EU, US Officials Reconvene in Washington to Advance Bilateral Trade Agenda

15 November 2018

Trade ministers from the European Union and the United States met on Wednesday 14 November, looking to take stock of working group discussions on trade and chart a shared path ahead. The high-level discussions are among a series of events this week expected to address international cooperation and the multilateral trading system, coming on the heels of the inaugural Paris Peace Forum. 

EU Trade Commissioner Cecilia Malmström and US Trade Representative Robert Lighthizer were reviewing the latest developments in a working group process launched in July, which followed a meeting between US President Donald Trump and European Commission President Jean-Claude Juncker. (See Bridges Weekly, 26 July 2018

The two presidents announced in July an initial set of issues and objectives that their trade teams would work to address, though trade officials have indicated in the months since that Washington and Brussels are still figuring out what might feature in a formal trade agreement and what may be addressed through other, parallel tracks. (See Bridges Weekly, 25 October 2018

Malmström, Schramböck outline objectives, timing

Speaking to reporters on Friday 9 November after a meeting of the European bloc’s trade ministers, Malmström described next steps for advancing the EU’s trade agenda both at the bilateral level and multilaterally, including with the EU-US relationship. 

Regarding the Trump-Juncker statement from this past July, she noted that both sides are looking at how to “take forward” that work and “identifying what might be done.” Trade officials from the EU and US are due to submit a report to their respective leaders by year’s end, she added. 

She noted in particular discussions “in the regulatory field on how we can make trade easier in sectors like pharmaceuticals, medical devices, cybersecurity, and how we can also allow for those countries and companies in the European Union who would like to buy gas, LNG, from the US.” 

The term LNG refers to liquefied natural gas, which involves cooling natural gas so that it can become liquid, more compact, and therefore easier to ship abroad or keep in storage. According to the US Energy Information Administration (EIA), the US is currently a net LNG exporter, with the top destinations for the fuel including Mexico, South Korea, China, Japan, and Jordan, in that order. Exports of LNG from the US to the European market are significantly behind, with the European Commission noting that the first imports of US LNG began just over two years ago. 

Additionally, the EU’s executive arm noted this past August that one of the biggest hurdles in boosting LNG exports from the US to the EU involves regulatory approval requirements that exist in current US legislation, and which complicate efforts to increase trade in the fuel. Additionally, experts note that Europe has other ways to meet its gas needs: European Commission data notes that the bloc’s top sources of gas imports are Russia, Norway, and Algeria, and that on importing LNG countries like Qatar and Nigeria are taking a leading role as suppliers.  

Malmström also stressed that the EU is looking for outcomes based on cooperation, and that anything agreed with Washington will not involve changes in the European bloc’s legislation nor the lowering of standards. 

Austrian Federal Minister for Digital and Economic Affairs Margarete Schramböck similarly noted that the trans-Atlantic trading relationship played a dominant role in discussions among EU trade ministers. The objective, she added, was to lay the groundwork for increasing “the pace of talks with the Americans.” 

“The trade disputes were not the top issue in the campaign running up to the midterm elections, but nobody knows how long this lull in proceedings is going to last,” she said, explaining why the issue has remained prominent on the European side. Austria is the current holder of the Council of the European Union. 

“We have to conclude discussions on a negotiating mandate and hopefully at the beginning of next year we’ll have a strong negotiating mandate” to give to the Commission, Schramböck added. This would build on the July deal between presidents, which she notes does not include farm goods. 

The Austrian official also noted that the European Union is hoping to see movement from their American partners on some key issues, particularly given recent efforts on the EU side to re-engage in discussions on importing hormone-free beef and veal, which had been the subject of a WTO dispute between both sides and is currently governed by a quota system outlined under a memorandum of understanding.

