EU trade chief: Trump tariffs will destroy jobs

Written by Martin Banks on 20 June 2018 in News
News

The European Commission’s top trade official condemned US President Donald Trump’s decision to impose steel and aluminium tariffs on the EU, Canada and Mexico.

Photo credit: Press Association


Speaking in Parliament on Wednesday, Jean-Luc Demarty warned that the taxes could be “catastrophic” for world trade.

His comments, at a meeting of Parliament’s international trade committee, come after the European Commission recently launched legal proceedings against the US decision in the WTO.

Demarty, who is the head of the European Commission's trade directorate, also defended the EU’s “reasonable counter measures.”


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He told MEPs, “I am no psychologist but I fail to see the logic of these measures the US has imposed.

“There will be some initial artificial effect on the US economy but these tariffs will be clearly detrimental, not only to global trade but also to trade in the United States. These measures are also going to destroy jobs.”

He said studies had shown that similar tariffs by the US under the Bush administration in 2002 had also proved detrimental.

It was recalled that when George W. Bush tried to save the steel industry in 2002 by raising tariffs on select steel products, many business groups said the result was a disaster and that more jobs were lost than saved.

In the end, the tariffs were overturned and the WTO ultimately decided they did not conform with global rules. Facing retaliation from the European Union and others, Bush removed the tariffs after just 18 months, instead of having them in place for three years as he wanted.

Demarty said that the current WTO case could take up to three years by which time he semi-mockingly said that President Trump may no longer be in office.

He told the meeting, “We have a lot in common on this with Canada and Mexico and are working closely with both. The last thing that should be happening is throwing oil on a fire.”

He added that it was vitally important for the EU to be strong in the face of such threats.

The trade chief said, “Our door is always open to reasonable discussion on this but not if threats are being made. The last thing we need is for the EU to appear weak on this. That is why we had to respond as we did and will do. We have to show that the EU must be respected.”

Demarty was taking part in an exchange of views on EU-US trade relations and possible future steps on what some have called a trade war with the US.

His appearance comes after the Commission on 6 June endorsed the decision to impose additional duties on the full list of US products notified to the WTO, as part of the EU’s response to the US tariffs on steel and aluminium products.

Following the decision to apply additional duties to selected imports from the United States, the Commission said that it expects to conclude the relevant procedure in coordination with member states before the end of June so that the new duties start applying in July.

The application of what Demarty called “rebalancing” duties is, he said, fully in line with WTO rules, and corresponds to a list of products previously notified to the WTO.

The WTO safeguards agreement allows for a rebalancing corresponding to the damage caused by the US measures with EU exports worth €6.4bn (in 2017) being affected.

The EU, he said, had merely exercised its rights on US products valued at up to €2.8bn of trade.

The remaining rebalancing on trade valued at €3.6bn will take place at a later stage - in three years’ time or after a positive finding in WTO dispute settlement if that should come sooner.

Speaking recently, European trade Commissioner Cecilia Malmström said, “This is a measured and proportionate response to the unilateral and illegal decision taken by the United States to impose tariffs on European steel and aluminium exports.”

The former MEP said, “What’s more, the EU’s reaction is fully in line with international trade law. We regret that the United States left us with no other option than to safeguard EU interests.”

The imposition of duties on a list of selected US products is part of the three-pronged response outlined by the European Commission that includes the launch of legal proceedings against the US in the WTO and the possible triggering of safeguard action.

Demarty also cited the current trade spat between the US and China which threatens to escalate.

The official told the meeting that he was equally sure the measures announced by President Trump would have a bad effect on trade globally.

President Trump has threatened to impose tariffs on an additional $200bn of Chinese goods in a growing trade row. On Wednesday, Trump said the 10 per cent tariffs would come into effect if China “refuses to change its practices”.

The threats would be a major escalation of the dispute and sparked further falls on stocks. European markets also suffered, with some trading more than one per cent lower.

China has responded by accusing the US of "blackmail", raising fears of a full-blown trade war.

Demarty said, “Instead of solving current trade problems this is going in the opposite direction and threatens to weak us collectively. A trade war with China will be bad for everyone.”

The official said that, instead of tariffs, it would be better to use the current “crisis” to press China to reform its trade practices.

“It is all difficult to understand but there is a real risk of an escalation in tensions.”

About the author

Martin Banks is a senior reporter for the Parliament Magazine

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