I hope that we will not be used, but of course, if there is no agreement, I mean, we can also harm.

Detrow: It’s Cecilia Malmstrom, a non -resident principal scholarship holder at the Peterson Institute for International Economics. Thank you so much.

Malmstrom: Thank you for doing me.

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