TRADE RELATIONS

E.U. Embraces Nations Spurned by U.S.

  • Why it matters

    Why it matters

    The European Union could pick up new trade deals in Asia and Latin America if the United States turns toward protectionism.

  • Facts

    Facts

    • Several Asia-Pacific nations have reached out to the European Union since the Trump administration withdrew the United States from the Trans-Pacific Partnership.
    • The European Union has accelerated trade talks with Mexico and Mercosur, the five-nation South American bloc that includes Brazil and Argentina.
    • E.U. Trade Minister Cecilia Malmström has warned the Trump administration that erecting trade barriers could trigger global retaliation.
  • Audio

    Audio

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Cecilia Malmström
Cecilia Malmström warns against a trade war. Source: DPA.

The European Union is positioning itself to fill any vacuum left behind by the United States as the Trump administration spurns trade deals in Asia and Latin America.

E.U. Trade Commissioner Cecilia Malmström said Brussels has been in close contact with several Asia-Pacific countries since the White House decided to withdraw from the Trans-Pacific Partnership.

“We have seen that many of the TPP countries are now approaching us and saying ‘we still want to do deals,’” Ms. Malmström told Handelsblatt. “We are engaged with basically all of them, either negotiating or have a deal or preparing negotiations.”

Bernd Lange, chairman of the trade committee in the European Parliament, said the European Union should "close to a certain extent the vacuum left by the U.S. that China would like to fill by itself."

Brussels has also announced the acceleration of trade talks with Mexico, as U.S. President Donald Trump threatens to impose a tax on goods that cross the U.S.-Mexico border and to renegotiate the NAFTA trade agreement.

“We have decided to speed up with Mexico,” Ms. Malmström said.

The European Union is also accelerating trade talks with Mercosur, the South American bloc that includes Argentina, Brazil, Paraguay and Uruguay. Venezuela is a suspended member.

“There’s no official timetable, but we are in regular contact with the ministers and we are eager to do this as soon as possible, so we are working very hard to advance,” Ms. Malmström said.

Bernd Lange, chairman of the trade committee in the European Parliament, said the European Union should “to a certain extent close the vacuum left by the U.S. that China would like to fill by itself.”

As the European Union moves to expand trade ties in Asia and Latin America, the future course of its trade relationship with the United States remains uncertain.

The Trump administration has not taken an official position on the Trans-Atlantic Trade and Investment Partnership (TTIP), but its hostility toward multilateral trade deals doesn’t bode well for TTIP.

U.S. Vice President Mike Pence sought to smooth over frayed relations between the Trump administration and the European Union in Brussels on Monday, where he delivered a general reaffirmation of U.S.-E.U. economic relations.

“Trans-Atlantic commerce supports 14 million jobs on both continents and improves the lives and well being of all of our citizens,” Mr. Pence said. “So today, we reaffirm our commitment to free, fair and flourishing economies that undergird our success and to cooperation in achieving that.”

Ms. Malmström has warned the Trump administration against imposing trade barriers, pointing to the risk of retaliation

Mr. Pence’s reaffirmation of trans-Atlantic economic ties comes after U.S. President Donald Trump has spent months slamming the European Union and promoting a protectionist trade policy, unsettling U.S. allies across the European continent.

Mr. Trump, in a major rhetorical departure from the traditional U.S. commitment to European integration, has repeatedly praised Britain’s decision to leave the European Union and has predicted that other nations will also choose to leave the bloc.

The U.S. president has slammed the European Union as “a vehicle for Germany,” a country that Mr. Trump has singled out for its export-driven economy.

Mr. Trump has threatened to impose import tariffs on German cars imported from plants in Mexico, and his trade adviser, Peter Navarro, has accused Germany of undervaluing the euro to expand its trade surplus, a charge that German officials have roundly dismissed.

According to Handelsblatt’s E.U. sources, European Commission President Jean-Claude Juncker reminded Vice President Pence during their talks on Monday that U.S. companies generate nearly $3 trillion in revenue in Europe, while European companies represent 70 percent of all foreign investment in the United States, employing 3.8 million people.

But the discrepancy between the comments of Mr. Pence and those of Mr. Trump have left some European officials wondering whose words to believe. Ms. Malmström has warned the Trump administration against imposing trade barriers.

“We advise not to do that because there is a risk of global retaliation,” Ms. Malmström said. “That would be very bad for the economies and for the citizens of course.”

 

Till Hoppe reports on politics for Handelsblatt, with a focus on defense, domestic policy and cyber issues. To contact the author: hoppe@handelsblatt.com 

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