Lawmakers Welcome Easing of EU-US Trade Rift, Look to NAFTA
But tensions still evident, as U.S. trade representative finds out
Key agriculture Republicans say they are hopeful the Trump administration is starting to move farmers out of a trade crossfire under a limited agreement between President Donald Trump and the European Union to ease trade tensions as the two sides work to iron out their differences.
Senate Agriculture Chairman Pat Roberts called Wednesday’s agreement in principle “quite a startling development and positive development. If that happens and then we get NAFTA done, there are quite a few lights at the end of the tunnel.”
The Kansas Republican said Wednesday night that he was heartened by the apparent truce, but added “we’re waiting for the details.”
Roberts, Senate Agriculture Appropriations Chairman John Hoeven, R-N.D., and House Agriculture Chairman K. Michael Conaway, R-Texas, were at the White House Wednesday with other GOP lawmakers for a meeting with the president when they were led out to the Rose Garden for the trade announcement with the EU.
The agreement calls for reducing barriers and increasing trade in chemicals, pharmaceuticals and soybeans, as well as plans to increase American natural gas sales in Europe. The two leaders also established a joint working group to implement what Trump described as deals-in-the-making.
Conaway said the two developments should reassure farm country, which has been targeted for billions in retaliatory tariffs in response to the Trump administration slapping duties on steel and aluminum imports and Chinese imports.
“Calling out our trading partners for failing to live up to the commitments they have made is not protectionism — it’s common sense,” Conaway said. “This task is made even harder by foreign countries that are now sanctioning unjustified tariffs against U.S. agricultural exports to pressure the administration to back off and simply accept the status quo.”
At the Rose Garden event Wednesday, Trump said EU Commission President Jean-Claude Juncker would “almost immediately” begin making bigger purchases of soybeans. The EU is already the world’s second largest importer of U.S. soybeans after China. Neither leader said how much the 28-nation bloc would buy of soybeans or of liquefied nitrogen gas.
The Trump administration will keep in place a 25 percent steel tariff and a 10 percent aluminum tariff on EU import. The EU will keep in place retaliatory duties it has levied on selected U.S. goods.
Also unclear is how much of a boost the arrangement could be for soybean growers. Rabobank International Ltd., a lender to agricultural commodity traders, had already forecast that the EU would buy more American soybeans in the coming year as a cheaper alternative to Brazilian soybeans, which have risen in cost because Beijing has turned to South America to replace U.S. soybean suppliers caught in the U.S.-China trade battle.
The agreement appears to also put on hold possible U.S tariffs on imported autos and auto parts. Trump ordered the Commerce Department in May to determine whether imported vehicles and car parts pose a national security threat to the United States. If Commerce finds there is an economic or national security threat, Trump could impose tariffs on foreign-made cars, hitting a major EU industry.
“We will also work to reduce barriers and increase trade in services, chemicals, pharmaceuticals, medical products, as well as soybeans,” said a joint U.S.-EU statement. “This will open markets for farmers and workers, increase investment, and lead to greater prosperity in both the United States and the European Union.” Both sides declared victory in averting an escalation of tensions.
Some issues raised by Trump and Juncker were addressed during negotiations on the Transatlantic Trade and Investment Partnership (TTIP) agreement that stalled in 2016 as the Obama administration ended.
China, however, remains a bigger concern for lawmakers.
House Ways and Means Chairman Kevin Brady, R-Texas, said as much. He, Ways and Means Trade Subcommittee Chairman Dave Reichert, R-Wash., and 20 committee Republicans urged Trump in a letter to hold direct trade negotiations with Chinese President Xi Jinping.
China hit soybeans and other U.S agriculture products with retaliatory duties after the administration imposed $50 billion in tariffs on Chinese imports. The U.S. tariffs were meant to show Beijing the Trump administration wants changes to practices and policies it says discriminate against American companies and allow theft of U.S. technology and intellectual property. Another $216 billion in additional U.S. tariffs on Chinese goods are under review by the U.S. Trade Representative’s Office.
Hoeven said Trump also told lawmakers Wednesday night that he thinks Mexico is ready to finish negotiations on a revamped North American Free Trade Agreement and that a final deal could be reached in the fall. Ildefonso Guajardo Villarreal, the Mexican economy secretary, is scheduled to meet with U.S. Trade Representative Robert Lighthizer Thursday.
Hoeven said Lighthizer also told lawmakers during the White House meeting that USTR is making progress on several “smaller deals and agreements” with South American countries and that changes to the revised Korea-United States trade agreement are nearing final approval. Hoeven said lawmakers asked for a list of those agreements.
“We need to keep moving and get the deals as soon as we can,” Hoeven said.
The EU agreement to buy more soybeans “is helpful, but obviously, China is a huge market. This is a positive step, but we want to keep working to get the other deals,” Hoeven said.
Lighthizer was asked Thursday about those deals and the U.S.-EU announcement at a hearing by the Senate Commerce-Justice Appropriations Subcommittee, which funds USTR.
Senate Commerce-Justice Appropriations Chairman Jerry Moran, R-Kan., and ranking member Jeanne Shaheen of New Hampshire focused on lost business sales and canceled contracts in their states they said were tied to tariffs the Trump administration imposed on Chinese imports.
Sen. Brian Schatz, D-Hawaii, and Lighthizer had a testy exchange over the wisdom of the United States imposing tariffs on Chinese imports and triggering retaliatory duties from China. Schatz called it a “stupid” approach.
Lighthizer asked if Schatz wanted no barriers to China “coming in and stealing our technology.”