2021-10-02 00:20:23 U.S. and Europe Announce New Trade Cooperation, but Disputes Linger

U.S. and Europe Announce New Trade Cooperation, but Disputes Linger

WASHINGTON (AP) — The United States and the European Union took a step closer to an alliance this week by announcing a new trade and technology partnership, but tensions over a variety of strategic and economic issues remain simmering in the background.

The formation of the Trade and Technology Council, which aims to forge a unified front on trade practices and sophisticated technologies, is a significant litmus test for President Biden’s ability to fulfill his pledge to reduce trans-Atlantic tensions, which have skyrocketed under President Donald J. Trump. The Biden administration has long characterized Europe as a natural partner in a broader economic and political conflict with China, and it has chastised the Trump administration for picking trade fights that have alienated European governments.

However, while officials on both sides claim that transatlantic relations are improving, the US-Europe rebalance has been more difficult than anticipated.

The Trade and Technology Council’s inaugural meeting in Pittsburgh this week was nearly canceled after the Biden administration announced it would share advanced submarine technology with Australia, which infuriated the French government.

Europeans say they have been frustrated by the Biden administration’s lack of consultation on a variety of issues, including the United States’ withdrawal from Afghanistan. In addition, officials will face a difficult negotiation in the coming weeks over metal tariffs imposed globally by Mr. Trump in 2018.

Europeans have said they will impose retaliatory tariffs on other US products beginning December 1 unless Mr. Biden reverses a 25% tax on European steel and a 10% duty on aluminum.

“The EU initially saw the Biden administration as a ‘breath of fresh air,’ but is now increasingly concerned about how much Biden will differ from Trump,” Stephen Olson, a senior research fellow at the Hinrich Foundation and a former US trade negotiator, wrote in a recent analysis. “From the start, the prospects for a US-EU ‘united front’ have been exaggerated.”

The European Commissioner for Trade, Valdis Dombrovskis, said in a round table discussion with journalists in Washington on Tuesday that the two sides had been working hard on the issue. They hoped to reach an agreement by early November in order to avoid European countertariffs, he said.

Mr. Dombrovskis added that the European Union was disappointed with the Biden administration’s handling of the Australian submarine agreement, but that “occasional divergences” should not jeopardize their strategic alliance.

“Of course, as allies and friends, we do not always agree on everything, as we have seen in recent weeks,” Mr. Dombrovskis said, adding that the Biden administration had been more engaged than the Trump administration.

Updated

5:03 p.m. ET on October 1, 2021

In meetings this week, Secretary of State Antony J. Blinken, Commerce Secretary Gina Raimondo, U.S. Trade Representative Katherine Tai, and their European counterparts pledged to collaborate on a range of 21st-century issues, including controlling advanced technology exports, screening investments for national security threats, and offering incentives to manufacture chips in Europe.

Though no mention of China was made in official documents, the partnership is clearly aimed in part at countering the country’s authoritarian practices. Among other things, the council promised to combat arbitrary and illegal technological surveillance as well as nonmarket economies’ trade-distorting practices.

In June, officials from the United States and Europe announced an agreement to end a 17-year dispute over aircraft subsidies given to Airbus and Boeing.

However, a lingering dispute over Mr. Trump’s metal tariffs on imports from Europe and elsewhere may be more difficult to resolve. Mr. Biden is under intense pressure from domestic steelmakers and labor unions who backed his campaign to keep import barriers in place.

In a virtual round table discussion on Thursday, industry executives and labor leaders expressed concern that cheap steel produced in Europe could continue to harm the U.S. industry.

While China is best known for subsidizing its steel industry, European manufacturers have also received significant government subsidies, giving them an unfair advantage over U.S. competitors, according to Lourenco Goncalves, CEO of Cleveland-Cliffs Inc., an American iron ore mining company.

He urged the Biden administration to bargain from a “position of strength.”

“We need the White House, and we need those on the front lines to not be swayed by sweet talk, especially from the Europeans,” Mr. Goncalves said. “I believe that friends are far worse than enemies.”

According to a person familiar with the discussions, who spoke on the condition of anonymity to discuss confidential matters, US officials made an offer to their European counterparts this summer to convert the current 25% tariff on European steel into a so-called tariff-rate quota, an arrangement in which higher levels of imports are met with higher duties.

The Europeans have argued for a more flexible arrangement, and discussions are expected to heat up in the next three weeks, according to the source.

Reporting was contributed by Thomas Kaplan.

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U.S. and Europe Announce New Trade Cooperation, but Disputes Linger