By Valentina Pop and Emre Peker
BRUSSELS -- European officials on Thursday hailed a deal with
the U.S. to avert a trade war despite a lack of details that could
derail the vague accord and upend efforts to resolve outstanding
issues.
President Donald Trump and European Commission President
Jean-Claude Juncker on Wednesday said EU members would buy U.S.
liquefied natural gas and soybeans in return for a U.S. pledge not
to impose new tariffs on European vehicles.
Washington and Brussels also pledged to slash tariffs on
industrial goods -- other than cars -- and to cooperate against
unfair Chinese trade practices. The deal would be voided if Mr.
Trump doesn't hold off on additional levies on cars
It also doesn't immediately lift tariffs the U.S. levied on
imports of steel and aluminum from the EU last month or retaliatory
measures imposed by the EU. In a joint statement and comments, the
two presidents pledged to "resolve" the matter.
"It is very important that the EU and the U.S. work together in
the field of trade and don't fight each other," Dutch Prime
Minister Mark Rutte said on Twitter, welcoming the "positive
outcome."
The details of how the accord will be executed remain unclear,
especially as the European Commission -- the EU's executive -- is
not directly involved in energy or agricultural purchases, which an
EU official stressed Thursday was up to private companies and
market conditions.
French Finance Minister Bruno Le Maire said his government is
seeking "clarifications" on terms of the agreement, reiterating
Paris's commitment to safeguarding EU standards on health, food and
the environment, as well as its demand for a reciprocal trade deal
that opens American markets to European exporters.
A high-level working group will work to fill in the details,
said commission spokesman Alexander Winterstein on Thursday.
"This is a win-win outcome, and that's the way we see it," he
said.
Negotiators from the EU, led by European Trade Commissioner
Cecilia Malmstrom, and the U.S. will hammer out a report in 120
days that will establish the framework for future negotiations
toward a trade deal, the EU official said. That would be past the
midterm elections in the U.S., and it would then take at least some
months to hammer out a trade deal.
"A more limited agreement of this type is much less difficult to
negotiate and manage in terms of complexity, if the political
conditions are of course in place," the EU official said.
The handshake largely echoes an offer put forth by the EU in
May, with some additions, such as the pledge to buy more U.S.
soybeans -- a major American agricultural export under pressure
from Washington's escalating trade war with China.
The EU slightly shifted its position by entering talks before
the White House exempts the bloc from its metals tariffs, but it
has not expanded concessions already on the table to secure waivers
and de-escalate trade tensions.
Still, the agreement comes as a relief, especially for the
bloc's political heavyweight and economic engine, Germany.
Berlin has been particularly concerned about car tariffs that
would hit some $60 billion of annual European exports to the U.S.
Mr. Trump has specifically targeted German carmakers in his tweets
criticizing EU auto tariffs, which at 10% are quadruple the U.S.
levies. The U.S. has a 25% levy on European light trucks.
"Good news from the USA," German Economics Minister Peter
Altmaier tweeted after the announcement. "Breakthrough achieved
that can avoid trade war & save millions of jobs!"
Yet Washington and Brussels left autos out of their decision to
push ahead for a free-trade deal on industrial goods. An EU
official familiar with the discussions said the leaders carved out
cars because they couldn't agree on zero tariffs.
"Are German cars safe? They are, for now," the official said.
"But we are not naive. We don't know how long it will last."
German Chancellor Angela Merkel has also been under pressure
from Mr. Trump to halt a pipeline project that would double
Russia's gas-export capacity to Germany. During the North Atlantic
Treaty Organization summit earlier this month, the president
chastised her for what he said was undermining security by
funneling billions of dollars annually to Moscow.
Brussels can't say how much it might buy but U.S. soybean prices
are dropping amid Washington's trade war with Beijing, while rising
oil price are making American LNG more competitive. The factors
could fuel European demand for imports and please Mr. Trump, two EU
officials said.
The EU's LNG and soybean concessions are "a bit of a stunt," one
EU official said. "You give something without giving anything."
One option Mr. Juncker mentioned was for the EU to build more
LNG terminals that could facilitate higher imports. The EU has
redoubled its commitments to diversify its energy sources since
Russia's annexation of Crimea in 2014.
The EU has committed EUR16.4 million ($19.2 million) for a
Croatian LNG project and approved almost half a billion euros in
state aid a Lithuanian LNG terminal.
Other prominent European leaders -- led by French President
Emmanuel Macron and Ms. Merkel -- unsuccessfully pleaded with Mr.
Trump to spare trans-Atlantic allies from his metals tariffs. Mr.
Juncker's bid to bolster ties coincided with rising opposition from
Republican lawmakers and industry groups to Mr. Trump's threats to
escalate his trade war with China, which EU officials said helped
the bloc's top executive sway the president.
"In this case, the context provided the platform to come to some
meeting of the minds, but let's see if we can come to a final
deal," an EU diplomat said. "I'm a bit cautiously optimistic."
--
Laurence Norman
contributed to this article.
(END) Dow Jones Newswires
July 26, 2018 09:18 ET (13:18 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.