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U.S., Europeans Agree to Iron Out Trade Differences

President Donald Trump and European Commission President Jean-Claude Juncker speaking in the Rose Garden of the White House on Wednesday. PHOTO: ASSOCIATED PRESS

Trump, Juncker agree to hold off on further tariffs as they work to reduce trade barriers

WASHINGTON—President Donald Trump and European Commission President Jean-Claude Juncker turned down the heat on a trade dispute between two of the world’s largest economic powers, suggesting Wednesday they would hold off on further tariffs while they talk through their differences.

Speaking in a joint news conference in the Rose Garden on Wednesday, the two leaders agreed to begin discussions on eliminating the tariffs and subsidies that hamper trade across the Atlantic, and to resolve the steel and aluminum tariffs the Trump administration had imposed this year as well as the retaliatory tariffs the European Union imposed in response.

The package of measures announced by Messrs. Trump and Juncker would have the EU buying more liquefied natural gas and soybeans from the U.S., and the two sides would begin a “dialogue to reduce differences on regulatory standards between the two economies,” Mr. Trump said. The two sides also suggested they would hold off on further tariffs—a nod to Mr. Trump’s threats to apply tariffs on imported cars.

While the two sides said the deal was contingent on negotiating in good faith, there was no schedule set to complete the talks, meaning that what amounted to a temporary truce could turn into a permanent one—or fall apart if one side accuses the other of lagging behind. To complete a deal, the EU would also face the difficult task of forging a consensus among all its 28 members, including both France and Germany, who often have divergent trade priorities.

Through the deal, the Trump administration seeks to reduce trade barriers to lower the $152 billion U.S. deficit in merchandise trade with the EU, while European counterparts want an end to repeated threats of new tariffs and other measures to restrict access to the U.S. market.

The proposed pact comes a day after the Trump administration faced criticism on Capitol Hill for its use of tariffs. The GOP-controlled Congress in recent days has spoken out against the prospect that the Trump administration could apply new tariffs on imported autos on top of aluminum and steel tariffs, with lawmakers considering legislation to counter the president’s initiatives.

Before the Oval Office meeting, EU trade representatives had paid visits to Capitol Hill in an effort to recruit allies to pressure Mr. Trump to cut a deal. EU Trade Commissioner Cecilia Malmström also came to Washington to meet with U.S. lawmakers, trying to gauge the chances that the Republican-led Congress would advance legislation, according to a person familiar with the conversation.

Senate Finance Committee Chairman Orrin Hatch (R., Utah), who last week sent a letter to Mr. Trump warning of legislation if he didn’t pull back from his threats to apply more tariffs, told Ms. Malmström that senators were evaluating their options, the person said. A spokeswoman for Mr. Hatch said he encouraged the commissioner to work with Mr. Trump, taking steps including the reduction of tariffs.

Mr. Trump had been scheduled to meet with lawmakers from farming states after his talks with the European delegation. Instead, a hastily planned Rose Garden event was announced following the talks, with podiums and flags rushed outside the Oval Office for the announcement.

Lawmakers were also asked to attend the event, Mr. Trump specifically calling each of them out by name and declaring his love for American farmers.

News of a deal was welcomed in Congress. “This is an important first step,” said House Ways and Means Committee Chairman Kevin Brady (R., Texas), who was part of a group that met with Mr. Trump at the White House immediately after the president’s meeting with the EU chief wrapped up. “This could lead to exempting Europe from steel and aluminum tariffs.”

Mr. Juncker, meanwhile, came bearing gifts for Mr. Trump, offering to engage in extensive reviews of barriers for U.S. goods to reach European markets. Mr. Juncker also gave Mr. Trump a picture of the military cemetery in his native Luxembourg where U.S. Gen. George Patton, who led U.S. troops in France and Germany at the end of World War II, is buried.

On the picture, Mr. Juncker wrote “Dear Donald, let’s remember our common history,” the EU official said later Wednesday during a speech at the Center for Strategic and International Studies, a think tank.

The effort to set aside the trade fight with the EU would help the U.S. focus its economic firepower more specifically on China, which Mr. Trump and his advisers see as the bigger trade priority.

The EU also has concerns about China, and had expressed hopes, earlier in the Trump administration, that it could join forces with the U.S. for a unified front in addressing Chinese trade practices. The U.S. alleges that China pressures U.S. companies to transfer technology to their Chinese partners and unfairly subsidizes its companies, leading to a massive U.S. trade deficit.

Before the Trump-Juncker meeting, Qualcomm Inc. said it planned to scrap its $44 billion purchase of Dutch chip maker NXP Semiconductors NV because it couldn’t get approval in China, adding yet another irritant to the U.S-China trade fight.

China and the EU have retaliated against U.S. tariffs with their own levies on U.S. farmers, a core Republican constituency. The U.S.-EU deal specifically calls for the EU to import more soybeans, a crop targeted by Chinese tariffs.

The U.S. and the EU, as part of their agreement, agreed to try to use the World Trade Organization to deal with issues of intellectual-property theft, government pressure on companies to transfer technology to local partners, and excess capacity in many industries—the heart of the U.S. concerns about China. That would be a big change in tactics for the U.S., which has relied mainly on unilateral actions—including tariffs on $34 billion in Chinese goods—to get Beijing to change course.

Five years ago, then-President Barack Obama formally launched similar broad trade talks with the EU under Mr. Juncker’s predecessor. The talks made little progress, and the Obama administration subsequently focused on the Trans-Pacific Partnership with Asian countries. Mr. Trump blocked the pact immediately after taking office last year.

Under the previous negotiations with the EU to form a Trans-Atlantic Trade and Investment Partnership, or TTIP, many European officials were unwilling to change rules that limit U.S. agricultural exports to the bloc, while the Obama administration declined Brussels’ requests to align its financial regulations with Europe’s. Still, the Trump administration never formally rejected TTIP.

Ms. Malmström, in a meeting with Mr. Hatch, Sen. John Cornyn (R., Texas) and Sen. Ron Wyden (D., Ore.), the top Democrat on the Senate Finance Committee, also floated the idea of reaching an industrial bilateral agreement, the person familiar with the matter said. The term generally refers to cutting tariffs on manufactured goods. The senators didn’t have an immediate reaction, the person said, in part because she didn’t provide details.

Whether the deal with the EU goes further and will result in zero tariffs on autos and trucks is an open question. The joint statement put out by the EU and U.S. said that zero-tariff initiative involved “non-auto industrial goods.”

Mr. Brady said that before the White House meeting, he had urged Ms. Malmström to agree to zero tariffs on automobiles, saying such a concession would be “a big step forward.” But lowering auto tariffs to zero faces political hurdles both in the U.S., which has its own 25% tariff on imported light trucks, and in the EU, which imposes 10% tariffs on auto and light-truck imports.

After the announcement with Mr. Juncker, the president arrived to a closed-door meeting with GOP lawmakers, said Rep. Mike Conaway (R., Texas), who attended.

Lawmakers told the president they were worried about retaliatory tariffs on farmers back home. “He seemed legitimately concerned,” said Mr. Conaway, chairman of the House Agriculture Committee. “He will keep negotiating.”

 

 

 

 

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