US President Donald Trump has just lectured NATO on it member’s commitment performance and held a controversial meeting with the Russian President Vladimir Putin and is next week to receive EU Commission President Jean-Claude Juncker, with trade matters being high up on the agenda.
Juncker is expected to present Trump with a package of proposals to help smooth relations and potentially heal areas of division, particularly those surrounding Europe’s trade relationship with America. Those proposals are precisely what is cropping up as another area of divergence between some members of the EU, specifically France and Germany, just after a major contention on migration has been driving discord within the Union.
This gets down to whether Europe should offer concessions to Trump on trade while Trump is admittedly describing the Union as a ‘foe’ and has initiated a trade spat with the Union by assessing trade tariffs on steel and aluminum imports from Europe, spurring retaliatory tariff measures from the EU Commission.
France, specifically, is opposed to any sort of compromise with Trump on the matter, where Trump is perceived as an opponent to the Union and its unity, whereas Germany is economically motivated to seek an end to the trade dispute under the threat of a new round of tariffs emanating from the Trump administration, and is therefore seeking to find some sort of proposal that Trump will accept and therefore back down on his protectionism against the EU, and Germany in particular.
Politico reports:
Only a week before European Commission President Jean-Claude Juncker flies to Washington, France and Germany are divided over how much he should offer to U.S. President Donald Trump to end a deepening trade war, say European diplomats and officials.
But, they add, Germany has the upper hand. Berlin is shaping Juncker’s agenda, suggesting three offers that he could take to Trump on July 25 to resolve the dispute, according to people familiar with the plans.
The French are uneasy about the wisdom of such a conciliatory approach, however, and publicly accuse Trump of seeking to splinter and weaken the 28-member bloc, which he has called his “foe.”
Despite Paris’ reservations about giving away too much to the increasingly hostile U.S. president, the diplomats say that the European Commission’s powerful Secretary-General Martin Selmayr supports the German attempt at rapprochement, which makes it more likely that Juncker will offer some kind of trade fix next week.
“It’s clear that Juncker can’t go to Washington empty-handed,” one diplomat said. He stressed that Juncker’s proposals would be a political signal to Washington and would not be the formal beginning of negotiations, which would have to be approved by EU countries.
European ambassadors will meet on Wednesday to discuss the scope of Juncker’s offer — and indeed whether any offers should be made at all. France’s official position is that Europe must not strike any deal with a gun to its head, or with any country that has opted out of the Paris climate accord, as Trump’s America has done.
While Berlin is terrified by the prospect of 20 percent tariffs on cars and is desperate for a ceasefire deal, France has more fundamental suspicions that the time for compromise is over and that Trump simply wants to destroy EU unity. Paris is concerned that Trump’s next target is its sacred farm sector and is putting more emphasis on the importance of preserving a united political front against Washington.
Two diplomats said Berlin has a broad menu of offers that should be made to Trump: a bilateral deal to cut industrial tariffs, a plurilateral agreement to eliminate car duties worldwide, and a bigger transatlantic trade agreement including regulatory cooperation that potentially also comes with talks on increasing U.S. beef exports into Europe.
Making such generous offers is contentious when Trump crystallized his trade position toward Brussels on CBS news on Sunday: “I think the European Union is a foe, what they do to us in trade. Now, you wouldn’t think of the European Union, but they’re a foe.”
This undiplomatic bombshell came not long after he reportedly advised French President Emmanuel Macron to quit the EU to get a better trade deal than he was willing to offer the EU28.
In announcing Juncker’s visit on Tuesday, the White House said that he and Trump “will focus on improving transatlantic trade and forging a stronger economic partnership.”
Talking to the enemy
Diplomats note that a French-led camp in Brussels reckons Trump’s goals are strategic, and that he’s not after the sort of deal Germany is offering.
A French government official said that Washington quite simply wants to shift the EU off the stage: “Trump’s objective is that there are two big blocs: The United States and China. A multipower world with Europe as a strong player does not fit in.”
