A non-binding joint statement on the EU – US trade deal is almost ready and will be issued any day soon according to a senior EU official who updated journalists on Tuesday about the state of play in the negotiations between the EU and the US.
As previously reported, European Commission President Ursula von der Leyen and US President Donald Trump met a Sunday on 27 July at Turnberry golf resort in Scotland where they reached a deal on tariffs and trade which would cancel the mutual threats of retaliatory 30 % tariffs and counter measures that both sides had announced would enter into force in August.
The deal was a non-binding political agreement which was not confirmed in writing and remaining differences of opinions were not resolved. The two sides were expected to issue a joint statement before 1st of August but this did not happen. Instead, they issued separate statements last week which different interpretations of what had been agreed between them.
The White House issued a document already on 28 July to explain the EU- US trade deal from its viewpoint. The European Commission issued its own fact sheet the following day to do the same. A comparison of the two documents show divergent interpretations of the political deal reached in Scotland.
According to the official all outstanding issues have been solved by now but he was not completely satisfied with the outcome of the negotiations. “It’s not a result that we celebrate but the best possible in the circumstances”, he explained. It safeguards the competitive competition of European exporters and provides immediate relief as a first step.
The EU was not even facing a dilemma between two equally undesirable and uncertain choices. “To evaluate the deal, you have to look at the alternatives. The choice was between a bad deal and a less bad deal ('the least worst').” There was no way that the Trump administration would go back to low or zero tariffs. He described EU’s choice as an act of “strategic realism” in a new reality.
Compared with the UK, which agreed on 10% on most goods imported into the US, the EU with a threshold of 15% seems to have achieved a worse deal. However, to the UK – US tariff should be added Most-Favored Nation Tariffs (MFN) which raise the total tariff to 25 % on certain goods. The EU agreed on a single, all-inclusive US tariff ceiling of 15% for EU goods without stacking.
This tariff will apply as of 8 August when the US presidential executive order of 1 August will enter into force. It will apply to almost all EU exports currently subject to reciprocal and sectoral tariffs. It will also apply immediately to car and car parts. The 15% tariff will also apply for steel and aluminum until there is an agreement on tariff rate quotas for EU exports at historic levels.
While the EU official expected negative consequences of an increase in tariffs for the American economy, the deal can be seen as an insurance policy which gives exporters in the EU Member States some certainty and predictability in at least the short term. Member States overall supported strongly the deal and there was no appetite among them for an escalation to a trade war with the EU.
This does not exclude possible turbulence if the US would not honor the agreement but the EU has the means to respond to that, the official assured.
Like the previous verbal deal, the upcoming joint statement is not a binding legal document but will provide clarification on all points that have been unclear until now. It will also set the framework and scope for a future binding trade agreement.
In the political deal, the EU agreed to purchase $750 billion of energy products (LNG, other fossils fuels and nuclear energy) over three years and invest $600 billion more than planned in the US. A Commission spokesperson declined yesterday to confirm whether this would also be included in the joint statement.
According to the spokesperson, any energy purchases from the US will not contradict its current policy of diversification of gas energy sources from other countries and regions (Norway, Azerbaijan, Gulf and eastern Mediterranean countries).
