EU drafts retaliation list for possible U.S. auto tariffs

Date: Monday, November 19th, 2018
Source: American Shipper

European Trade Commissioner Cecilia Malmstrom said the list has U.S. products targeted for retaliation should the Trump administration impose automotive tariffs on Europe.

European Trade Commissioner Cecilia Malmstrom met with U.S. Trade Representative Robert Lighthizer during a visit to Washington this week, as the U.S. and EU continue talks on trade-related regulatory cooperation that could lay the groundwork for a bilateral trade agreement.
But speaking to reporters meeting with Lighthizer on Wednesday, Malmstrom cast any potential trade agreement with the U.S. in limited terms, noting it would be geared toward reducing tariffs, and repeatedly stating that agriculture would be omitted, despite recent statements by U.S. officials that they hope talks could cover agricultural goods.

Malmstrom said talks are a “work in progress,” but noted “good momentum” on issues being discussed.
Importantly, she also noted that the EU has drawn up a draft list of retaliatory tariffs that could be imposed if the U.S. follows through on Section 232 tariffs on automobiles or auto parts.
Bloomberg reported on Monday that the Trump administration has circulated a draft report on potential Section 232 measures on automobiles, indicating the executive branch might be moving closer to a final decision. The final report is due in February, after the Commerce Department started the Section 232 auto investigation under Section 232 of the Trade Expansion Act of 1962 in May.

President Donald Trump has publicly identified Europe several times as a potential target of any auto tariffs.
During a media roundtable on Wednesday, Malmstrom said of ongoing bilateral talks:

• The U.S. and EU are discussing regulatory cooperation, both in general terms and in detail about several sectors, such as medical devices, pharmaceuticals, and others, to make life easier for exporters on both sides of the Atlantic.
• The European Commission has not received any assurances from the U.S. that it will not impose tariffs on automobiles and auto parts, Malmstrom said, citing the joint statement from President Trump’s and Commission President Jean-Claude Juncker’s July meeting that the two sides would refrain from imposing any new tariffs on each other as long as trade talks were making progress, referring to any new tariffs on autos from the EU as “our point of departure.”
• The European Commission still needs to conduct its own formal scoping exercise, and still needs a formal mandate from EU member states to negotiate a trade agreement. Malmstrom noted that obtaining a mandate is a lengthy process, but didn’t give a definitive timetable for when the Commission might receive the mandate.
• She said: “We haven’t even started scoping yet because of the procedural issues here in the U.S., while the Congress is looking at this. They are first looking at the broader issue, and then because, the Office of the U.S. Trade Representative (USTR) will have to come back in more detail. But that is later. So they haven’t started with that process yet. There’s not really a timetable. We think that this is part of the agreement that was made between the two presidents, but if you look closely at that, it’s only one page. It doesn’t have any timetables. We are willing to engage in these discussions, but…the U.S. has to be ready to engage in these talks as well. On my side, we are willing to have a broad agreement on industrial tariffs, bringing them basically to zero, including in the car sector. But that discussion hasn’t been started yet.”

• She said the commission is willing to negotiate a “small” bilateral trade deal that would cover a broad range of industrial goods, including automobiles, though it wouldn’t include agricultural products, despite U.S. wishes for their inclusion. She noted that the commission would not start a scoping exercise if the Trump administration submits a notification to Congress that it would seek agricultural products’ inclusion in a trade deal.
Addressing potential U.S. auto tariffs and ongoing U.S. steel and aluminum tariffs, Malmstrom said:
• The commission has a draft list of retaliatory tariffs that it could impose if the U.S. follows through on Section 232 tariffs on automobile products. She added the list would have to undergo a review process by member states, and would be compliant with World Trade Organization (WTO) rules, but that the commission hopes that it doesn’t have to impose counter-tariffs.
• Malmstrom added that the commission believes ongoing U.S. steel and aluminum tariffs are unjustified, and that it would seek action at the WTO if the U.S. follow through on automotive tariffs, similar to action it took regarding the steel and aluminum tariffs.
• Malmstrom said she has raised the issue of steel and aluminum tariffs several times and that the U.S. and EU haven’t reached a resolution, as there was no indication during her meeting at USTR on Wednesday that the U.S. is moving toward dropping the tariffs.

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