Trump, Merkel Discuss Trade Prospects in Washington Meeting

23 March 2017

US President Donald Trump and German Chancellor Angela Merkel met last week in Washington for discussions on trade, the G20, and other areas for international cooperation, in their first such meeting since the new American leader took office in late January.

The discussion comes at a time when trade has become an increasingly high-profile topic in geopolitical circles, with questions being raised over how to make trade more inclusive, address concerns over inequality, and respond to the debate over what qualifies as protectionism, free trade, and fair trade.

While the US’ presidential elections are now in the rearview mirror, the European Union’s own electoral cycles are kicking into gear, with the Netherlands holding parliamentary elections last week and French voters set to go to the polls in April and May. Germany is due to hold its federal election on 24 September, with Merkel running for a fourth term as chancellor.

At the same time, the EU is also preparing to begin negotiating the United Kingdom’s exit terms from the bloc, with UK Prime Minister Theresa May confirmed that she will trigger the relevant provision to begin those talks on 29 March. The other 27 EU members are due to hold a summit on 29 April to adopt their own Brexit negotiating guidelines.

Merkel pushes for TTIP

Speaking to reporters on Friday 17 March, the two leaders both raised the potential for changing the trading relationship between the two countries within this larger geopolitical context, though differed somewhat in their framing of the issue.

In his comments, the new US leader expressed optimism over the future, but at the same time claimed that the current state of play is not ideal for Washington.

“On trade with Germany, I think we’re going to do fantastically well. Right now, I would say that the negotiators for Germany have done a far better job than the negotiators for the United States,” said Trump.

“Germany has done very well in its trade deals with the United States, and I give them credit for it,” the US leader added. Trump did not clarify which deals he was referring to, given that there currently are no free trade agreements in place between Germany and the United States.

The US leader also rejected the idea that he is an “isolationist,” claiming instead that he is “a free trader, but… also a fair trader.”

“The United States has been treated very, very unfairly by many countries over the years. And that’s going to stop,” he said.

The German chancellor, for her part, noted in her own remarks that negotiating trade agreements falls under the purview of the European Union, and also cited examples of EU trade pacts with large economies – such as South Korea – which she said had been of economic benefit to all parties.

“That’s the purpose of concluding agreements – that both sides win. And that is the sort of spirit, I think, in which we ought to be guided in negotiating any agreement between the United States of America and the EU. I hope that we can resume the agreement that we started,” said Merkel.

The German chancellor was referring to the Transatlantic Trade and Investment Partnership (TTIP), an agreement that the US and EU began negotiating in 2013 under former US President Barack Obama.

Efforts to conclude the talks before Obama left office ultimately proved unsuccessful, with the agreement since put on hold pending clarity from the new US administration. (See Bridges Weekly, 8 December 2016)

In her remarks to reporters, Merkel also noted that the US is not alone in having a sceptical public on trade, referring to past protests in Germany and other parts of the EU relating to TTIP. She also noted that the EU is responsible for negotiating on behalf of Germany and the other member states.

“We’ve devolved our competences to the European Union, so the European Union, or rather the Commission negotiates on behalf of the member states, so that’s not going to prevent us from concluding agreements. Indeed, this would then qualify as a bilateral agreement between the EU and the United States if we have it,” said the Chancellor.

Trump has said that bilateral agreements have priority when it comes to future trade talks under his administration.

While Trump never referred to TTIP in his remarks on Friday, some other White House officials have previously indicated that the talks may not have a promising future. Peter Navarro, who Trump has named the head of the new National Trade Council, has particularly suggested that Germany’s currency policy and implications for the euro are stumbling blocks for the US moving forward.

Navarro has also suggested that TTIP, as a “multilateral” agreement, would not qualify as a bilateral pact. (See Bridges Weekly, 2 February 2017)

Robert Lighthizer, Trump’s nominee for US Trade Representative (USTR), has for his part said that he would consult with congressional lawmakers on the next steps for TTIP, telling the Senate Finance Committee in response to their questions that if these talks resume, this would have to wait until the end of 2017 at earliest given elections in some EU member states.

Meanwhile, EU Trade Commissioner Cecilia Malmström confirmed to an audience in Bavaria on Tuesday 22 March that the proposed trade deal remains “in the deep freeze.”

“We are waiting for a signal from the new administration, but we should be realistic that it might not be ‘defrosted’ for quite some time,” said Malmström.

G20, G7 summits coming up

Merkel also told reporters that her trip came both as the leader of Germany, but also as the G20 president. Trump is due to attend the leaders’ summit in Hamburg, Germany, this coming July.

“We say trade has to be rendered fairer, there has to be a win-win situation. We can talk about the details of that,” said Merkel.

Finance ministers and central bank governors from the G20 coalition met in Baden-Baden this weekend to discuss a range of topics, including their approach to trade. The two leaders will also see each other again at the upcoming G7 summit in Taormina, Italy, in late May, which is also expected to tackle the issue of trade.  (For more on the meeting, see related story, this edition.)

ICTSD reporting; “Trump’s pick for trade envoy open to continued EU trade talks,” POLITICO, 21 March 2017; “Host Italy wants G7 to reject ‘temptation’ of protectionism at summit,” REUTERS, 21 March 2017.

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