EU to Present Trade Proposals to US Negotiators Next Week

(Bloomberg) --

The European Union is planning to share a paper with the US next week that will set out a package of proposals to kick-start trade negotiations with the Trump administration.

The paper will propose lowering trade and non-tariff barriers, boosting European investments in the US, cooperating on strategic challenges such as tackling unfair competition and China’s steel overcapacity, as well as purchasing US goods like liquefied natural gas and technologies, according to people familiar with the matter.

The plans could still change as the European Commission, the EU’s executive arm that handles trade matters for the bloc, continues to consult with member states, said the people, who spoke on the condition of anonymity. 

A spokesperson for the commission declined to comment.

The menu of options will be presented to the Trump administration as a way to scope out if there is appetite to then translate the ideas into more formal offers and negotiations, the people said.

Proposals to bring down tariffs are complicated by the fact the EU has already been rebuffed in offering to reciprocally eliminate duties on industrial goods. For Washington, lowering tariffs would require congressional approval and officials in Brussels see little scope for President Donald Trump to go that route.

Still, the bloc is prepared to talk about other ways to lower levies on a reciprocal basis as well as ideas to harmonize technical barriers to trade and food and agricultural standards, the people said.

In addition to purchases of LNG, the two sides could explore investments and cooperation in chips, artificial intelligence, nuclear technology and digital connectivity as well as critical materials, auto supply chains and civil aircraft, the people said. They noted that many such decisions would ultimately be up to private companies.

In parallel, the EU is also moving forward with plans to retaliate over the tariffs Trump has imposed on the bloc should negotiations fail, according to the people. Those plans include more lists of US goods to hit with tariffs as well as possible export restrictions, Bloomberg previously reported.

90-Day Reprieve

The EU agreed earlier this month to delay for 90 days the implementation of a set of counter-tariffs against the US over 25% duties Trump imposed on the bloc’s steel and aluminum exports. That move came after the US president lowered his so-called reciprocal rate on most EU exports from 20% to 10% for the same amount of time.

Trump has also imposed a 25% duty on cars as well as some parts. The president has said he will press ahead with plans to target semiconductors and pharmaceutical imports too.

The EU’s trade arm is expected to present member states with countervailing proposals next week in order to allow the bloc to move quickly if Trump’s 90-day pause expires and talks fall short of a satisfactory solution, the people said. In that scenario, the bloc would also likely take the US to the World Trade Organization and is preparing for an eventuality that could see the two sides spar in litigation.  

The EU and the US have so far made little progress in talks aimed at defusing the conflict and several government officials told Bloomberg earlier this week they believe that many of the US tariffs are here to stay.

The Trump administration has raised grievances about the trade deficit in goods it has with the EU as well as over several of the bloc’s regulations and standards.

The bloc is also preparing to address any trade diversion that could result from the 145% tariffs Trump placed on many Chinese exports. 

(Adds details on EU plans in fifth to ninth paragraphs)

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