By Emre Peker in Brussels and Joshua Zumbrun in Washington
The European Union's top trade official is trying to head off a
trans-Atlantic trade war with offers of cooperation, as the White
House weighs whether to impose new tariffs.
Hanging over Phil Hogan's first U.S. visit since taking office
last month is a widening European trade surplus and threats from
President Trump, who says the EU is "taking advantage" of the U.S.
and is worse than China on trade issues. Mr. Hogan hasn't signaled
any new approach from his predecessor to resolve the impasse,
despite resurgent commercial tensions.
"We have a challenging relationship with the U.S.," Mr. Hogan
said ahead of his visit, who met with U.S. Trade Rep. Robert
Lighthizer on Tuesday and will also talk with Treasury Secretary
Steven Mnuchin, Commerce Secretary Wilbur Ross and members of
Congress.
Washington is threatening to slap levies on $2.4 billion of
French goods over a digital tax that Paris adopted and the Trump
administration says unfairly targets U.S. firms. The U.S. has
cleared its procedural hurdles to act as soon as Wednesday but has
signaled it will hold off as Paris and Washington try to resolve
the issue by next week when they meet on the sidelines of the World
Economic Forum in Davos.
A previous deal between Mr. Trump and French President Emmanuel
Macron unraveled. The EU has vowed to react and other members of
the bloc, including Italy, are following France's lead on taxing
large tech companies.
The USTR is separately considering expanding tariffs -- first
imposed in October -- on $7.5 billion worth of annual imports from
the EU. After clearing a procedural step on Monday, the U.S. can
take action at any point. The initial action followed a WTO
decision permitting the U.S. to impose duties to recoup losses from
the EU subsidies of airplane maker Airbus SE. A countervailing
European case at the WTO, expected to conclude this year, would let
the EU impose similar tariffs on the U.S. for American subsidies to
Boeing Co.
The White House has also not ruled out imposing duties on some
$60 billion worth of annual European car and auto-parts exports
after Mr. Trump let lapse a deadline to do so. The EU has vowed
again to retaliate -- which would amount to levies on about $100
billion of commerce, or roughly 10% of annual trans-Atlantic goods
trade.
The administration is focused on EU exports. "You can't get the
global trade deficit down without getting the trade deficit down
with Europe," Mr. Lighthizer told Fox Business in December.
Rather than directly address the issues stoking U.S. anger, Mr.
Hogan is focusing on how the two economies can together tackle
Beijing's market-distorting trade policies. But Mr. Trump's
administration has largely opted to tackle China alone, with plans
Wednesday to sign a first-phase trade deal with Beijing.
Efforts to boost trans-Atlantic trade have fallen short since a
July 2018 White House deal to deepen economic links, roll back Mr.
Trump's steel and aluminum tariffs, and remove EU retaliation.
Talks to bolster the World Trade Organization and counter Chinese
subsidies have yet to deliver concrete results, while bilateral
trade conflicts have multiplied.
"The relationship has been rough for the last few years," said
Marjorie Chorlins, senior vice president for European affairs at
the U.S. Chamber of Commerce. "I think both sides want to make an
effort to get things back on track, but there's certainly a risk it
gets tougher before it gets better."
The EU is seeking to reset U.S. ties by leveraging a leadership
change following the 2019 European elections. The new European
Commission, the EU's executive, took office Dec. 1.
"We expect this engagement to be a steppingstone in an effort to
refresh and invigorate a positive trans-Atlantic trade
relationship," a Commission spokesman said of Mr. Hogan's trip.
The trade chief joined Mr. Lighthizer and Japanese Trade
Minister Hiroshi Kajiyama in agreeing on Tuesday to ban four types
of subsidies under WTO rules. Their proposal follows more than two
years of talks and covers unlimited guarantees, subsidies to ailing
businesses, support to zombie firms in sectors with excess
capacity, and debt write-offs.
Updating WTO rules, however, needs broad support from the
organization's members, including China -- one of the biggest
global providers of subsidies targeted by the revamp.
"The situation in WTO at the moment makes it very unlikely that
we'll get to a multilateral outcome soon," an EU official said
Tuesday.
Amid slow progress on addressing shared global challenges, such
as checking China's state-capitalism and removing trade barriers,
European and U.S. trade negotiators have struggled to find common
ground for rebuilding bilateral relations.
Talks for an EU-U.S. trade deal never started due to
disagreements over agriculture, which Washington wants to include
in talks and Brussels refuses to discuss. Pacts on industrial
regulations advanced but recently bogged down. And nascent efforts
to resolve the long-running WTO aircraft dispute through
negotiations remain far from success.
"No low-hanging fruit, I would say, to be expected," said Sabine
Weyand, a top EU trade official, after meeting her U.S.
counterparts in December.
The lack of quick wins, which both sides had targeted, is
stoking concern among some EU officials as Mr. Trump inks his
initial trade deal with China. Beijing's commitments to boost
imports from the U.S. is bad news for Europe, an EU diplomat
said.
European officials say Brussels needs to convince the Trump
administration that the EU is a valuable partner. That is a hard
task as the president pursues unilateral actions aimed at reducing
U.S. trade imbalances. The U.S. trade deficit with the EU has been
deteriorating for a decade and widened to another record last
year.
"Even if you change the people, the assignment is the same. The
situation hasn't changed," the EU diplomat said. "On underlying
issues we still have divergent views and quite a lot of distance to
cover."
Write to Emre Peker at emre.peker@wsj.com
(END) Dow Jones Newswires
January 14, 2020 15:59 ET (20:59 GMT)
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