The European Union’s trade chief heads to New York this week to continue negotiations with the United States and Japan, as the three parties seek a way to end what they see as China’s unfair commercial policies and dial down global tensions.
Their plan is to create an agreement to try and force China to end “non- market-oriented policies” that lead to overcapacity, create unfair competitive conditions and hinder technological development. The stakes couldn’t be higher. The EU is engaged in a delicate balancing act, working with the US to address common complaints while also trying to convince President Donald J. Trump to roll back unilateral tariffs he imposed on the 28-country bloc this year and persuade him against instating other, more punitive measures. Cecilia Malmstrom, the EU’s trade negotiator, will also seek to stem the American assault on the multilateral system by shoring up the World Trade Organization.
“It’s a longshot, and these talks are at a very early stage,” said Chad Bown, a senior fellow at the Washington-based Peterson Institute for International Economics. “But this may be the best way both to resolve Trump’s escalating trade war with China and to address some of the WTO’s key shortcomings.”
Trade off-ramp
Malmstrom will meet US Trade Rep. Robert Lighthizer and Japanese Trade Minister Hiroshige Seko on September 25 while the UN General Assembly is in session. The three will seek to lay the groundwork to develop stronger rules for industrial subsidies, state-owned enterprises, forced technology transfers, WTO transparency and e-commerce.
The meeting comes after Trump has already hit China with tariffs on $50 billion of its imports, announced duties on another $200 billion of goods coming from the nation that go into effect on September 24, and threatened levies on another $267 billion if China retaliates—which Beijing has already pledged to do. China canceled trade talks that had been planned between the two nations.
Overall manufacturing in the euro area grew at the slowest pace in two years in September as the economy feels the pain from the global trade war. The auto industry—which has been targeted by Trump and is particularly sensitive to larger EU nations—is taking the brunt of the slowdown in demand, according to IHS Markit’s latest monthly survey.