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American Shipper

EU ambassadors: Tariffs hurt lucrative relationship

“The fact is, we are both winning and have been for years,” 29 European Union ambassadors to the United States said in an open letter on EU-U.S. trade relations.

   Twenty-nine ambassadors of European Union countries to the United States have penned an open letter on the subject of EU-U.S. trade relations in which they argue recent policy decisions on the part of President Donald Trump and his administration threaten what has historically been a mutually beneficial relationship.
   Published in the opinion section of The Washington Post, the letter begins with a seemingly simple assertion that flies in the face of much of the rhetoric coming out of the White House these days.
   “The fact is, we are both winning and have been for years,” the ambassadors wrote, using one of Trump’s own favorite rhetorical devices — the idea that there is always a winner and loser in any negotiation or agreement. “Claims to the contrary, including that the United States is at the losing end of this relationship, deserve to be debunked.”
   The primary reason for this, according to the ambassadors, is that the United States “makes more money doing business with the EU” than it does with any other country.
   The ambassadors further argue that the EU and United States together represent the “largest and wealthiest market in the world,” accounting for half of global GDP and nearly one-third of all international trade in goods; the EU invests more into the U.S. than the other way around; the EU has no corollary to the “buy American” policy that aims to protect U.S. businesses and labor by restricting the acquisition and use of material inputs and end products that are not domestically produced; the EU is the top importer of U.S. goods and services, even running a deficit in services trade; and the EU’s tariff rates are “constant, level and predictable, helping U.S. enterprises to seamlessly enter our markets without having to fear sudden, perhaps unforeseen heightened charges.”
   All this, according to the letter, translates to a trade relationship that is highly lucrative for both the United States and the European Union. The ambassadors warned, however, that the coming into force of broad global tariffs on U.S. imports of steel and aluminum, and the potential for further duties to be placed on auto imports, could change all that.
   “Simply put, the EU invests more in the United States, buys more American services and employs more American workers than the other way around,” they wrote. “This is a relationship, indeed a partnership, that other countries can only dream of. It’s a partnership underpinned by a broad set of shared values, grounded in a common determination for freedom, peace and prosperity. But as with any partnership, the prospect of unilateral action by one side, to the detriment of the other partner, places the entire mutually beneficial relationship at risk.
   “Placing tariffs on EU steel and aluminum imports — imports that are high value and support critical U.S. industries — is a significant step in that protectionist direction. So is going after the European auto industry — an industry that invests billions in the United States and creates millions of jobs.”
   Tensions over the Trump administration’s tariffs on steel and aluminum, as well as planned retaliatory measures by the EU and other close allies and trading partners, have boiled over of late, with some harsh words being lobbed over both sides of the proverbial fence.
   Trump over the weekend rejected a joint statement signed by the six other world leaders who participated in the G7 summit in Charlevoix, Quebec, after taking issue with comments made by Canadian Prime Minister Justin Trudeau at a news conference following the multilateral gathering. The joint G7 communiques have historically been a way for the group’s members — the United States, Canada, France, the United Kingdom, Germany, Japan and Italy — to show unity and solidarity even in the face of their myriad disagreements.
   The president then took to Twitter, calling Trudeau “dishonest” and “weak” for saying Canada would move forward with plans to place retaliatory tariffs on a wide range of U.S. goods starting on July 1.
   Trump also made reference to a recently announced Commerce Department investigation into the national security impacts of global automobile imports that could result in tariffs similar to those currently being placed on steel and aluminum.
   Since then, leaders from France and Germany have been critical of Trump’s decision not to sign off on the joint G7 communique.
   “International cooperation can’t depend on anger and small words,” the French government said in a statement, according to a report from CNN. “Let’s be serious and worthy of our people. We spent two days obtaining a draft and commitments. We stick to it. And anyone who leaves and turns their back on them shows their inconsistency.”
   German Foreign Minister Heiko Maas said Trump’s apparent reversal shouldn’t come as a surprise.
   “We have seen this with the climate agreement or the Iran deal,” he reportedly said at a news conference in Berlin. “In a matter of seconds, you can destroy trust with 280 Twitter characters. To build that up again will take much longer.”
   Rather than resort to a war of words, or worse, an ever-escalating tit-for-tat tariff battle, the ambassadors in their letter encouraged both sides to continue to cooperate and “focus on what benefits us both.”
   “We should work together to address Chinese steel overcapacity and other market distortions,” they wrote. “We should work together toward a fair, open and rules-based global trading system. We should work together to improve market access for our companies and farmers around the world. Together we should tackle intellectual property theft and look at how we can further reduce red tape, regulatory barriers and tariffs between us — facilitating innovation and investment, to the mutual benefit of business and consumers on both sides of the Atlantic.
   “This, not tariffs and quotas, would be moving in the right direction.”
   The open letter was signed by the ambassadors to the United States of Bulgaria, Austria, Romania, Finland, Croatia, Germany, Portugal, Slovenia, France, the Czech Republic, Sweden, Spain, Belgium, Hungary, Poland, Denmark, Cyprus, Ireland, Lithuania, Greece, Italy, Latvia, Luxembourg, the Netherlands, the Slovak Republic, Malta, the United Kingdom, Estonia and the European Union.

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