Hoping to Ease Trade Tensions With U.S., Europeans Look to Oysters
Posted November 12, 2018 8:27 p.m. EST
BRUSSELS — The United States and Europe may one day put aside their differences on trade, eliminate tariffs on industrial goods and work together to rein in their common economic adversary, China.
But for Cecilia Malmstrom, the European trade commissioner, the most urgent task is to produce quick results, however humble, that will keep an impatient President Donald Trump from imposing even more drastic penalties on European imports than the tariffs his administration has already levied.
So when Malmstrom meets in Washington on Wednesday with her American counterpart, Robert E. Lighthizer, she will count it as a substantial victory if she can lower the barriers hindering one bit of trans-Atlantic commerce: oysters.
The United States and Europe have long banned the importing of each other’s shellfish. But a deal to ease trade on that front has been in the works for several years and could be dressed up by the both sides as a success that helps smooth relations with the White House.
Shellfish may seem like an odd focus for negotiators, but exports from the United States are worth about $1.7 billion a year. And international trade in clams, mussels, oysters and scallops — all of which are shipped live by air — is growing.
The emphasis on mollusks also illustrates a strategy that officials in Brussels hope will prevent Trump from acting on a threat to impose steep tariffs on European cars, a potentially devastating blow to the European economy.
The likelihood that the administration would proceed with those tariffs appeared to increase with the revelation on Monday that the president planned to review a draft report of a Commerce Department investigation into whether imported cars and car parts pose a national security threat, according to three people familiar with the matter.
A finding that such imports threaten national security would allow Trump to impose sweeping tariffs under Section 232 of the Trade Expansion Act. The report is expected to outline a range of options, from doing nothing to placing tariffs or imposing quotas to limit imports, the three people said.
Even before that development, it had become clear that it would probably take years to negotiate a comprehensive trade deal, and Malmstrom does not yet have a formal mandate from European Union members to conduct talks toward that goal.
That is why Europeans are considering sectors where their regulatory standards and those of the United States are similar or identical in hopes it might be relatively easy to reach accord.
“We are working as fast as possible to try to deliver a few positive outcomes as quickly as possible,” Malmstrom said at a news conference in Brussels on Friday after European Union trade ministers met to discuss relations with the United States.
Drugs are another category where a quick agreement might be possible. The European pharmaceutical industry is pushing for the United States to accept the results of clinical trials in Europe of its new drugs, and vice versa. That would cut the cost of testing drugs by millions of dollars and, by extension, help hold down prices for prescription medicines for everyone.
The narrow focus of such proposals shows how difficult it has been to fulfill the expectations raised by an upbeat meeting in July between Trump and Jean-Claude Juncker, the president of the European Commission, which is the union’s executive arm. At the time, the two leaders released a joint statement speaking of a “close friendship, of strong trade relations in which both of us will win.”
Trade pacts typically take years to negotiate under the best of circumstances. EU procedures require Malmstrom to first define the scope of any talks and then seek a mandate from the 28 member states. By the time that process is complete, she and other European Commission commissioners may be near the end of their terms, which expire at the end of next October.
The meeting between Lighthizer and Malmstrom will be only their second since July, but lower-level officials have been meeting more frequently to discuss ways to produce quick results. Dismantling regulations is often easier than cutting tariffs, because negotiators are less likely to run afoul of World Trade Organization rules that require members to treat all other members equally.
An agreement to open up the shellfish trade would hardly be a diplomatic breakthrough, because it was near completion anyway. But it would allow Malmstrom and Lighthizer to announce something concrete, and might help build trust. The Food and Drug Administration has banned European shellfish since the 1980s because of doubts about sanitation standards. Several years ago, though, food safety officials on both sides of the Atlantic began to perform detailed reviews of each other’s quality controls and agreed that they were equally rigorous.
That opened the door for the FDA to issue a proposal in March to lift the seafood ban, initially for mollusks from Spain and the Netherlands. The EU would reciprocate by allowing in shellfish from Massachusetts and Washington and eventually other states.
Europeans also hope that with the midterm elections complete in the United States, Trump will be more willing to call a truce with Europe and join forces to deal with China. The European Union shares many of Trump’s objections to Chinese trade policies, including de facto government subsidies for Chinese companies.
For Americans, the trade war’s negative side effects — higher prices, job losses — are likely to become clearer in the months ahead. When that happens, Trump could feel pressure to ease up on Europe. The German carmaker BMW said last week that the trade war had cost it nearly 300 million euros ($337 million) and that it might have to move some production from Spartanburg, South Carolina, to China to avoid tariffs.
A few optimists are holding out hope that the United States and Europe will pursue a stripped-down version of the Trans-Atlantic Trade and Investment Partnership, better known as TTIP, a far-reaching deal begun under the Obama administration and abandoned by Trump.
“There is a quiet belief in Brussels that after these midterm results the Trump administration will remain keen on a baby TTIP deal with the EU as tensions with China are almost certainly set to escalate,” said Mujtaba Rahman, managing director in Europe for the Eurasia Group, a consulting firm. But serious points of dispute in other areas remain. The United States wants Europe to open its doors to U.S. producers of beef, cheese and other food. The EU has ruled out discussions on agricultural products except soybeans, mindful that any deal that disturbed protections for French or Polish farmers in particular would be politically radioactive in Europe.
The stakes are probably higher for Europe than for the United States. Economic growth has slowed markedly in Europe, in part because the Continent has become collateral damage in Trump’s trade war with China. Exports of products like German machinery and cars have been hurt because the economy of China, an important customer, has also lost momentum.
Nor is there any sign that the Trump administration is ready to roll back tariffs it imposed on European steel and aluminum in May. Those tariffs, which stemmed from a Commerce Department investigation similar to the one involving cars, are seen in Brussels as a strong-arm tactic. (European officials retaliated with levies on U.S. products like orange juice, peanut butter and whiskey. The reaction to auto tariffs would probably be the same.)
“Trump is using trade as a lever more than before,” said Koen Berden, a trade expert at the European Federation of Pharmaceutical Industries and Associations. “The Trump administration sees trade as selling out U.S. interests to some degree, and that needs to be corrected.”
There is a palpable nervousness in Brussels that things could get much worse, that Trump will grow restive at the slow pace of trade talks and use car tariffs to ratchet up the pressure.
“Time,” Margarete Schramböck, the Austrian economics minister, told reporters Friday, “is definitely not our friend.”