We’ve managed to stay away from Brexit in today’s main piece, but we did have the unexpectedly exciting experience of attending Michel Barnier’s press conference in Brussels yesterday. The EU chief negotiator’s habitual urbanity cracked under strain as he laid into the UK for apparently backing away from its pledges on Northern Ireland and the “level playing field”. The UK will publish its own negotiating objectives tomorrow. Meanwhile, news about the coronavirus and its economic impact only continues to worsen. Today’s main piece, based on an FT interview with EU trade commissioner Phil Hogan, is on the EU’s attempts to see off US threats of car tariffs by offering more market access (read to the end for a top nugget of info on “Big Phil”, his now-compulsory nickname).
Our Person in the News is Indian commerce minister Piyush Goyal, while our chart of the day looks at Chinese imports of US medical devices.
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Finding a bone to throw to Donald Trump
The FT spoke to Hogan on Monday, and the main write-up is here. We talked about various things, but for today we’ll look at the relationship with the US. In particular, we discussed his attempts to put together the mini-trade deal that European Commission president Ursula von der Leyen mooted with Donald Trump in January. The aim is to placate Trump enough with more market access to Europe that he drops the renewed US threat of tariffs on European cars.
Hogan was very keen to get a particular message out. The commission would look for progress wherever possible. But changes in food regulation, including “pathogen reduction treatments”, ie chemical-washed chicken, were not on the, er, table. He more or less concurred with our suggestion this would reduce the deal’s scope. “In any negotiation both sides have to compromise in relation to their level of ambition,” Hogan said. “This is about a mini-deal in line with existing [negotiating] mandates.”
So, unclogging bureaucratic processes with regard to importing oysters from Maine, fine. Another idea we have heard is easing the inspection protocol for almonds from California. Plus co-operating on drafting new rules for the World Trade Organization constraining industrial subsidies (which it is already doing), and working together on new technologies and energy. It’s not exactly the Marrakesh Agreement. More a micro-deal than a mini-deal, one might say.
It’s certainly not the comprehensive reassessment of food hygiene rules that the Americans have demanded. Hence it’s unclear whether it will be enough to mollify Trump and keep car tariffs at bay.
It’s fair to judge this attempt to placate the Americans as less well choreographed than the last effort, in July 2018. On that occasion the then-commission president Jean-Claude Juncker came to the White House with a specific proposal worked out in advance with Larry Kudlow, Trump’s most free trade-friendly adviser. The deal defused the threat of car duties with negotiations on cutting industrial tariffs plus Europe buying American soyabeans and liquefied natural gas. It was all neatly done: Juncker literally brought in colour-coded flash cards to explain the deal to Trump.
Completing the agreement was always improbable. Vast-scale commodity procurement is not exactly in the European Commission’s purview. Excluding farm tariffs was never going to please US trade representative Robert Lighthizer, the man in charge of negotiating the deal. Still, Trump signed up, and until now it has kept at bay his wilder impulses.
In the new iteration of Operation For God’s Sake Give Trump Something, Anything, von der Leyen created expectations without having anything immediately to fill them. The commission is working to fill in the gaps. But it doesn’t have much in the cupboard to offer the US without touching off some fierce opposition from domestic constituencies including farmers and consumer rights types.
It’s possible that Trump in an election year is so keen for a deal he will accept some bureaucratic tinkering on oysters and almonds and declare victory. Lighthizer won’t be happy, but he’s unlikely to be able to ramp up a trade war of his own volition. In any case he is known not to be a fan of the national security tariffs with which Trump is threatening EU cars.
As usual, everything comes down to how Trump is feeling and which administration official has his ear the day that a deal is presented to him. On those questions, your guess is as good as ours.
What else? Ah, yes, that nugget of info. How big is Big Phil? We have an official ruling: he’s 198cm tall, or for metric martyrs a tiny rounding error short of 6ft 6in (others have also reported this, to be fair, but this is the definitive line from his staff). Do with this information what you will.
The latest round of Chinese tariff cuts for US exports includes medical devices — X-ray machines and other diagnostic equipment among them. US exports had already been increasing in the fourth quarter despite tariffs. Meanwhile, Europe’s exports and imports with the rest of the world stabilised in 2019, ending the year with a €23.2bn trade surplus. EU27 exports to its main partner, the US, grew 9.5 per cent from 2018 despite trade friction.
Person in the news
Who is it?
Indian commerce minister Piyush Goyal
Why is he in the news?
Donald Trump has made the first visit of his presidency to India — but despite multiple phone calls between US trade representative Robert Lighthizer and Mr Goyal in the run-up to the visit, hopes that a limited trade deal would be signed this week were dashed.
Mr Goyal is quoted in the Indian press as saying he still hopes a limited mini-deal can be closed “quickly”, with a larger full trade agreement to follow.
Speaking at a rally alongside Indian prime minister Narendra Modi, Mr Trump bombastically agreed a more ambitious trade deal might happen in the future. “We will be making a very, very major — almost the biggest ever made — trade deal,” the president said.
- The volume of goods traded around the world rose late last year for the first time in more than six months as US-China trade tensions eased, but the improvement is likely to be shortlived as coronavirus hits the global economy.
- EU chief Brexit negotiator Michel Barnier has revealed the depths of Brussels’ frustrations with perceived backsliding by UK prime minister Boris Johnson, only days before the start of trade talks. He warned Britain “not to go backwards when we should be going forwards” — and repeatedly banged a podium as he spoke.Read more
- As the coronavirus hits Europe, questions arise about dependency on China, the risks of air travel, climate change and a new racism in populist politics.
The best trade stories from the Nikkei Asian Review
- Google and Microsoft have been quicker to move production out of China than hardware-focused tech brands such as Apple, HP and Dell, with “Made in Vietnam” Pixel phones and Surface laptops expected this year.
- A Japanese court has ruled in favour of a patent application by a US institute on the breakthrough CRISPR-Cas9 gene-editing technique, in a victory for a technology embroiled in intellectual property disputes worldwide.