France’s Economy Minister Bruno Le Maire this month also issued a stark warning that Trump is seeking to drive a wedge between France and Germany — courting Paris, while simultaneously attacking Berlin’s trade surplus with the U.S. “In this globalized world, European countries must form a bloc, because what our partners or adversaries want is to divide us,” Le Maire said at an economic conference in Aix-en-Provence. “What the United States want, that’s to divide France and Germany.”
Despite these remarks from Le Maire, Anthony Gardner, former ambassador to the EU under the Barack Obama administration, said that he suspects the full magnitude of the threat has not sunk in. “Europe wake up; the U.S. wants to break up the EU,” he tweeted on Sunday. “Remember Belgium’s motto: L’union fait la force. [Unity creates strength]. Especially on trade. No side deals.”
One EU diplomat insisted that Brussels is not blind to these dangers in the run-up to Juncker’s visit.
Trump thinks that Europe is “too big to be controllable by DC, so it’s bad for America. Simple logic. And therefore the only deal that will bring the president to stop the trade war is the deal that breaks up the European market. I don’t quite think that’s the legacy Juncker is aiming for,” the diplomat said.
Europe is source of a deep frustration for Trump, as it runs a massive goods surplus with the U.S., at $147 billion in 2016. In particular, the U.S. president blames Germany’s mighty car exporters for this imbalance.
Leveling the field is not easy, however. With its market of 510 million consumers, Europe not only has the clout to stand up to the United States, but is increasingly setting global standards — particularly on food. This not only limits U.S. exports in Europe but also means that the European model is used in a broader trading ecosystem that includes Canada, Mexico and Japan.
New world order
Marietje Schaake, a liberal Dutch member of the European Parliament, observed that the U.S. trade strategy meshed with Trump’s political agenda.
“You could say there’s a new transatlantic relation emerging, of nationalists, populists and protectionists,” she said, pointing out that Trump’s meeting with Russian President Vladimir Putin has cast doubt on America’s commitment to supporting European security.
Trump’s opposition to the EU partly builds on an long-standing American discomfort about the EU’s economic policies.
“We already saw problems during the negotiations for the Transatlantic Trade and Investment Partnership, where the U.S. didn’t like EU demands such as on geographical indications [food name protections], and certainly didn’t like that we had ambitious requests in areas like public procurement,” said Pascal Kerneis, managing director of the European Services Forum and a member of the now defunct TTIP advisory group.
Kerneis said that Trump’s trade attacks are shifting the tensions to a completely new level: “He’s attacking on all fronts, hoping to break our unity, particularly between Germany and France.”
France particularly fears that Trump’s duties on Spanish olives could only be the first salvo on Europe’s whole system of farm subsidies.
EU lawmaker Schaake said that France is right to worry about a conflagration. “Once we give in in one area, he will attack at the next one,” she said. “If we allow Trump to play Europeans against each other, sector by sector, it will be a losing game.”
Even if Europe goes about capitulating to Trump’s gripes about the Union, whether it gets back to NATO defense spending or the trade deficit, the question remains whether this will satiate Trump’s political appetite and result in an improved trade perspective and politically acceptable position with Washington, and France’s concern that the matter runs deeper and has a foreign policy agenda behind it, and that caving to Trump’s pressure will only end in defeat for the EU would therefore appear reasonable.
But Germany is staring down the barrel of a possible new round of tariffs that would hurt some of their largest industries and is therefore under a lot of pressure to find a solution, or at least some sort of agreement that could deescalate the situation.
However, Germany’s recent record of resolving international issues is such that Germany is really only scoring cease fire agreements, rather than ending the real political conflicts, referring mainly to the immigration issue which recently resulted only in diffusing some inter Union tensions, but without resolving the problem itself.
In this context, Germany could promise the moon and stars to Trump, possibly avert further trade tensions, but yet fail to address the core political and trade conflicts that have already broken out. Essentially, then, such a compromise would only serve to function as damage control, while leaving Germany and the Union at a further disadvantaged political position relative to the States at the political table.
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