A few days to 9 July, the date “X” identified by Donald Trump for the entry into force of the duties up to 50 percent on European goods if a new commercial agreement between Washington and Brussels is not reached. The head of the White House guaranteed that there will be no extension for the partners, none excluded.
Duties, we have (again) joked: the White House opens up to the postponement on the deadline of July 9th
Trump’s message came while the European Commissioner for Commerce Maros Sefcovic has flown to Washington for a new round of talks that promises to be crucial. Waiting for him, the US secretary to trade, Howard Lutnick and the other leader of the American administration, Jamieson Greer. Everything will revolve around the American proposal, presented last Thursday during the European Council, which provides for a 10 percent basic duty on European products. A proposal initially opposed by Brussels, but today considered acceptable if compromises will be found in return. The EU aims to obtain exemptions for key sectors such as pharmaceuticals, semiconductors, planes and alcohol, in addition to the reduction of duties on cars, steel and aluminum, while Washington would like a softening of European legislation on digital markets, considered penalizing for the Big Tech US.
The “mini wto” he thinks of Brussels
But in the face of the uncertainties in commercial relations with Washington, Brussels thinks of an alternative plan: to build an economic partnership with the comprehensive and progressive agree for trans-Pacific Partnership (CPTPP), the block that brings together 12 economies of Asia-Pacific, including Japan, Australia, Canada, Singapore and United Kingdom and born after the failure of the Trans-Pacific. Partnership (TPP), never entered into force for the retreat decided by Trump during his first term. The European Union knows that the agreement would have a remarkable impact, because it would embrace 39 countries populated by one billion people, who represent 30 percent of global trade. A figure that exceeds the exchanges between the EU and the United States.
The proposal was made by the president of the Ursula von der Leyen Commission to the leaders of the twenty -seven member states during the European Council last week. Second Politicalthe number one of the Commission presented the idea of starting a formal dialogue with the CPTPP countries, with the aim of creating a commercial platform based on shared rules. Von der Leyen explained that the new group would redesigate the rules of global trade, “reforming or perhaps even replacing the regulation body of world trade”, the World Trade Organization (WTO). A project that the German Chancellor Friedrich Merz summarized with the “Mini WTO” formula.
Therefore, the agreement between the EU and the CPTPP would be a response both to the commercial instability fueled by the sudden choices of President Trump, and to the WTO crisis which is paralyzed 30 years since its inception: to keep the World Organization of the Commerce in check are precisely the United States that since 2019 refuse to appoint the judges of the appeal body, preventing their functioning and blocking the resolution of commercial disputes. A choice that finds justifications in China’s commercial moves: Washington accuses the WTO of having allowed the commercial giant of exploiting the multilateral system to invade foreign markets and limit access to their own, through incorrect practices, blackmail and manipulations.
This is why Brussels accelerates contacts with the Pacific commercial blockade. In view of a ministerial meeting in July, the European Commission has already started the technical analysis on the compatibility between the EU treaties and the rules of the CPTPP. In the meantime, the details of a standard agreement are being limited to freeze duties and barriers, the first step towards a possible free trade area between the two blocks. The goal, declared by both sides, is to keep the markets mutually open.
The distance between Beijing and Brussels remains
But looking with particular interest in an agreement between the EU and CPTP is China, who has formally asked to join the commercial partnership in 2021. A perspective that however meets strong resistances within the blockade, where several countries fear the “aggressive commercial practices” of Beijing.
Meanwhile, the hypothesis of a rapprochement between the European Union and China moves away. Tensions remain high, especially on the commercial and geopolitical front. Chinese Foreign Minister Wang Yi is in Europe to prepare the EU-China summit of 24-25 July, which will see Ursula von der Leyen, Antonio Costa and Kaja Kallas fly to Beijing and Hefei to meet the Chinese president Xi Jinping and the Premier Li Qiang. At the center of the summit, the Chinese restrictions on rare lands and the failure to distance Beijing from Russian aggression in Ukraine.
But China evaluates its interlocutors based on their ability to concretely affect decisions. And a European union divided, unable to express themselves with a single voice on key dossier such as rare lands, support for Russia or access to the Chinese market, risks being perceived by Beijing as a less fearful actor than the United States. Janka Oertel, head of the Asia program at the European Council on Foreign Relations, is convinced of this: “Beijing believes that Europe will never be united enough to provide a hard response” on all these dossiers. A vision that further complicates the already fragile bilateral dialogue.
