FAC trade: low expectations regarding US steel exemption

There’s little that is really new to report on the Foreign Affairs Council meeting held today in Brussels. The EU is not nurturing  strong hopes to be exempted from import restrictions from the United States.


Australia and New Zealand trade negotiations to begin by July


As expected, the EU’s member states gave the green light to the European Commission to begin free trade negotiations with Australia and New Zealand.


Member states are expected to publish the final version of the draft mandates sent to them by the commission last autumn. “I hope the Council will publish the mandates soon,” Cecilia Malmström said after today’s meeting.


It is now official: member states will follow their new principles on the new architecture of EU trade agreements following the Court of Justice of the EU’s ruling on the EU-Singapore free trade agreement.


The Singapore agreement – initially concluded in 2015 – is now on track to be ratified. Governments will ratify a separate investment accord. But the EU-Japan pact concluded recently will come first, as member states aim to approve the deal by July.


EU-US: low expectations, signs of tension


Malmström reported back to the EU’s member states on her latest discussions with US commerce secretary Wilbur Ross regarding tariffs on steel and aluminium that Washington could impose on EU firms for national security reasons by 1 June. This was part of the formal agenda for the day.


In practice, the EU-US row over Iran dominated the meeting.


The EU’s trade chief presented the four points for potential negotiation that heads of government came up with following a dinner in Sofia, Bulgaria, last Wednesday: talks on tariffs, on regulatory cooperation in specific industrial sectors, energy trade and on World Trade Organization reforms. The offer to talk is made on condition that the EU be exempted permanently and unconditionally from such duties.


“Discussions are continuing. Is this going to be enough? I am not sure, frankly,” Malmström said. The EU trade commissioner expects either tariffs or “other sorts of limiting measures”.


Our understanding is that such measures would be a quota or a cap on imports.


Peter Altmaier, Germany’s economy minister, told reporters after meeting his counterparts that should any negotiations emerge from current discussions with the US, member states would need to adopt a formal mandate for the commission. “We are not there yet. Instead, at the moment, it is about discussing our proposal for an agenda [with the US] and agreeing what that agenda could be.”


The commission and France say that any negotiation with the US would be conditioned on a full and permanent exemption from trade measures. Altmaier did not mention this precondition in his statements to the press today. “There have been appeals to the commission to continue to have talks with our American counterparts,” he said.


The EU’s defence minister, Jean-Yves Le Drian, showed up for the trade council meeting – an unusual move for a defence chief. Le Drian insisted an exemption was a precondition to any talks with the US in his statements to the press. In response to a question on whether France and Germany were still in disagreement over the approach to take vis-à-vis the US, the French minister refused to comment: “I will stop here,” he said.


Member states did not release common language to the press on the approach to take towards the United States in the matter of steel and aluminium export restrictions.


The next milestone in these conversations with Washington is the OECD ministerial meeting to be held next week – on 31 May – in Paris. A small WTO ministerial will be held on the sidelines of the gathering.