The international rules-based trading system is put under great pressure since the failure of further multilateral trade liberalization, and the blockage of the nomination of the judges of the WTO appellate body. Increasing trade tensions between the US and its trade partners also arise due to several unilateral measures recently imposed by the US (such as high duties on steel and aluminum, announced tariff measures against China, as well as increased sanctions against Russia and Iran). The US measures, and the retaliation foreseen by some of its trade partners, will have negative impacts on transatlantic relations and trade and on global markets, with the risk of trade wars. For the chemical industry, at the present state, indirect effects are to be expected, i.e. trade diversions, decrease of exports and of supply demand from key customers and increasing uncertainty leading to less investment. In addition, the US administration is showing increasing irritation towards EU Health, Safety and Environment standards and regulations, as well as towards certain EU tariffs, considering them as unfair trade barriers to US exports. In May 2018, the Trump administration even launched an investigation into whether automotive imports pose a risk to US national security, a move that the EU considers as a direct threat to the EU automotive industry, an important customer of the chemical industry.
At their meeting on May 16th in Sofia, the Heads of State and Governments of the EU unanimously have offered – inter alia – negotiations on a lean transatlantic trade agreement, combining the elimination of industrial tariffs with some additional areas of liberalization to their American counterpart if the EU would be exempted from the additional US tariffs on steel and aluminium (“called TTIP light”). Even though the preconditions were not met at June 1st, the idea of renewed free trade negotiations is still under discussion, fuelled by additional threats from the US government on car tariffs. US-President Trump has raised the issue of “eliminating all tariffs, trade barriers and subsidies” at the G7 meeting in Canada in June.
As you know, the EU is currently negotiating, and has recently concluded, deep and comprehensive trade agreements with third countries, going well beyond tariff-only agreements and requiring significant efforts/concessions. The EU trade negotiations on a trade agreement with Japan and Singapore are expected to be adopted by the Council this summer, and the agreement with Vietnam should be presented to the Council by end 2018. The negotiations with Mercosur and Mexico are in an advanced stage, with already a political agreement on the modernization of the EU-Mexico trade deal.
In this respect, negotiating a transatlantic tariffs-only trade deal could give a negative message to EU’s trade partners and make other trade negotiations more difficult. In addition, a tariffs-only agreement would be in contradiction to Cefic’s claim, back to the TTIP negotiations, for a deep and comprehensive transatlantic trade deal including regulatory cooperation. On the other hand, tariffs-only trade deal could indeed reduce US temptations to impose new trade measures on the EU. Even though a tariffs-only trade deal is per se not the favourite option of the EU chemical industry, one could consider that such a trade deal could be offered in exchange of the unblocking of the current WTO crisis, i.e. commitment for further liberalization and an effective WTO dispute settlement mechanism. Without regulatory cooperation, a tariffs-only trade deal would also raise less opposition from civil society. However, the likelihood of such a TTIP light without negotiations on public procurement seems low.
It is therefore all the more important to raise the voice of business against protectionism. Cefic already voiced its concerns regarding the current US approach to trade policy and will continue to seek alliance with link-minded associations to speak in favour of free and fair rules-based trade system. Please check our recent press statements in the Cefic newsroom.
In the context of BUSINESSEUROPE’s initiative to share strong messages against protectionism, in favour of the multilateral trading system and showing how open trade is essential for business, please check their first video, which focuses on messages against protectionism (BusinessEurope’s website or on YouTube). A second video will be published in autumn – when BusinessEurope adopts its position paper on the future of the WTO – that will focus on messages in support of the multilateral trading system and the WTO. Cefic has given input to the BusinessEurope paper, notably including a call for plurilateral chemical tariff liberalisation and an update of the pharmaceutical agreement.
Souerce: CEFIC