BRUSSELS — The trade dispute between the European Union and United States is not over yet. U.S. President Donald J. Trump and European Commission President Jean-Claude Juncker agreed in Washington on July 25 to stop a further tariffs battle escalation, promising each other not to introduce new measures and to work together towards zero tariffs.
The trade tension between the two economies began when Trump imposed tariffs on European steel and aluminum imports and threatened to add tariffs on European-imported cars. In retaliation, the EU introduced tariffs to a number of American products and adopted quotas for steel imports in July for other countries, including Ukraine.
“I am pleased to learn that the United States and European Union reached the agreement today to work jointly to reduce trade barriers and, together with other partners, strengthen the (World Trade Organization),” Christine Lagarde, managing director at the International Monetary Fund, commented on this agreement. The global economy can only benefit when countries engage constructively to resolve trade and investment disagreements without resort to exceptional measures.”
Roland Freudenstein, policy director of the Martens Centre for European Studies, told the Kyiv Post that the current agreement to avoid a trade war and negotiate a new transatlantic trade agreement with lower tariffs demonstrates three points.
“First, it’s another proof of Trump’s unpredictability. At one moment he labels the EU as a foe and repeatedly threatens punitive tariffs painful for both sides, and a few days later he announces a deal and lets Juncker kiss him on the cheek,” Freudenstein said. “This unpredictability is part of Trump’s toolbox, of course. He wants to rattle the opponent with threats, and dramatize the situation, in order to be, at the surprising end, the skillful dealmaker, at least in the eyes of his voter base.”
Freudenstein thinks that the prospect of a new transatlantic trade agreement proves that the EU and the U.S. have a lot in common, also vis-a-vis China, a country that strongly violates WTO rules. “Trump certainly got a couple of angry phone calls from pro-trade Republicans and business leaders who see that a trade war would be damaging for the U.S. as well. Now, a serious transatlantic trade conflict is not completely off the table but at least it will not happen for the duration of negotiations.”
Despite the fact that issues of tariffs on steel and aluminum are not solved yet, Freudenstein is convinced that for Ukraine this is great news because better transatlantic relations means better security for Ukraine.
“America and Europe together can resist Kremlin pressures on Ukraine much better than America and Europe at loggerheads. Trump has backtracked on his romance with Putin, too. Therefore, for the moment, all this is good news for the EU, U.S., and Ukraine. Its bad news for Putin whose attempts to undermine Western unity has been thwarted for now.”
A few other important EU-U.S. issues were concluded including one within the energy sector that will have huge importance for Ukraine: The EU promised to buy more liquefied natural gas from the U.S. diversifying EU’s energy supply putting pressure on Russia’s North Stream-2 project.
During the 2018 Brussels NATO Summit Trump loudly expressed his concern about the construction of the North Stream 2 gas pipeline, an expansion of the Nord Stream 1 pipeline. Together, the pipelines will be able to carry 110 billion cubic meters of gas annually from Russia to Germany through the Baltic Sea and bypassing Ukraine.
