Looming threat of trade war in focus in EP meeting

The looming threat of a trade war between the United States and the European Union (EU) came into focus in Strasbourg on Wednesday, as European officials addressed the European Parliament about the impending American tariffs on imports of steel and other goods.

Citing national security concerns and high American trade deficits, U.S. President Donald Trump last week announced steep tariffs on steel (25 percent) and aluminum (10 percent) imports, which would take effect in 15 days.

European Trade Commissioner Cecilia Malmstrom told members of the Parliament (MEPs) in a Wednesday debate that these tariffs "would be very damaging to transatlantic relations," in light of the "global rules system based on a common global order that we have constructed together with our U.S. partners."

COLD-WAR ERA TARIFF POLICIES

"Justifying tariffs on the basis of national security considerations risks undermining the multilateral trading system," Malmstrom told MEPs.

"Moreover, the European Union, friends and allies in NATO, is not a threat to the national security of the U.S.," he added.

The EU Trade Commissioner noted that the American presidential order was made on the basis of a U.S. law that dates from the cold war era, making trade expansion zone for conflict.

"We are of the firm view that the EU should be excluded from the Section 232 measures announced last week," Malmstrom informed European legislators, explaining that she voiced the European Commission position to U.S. Trade Representative Robert Lighthizer in a meeting Saturday.

"Unfortunately, I did not leave last Saturday's meeting with sufficient clarity as regards the exclusions. We are in contact with U.S. counterparts to obtain more clarity as soon as possible," she said, admitting during her talk that EU officials were not yet clear on the details of how countries like Australia and Canada were listed as being exempt from the tariffs.

EUROPEAN COUNTERMEASURES AT THE READY

To reassure MEPs that the EU would not be taken off-guard by the new trade tariffs, and perhaps to reiterate a warning to Trump, Malmstrom indicated that the European bloc would be ready to reply to any unfair trade measures.

"If the EU is not to be excluded from the measures then there would have to be a firm and resolute, but proportionate, response," she said.

The EU Trade Commissioner promised to use the WTO system with other allies to dispute any unfair practices put in place by the United States, but also to execute more immediate measures while that process takes place.

"We suspect that the U.S. move is effectively not based on national security considerations but an economic safeguard measure in disguise. The EU is entitled to use the WTO Safeguards Agreement to rebalance the benefits we have granted to the U.S. in the past," Malmstrom explained, implying retaliatory tariffs on American imports.

"I think we have to try to solve these issues quite urgently, actually. But as long as the measures have not entered into force, we hope to avoid a significant trade dispute," said Malmstrom.