WTO modernisation: transparency proposal review

While Washington and Brussels are looking to make progress on a set of bilateral issues, in an effort to reduce trade tensions, cut trade costs, and foster a more cooperative relationship, they are also discussing different options for updating the Geneva-based World Trade Organization (WTO). These talks are going on bilaterally, within the Executive Working Group context, as well as in a trilateral format that also involves Japan. They are also reaching out to other WTO members to test ideas and put forward proposals for consideration on some subjects. 

Malmström referred, for example, to a proposal that the EU and US have circulated, together with Argentina, Costa Rica, and Japan, that is aimed at tackling concerns over WTO members’ delays in submitting their required notifications. “There I think we can achieve a lot,” she said. 

The proposal was discussed at this week’s meeting of the WTO’s Council for Trade in Goods. According to a Geneva trade official, Chinese Taipei has also signed on as a co-sponsor of the proposal. The document reportedly drew questions from some WTO members, both on the proposed penalties for non-compliance, given that all WTO members run behind on their notifications, along with whether the organisation’s Council for Trade in Services will see a similar proposal. (See Bridges Weekly, 8 November 2018

The European Union is also looking to advance a proposal related to the organisation’s Appellate Body, which is facing a hefty workload of challenging cases, while also only having three of the seats on its normally seven-member roster filled. 

Without going into detail, Malmström said that the EU’s planned proposal on the Appellate Body is “aiming to be attentive to some of the US’ concerns that they have voiced on specific issues, where they have a point.” Whether the proposal will differ substantially from what the European Commission put forward in a concept paper this past September is not yet clear, given the US Ambassador to the WTO Dennis Shea said later that month that Washington did not agree to some of Brussels’ suggested approaches to the issue. (See Bridges Weekly, 20 September 2018

“We could be quicker, and we could accelerate the procedures, and it could be improved, of course, but also taking advantage of reforming it a bit more substantively while maintaining the integrity and the independence of the body and making sure there is an Appellate Body, actually,” Malmström added, noting that the subject is one of interest for several WTO members.  

She also noted that bilateral discussions between the EU and China on WTO modernisation have been focused primarily on the Appellate Body situation. Meanwhile, she told reporters that meetings with the US and Japan in the trilateral format are devoted to the possible drafting of “new rules on the WTO to present to the membership,” while noting that some of these proposed new rules, which would address industrial subsidies and forced technology transfers, will require cooperation from China. 

Paris Peace Forum: Macron, IGO heads call for “collective responsibility”

The EU-US trade ministers’ meetings come right on the heels of the Paris Peace Forum, a new event convened from 11-13 November in the French capital city to bring together stakeholders from across countries and sectors in support of multilateralism and cooperation.

Event organisers describe the event as built for “those who seek to develop solutions for today’s transborder challenges,” and drew participation from world leaders, international organisation chiefs, media representatives, civil society, and a host of others.

One of the main outcomes of the Paris Peace Forum was a joint statement issued on behalf of French President Emmanuel Macron and the heads of various international organisations. These included the leaders of the World Trade Organization (WTO), the UN Educational, Scientific, and Cultural Organization (UNESCO), the Organisation for Economic Co-operation and Development (OECD), the World Bank Group (WBG), the International Monetary Fund (IMF), and the International Labour Organization (ILO).

“Topics such as the maintenance of international peace and security, the protection of the environment and biodiversity, the implementation and achievement of the Sustainable Development Goals (SDGs), international trade and investment, human rights and gender equality, the fight against corruption and against tax optimisation and tax evasion are interconnected and require coordinated action,” they said, according to an informal translation of the statement, which was issued in French.

“To address global challenges, global attention, collective responsibility, and international solutions are needed: we remain committed to working tirelessly to achieve lasting peace and progress through multilateral approaches,” they continued.

The importance of mitigating trade tensions among major players, safeguarding and improving the WTO system, and ensuring cooperation across the international trade community were also themes that emerged during WTO Director-General Roberto Azevêdo’s individual remarks during the event.

"Think about the world without the WTO. It would be the law of the jungle. It would be a return to unilateralism, with no global cooperation on trade issues,” he warned, according to a statement issued by his office.

ICTSD reporting.

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