EU trade nominee sends tough signal to Donald Trump

  • September 10, 2019

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Phil Hogan was tapped to be the EU’s next trade chief on Tuesday, and he wasted no time in signalling that he will be a tough customer for the Trump administration to deal with.

“Obviously we are going to do everything we possibly can to get [Donald] Trump to see the error of his ways and hopefully that he will be able to abandon some of the reckless behaviour that we have seen from him in relation to his relationship with China and describing the European Union as a security risk,” Mr Hogan, an Irishman, told national broadcaster RTE in an interview.

Mr Hogan also warned that if Mr Trump continued “this particular dynamic of protectionism”, Brussels would “continue to forge deals around the world”.

The not-so-conciliatory approach by the 59-year-old Kilkenny native chimes with the criticism of Washington’s trade policies by Cecilia Malmstrom, the EU’s outgoing trade commissioner. It also reflects the vow of “assertiveness” in EU-US trade relations from Sabine Weyand, the EU’s director-general for trade, in a speech in the US capital in July.

Anyone hoping for an easing in transatlantic tensions as the new commission led by Ursula von der Leyen takes office in Brussels on November 1 is likely to be disappointed. It also doesn’t help that Margrethe Vestager, disliked among Trump administration officials because of her antitrust probes against US technology companies, earned a promotion in Ms von der Leyen’s team.

Not only did Ms Vestager keep hold of the powerful competition portfolio, but she was also elevated to commission vice-president in charge of EU digital policy.

As a reminder of what is at stake in coming months on the US-EU trade front, the Trump administration could by mid-November slap tariffs on all incoming cars and car parts after judging that automotive imports are a threat to national security.

Not only would this be hugely damaging to Germany and its car sector, but could have ripple effects in other EU countries from Italy to Austria and several central and eastern European nations that are part of the bloc’s automotive supply chain.

Meanwhile, additional tit-for-tat tariffs worth several billion dollars are expected between Washington and Brussels, as punishment for infringements of World Trade Organization rules in the two aircraft subsidy cases related to Boeing and Airbus that have dragged on for years. And the US is still dangling the prospect of punitive tariffs on French wine in retaliation for Paris’s move to impose a digital services tax on US technology companies.

Over the summer, the US and the EU showed they can agree on some trade issues, as they approved a deal allowing greater access for American hormone-free beef into the European market. It is a deal Mr Hogan is familiar with since he has served as the bloc’s agriculture commissioner for the past four years.

But there are no signs that Mr Hogan might be tempted to discuss the sort of partial deal with the US being debated by Japan — where agricultural market access is traded for minor industrial tariff reductions and an uncertain promise of immunity from auto levies.

Mnuchin points to Beijing’s ‘good faith’ as talks approach

Might the next round of US-China talks be more promising than generally thought? On Monday, US Treasury secretary Steven Mnuchin said that Yi Gang, governor of China’s central bank, would be joining the negotiations in early October. Not only does this point to the fact that currency issues will top the agenda, but also suggests a level of seriousness about the talks that means they might not be entirely futile.

“They’re coming here. I take that as a sign of good faith that they want to continue to negotiate. And we’re prepared to negotiate,” Mr Mnuchin told Fox Business Network on Monday.

Optimists may also point to John Bolton’s sudden exit as national security adviser on Tuesday as a reason for some confidence. Mr Bolton was not heavily involved in China trade issues, but there is nonetheless one less foreign policy hawk in the White House.

A lot would need to happen for any kind of breakthrough — the US will be looking for a resumption of agricultural purchases and China will test America’s willingness to roll back or press the pause button on its latest tariff increases.

If all goes well, a new summit between Mr Trump and Xi Jinping, the Chinese president, could be on the cards at the Apec meetings in Chile in mid-November.

Chart choice

The IMF’s new trade uncertainty index is spiking, having been stable at low levels for about 20 years. 

The number: minus 1.3 per cent

Fall in manufacturing output across the OECD in June compared to the same month in 2018, its worst reading in more than six years 

Further reading

Trump’s self-induced manufacturing recession (Bloomberg)

Kristalina Georgieva has essentially clinched the top IMF job — here are her five top challenges (FT)

China’s trade data show its own suffering from the tariff war (WSJ)

The ad hit of the year, from the Missouri Farm Bureau, on passing the USMCA

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