EU to scrutinise US-China trade deal, considers WTO challenge

17 Jan 2020 | Rei Geyssens

The EU said it is analysing the phase one trade deal between the US and China and will call upon the WTO if the bilateral trade deal violates its global set of trading rules.

China has agreed to purchase an additional $200 billion of US goods and services – including $32 billion of agricultural goods – over the next two years in return for lower US import tariffs and a pledge not to raise additional tariffs.

EU’s Trade Commissioner Phil Hogan said his team will probe the bilateral deal signed on Wednesday and will check whether the deal between the world’s two largest economies is compatible with the WTO.

“We haven’t analysed the document in detail, but we will and if there’s a WTO-compliance issue of course we will take the case,” Hogan said at a conference in Washington DC on Thursday.

“We’re not trigger-happy about taking cases to the WTO, we don’t want to create that impression. But we’ll stand up for our own economic interests,” Hogan added.

Hogan had meetings this week with US officials in a bid to reset trade relations between the EU and the US, and said that he had made a “good start” but that more work was needed.

No unity in the short term

After agreeing the USMCA trading agreement with Mexico and Canada and signing the phase one trade deal with China, President Trump’s focal point is gradually shifting towards the EU.

“The United States President certainly decided that tariffs are a way to concentrate the mind and getting people to the table. He is obsessed with trying to reduce the trade deficit,” the commissioner said told a London conference, BY videolink from Washington.

Hogan continued that Trump will aim to reduce the $180-billion deficit it has with the EU by hiking US import taxes on EU goods or forcing the EU to buy additional US goods, such as agriculture.

“It’s not going to be unity in the short-term, because President Trump operates on the basis that he wants a grievance against somebody in order to accentuate his popularity in certain federal states,” he said.

Trump has spoken out against the EU’s Digital Tax – aimed at taxing large US e-commerce companies such as Amazon, Apple and Google in the EU – and has retaliated by hiking import taxes on premium EU products such as French cheese, wine and Scotch whiskey.

The EU is also planning to introduce a so-called Carbon Border Tax which will tax emission-heavy imports as part of the bloc’s Green Deal and will penalise countries that don’t have the same environmental standards the most.

The US is the EU’s largest trading partner followed by China, while the EU – in its entirety – is the US’ largest trading partner, however it will fall below China after the UK leaves the bloc at the end of this month.