EU Prepares Trade Proposal for US to Steer Momentum Into Talks

c8o0mli0i9e861f0f8aiovq9_media_dl_1.png European Commission

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(Bloomberg) — The European Union was expected to share a revised trade proposal with the US, as it aims to inject momentum in talks with President Donald Trump’s administration amid lingering skepticism that a transatlantic deal can be reached.

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The new paper includes proposals that take into account US interests, including international labor rights, environmental standards, economic security and gradually reducing tariffs to zero on both sides for non-sensitive agricultural products as well as industrial goods, according to people familiar with the matter.

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Intended to be sent to officials in Washington earlier this week, the paper also outlines mutual investments and strategic procurement in energy, artificial intelligence and digital connectivity, said the people, who spoke on condition of anonymity to discuss private deliberations.

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A spokesperson for the European Commission declined to comment.

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The EU is aiming to cooperate with the US, and is seeking a balanced and mutually beneficial deal, the people said. The sides are still scoping each other out, and the commission would likely need a mandate from member states before starting formal negotiations, one of the people said.

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EU officials and many member states remain skeptical that the Trump administration is driven by similar goals and have been stressing to counterparts that prosperity on both sides of the Atlantic is deeply intertwined, the people added.

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At the same time, the EU is moving forward with preparing countermeasures if negotiations fail to produce a satisfactory outcome.

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EU Retaliation

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The 27-nation bloc has put together plans to hit €95 billion ($108 billion) of US exports with additional tariffs in response to Trump’s “reciprocal” levies and 25% tariffs on cars and some parts.

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The EU agreed earlier this month to delay for 90 days the implementation of a separate set of retaliatory tariffs against the US over 25% duties Trump imposed on the bloc’s steel and aluminum exports. That move came after Trump lowered his so-called reciprocal rate on most EU exports to 10% from 20% for the same amount of time.

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Trump has also said he will press ahead with plans to target semiconductors and pharmaceutical imports, and has threatened action on movies and aircraft parts. Several EU member states have urged the bloc to retaliate should any of those levies be introduced while the two sides are negotiating, the people said.

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The European Commission’s latest proposals come in response to a paper the Trump administration shared with the bloc’s executive arm following an earlier EU proposal.

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One EU official described the US paper as a wish list of unrealistic demands. Brussels has declared as non-negotiable any unilateral demands that jeopardize the EU’s autonomy in regulatory and tax matters, the official said. 

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The US has long complained about many EU digital rules and sees its value-added tax as a barrier to trade. Brussels argues that VAT isn’t a trade measure and equally applies to all goods, European and non-European.