The U.S. and EU are currently undertaking preliminary discussions toward a potential bilateral trade agreement.
As part of U.S.-Mexico-Canada Agreement (USMCA) negotiations, Canada and Mexico agreed with the U.S. that if the Section 232 investigation results in U.S. tariffs on automobiles and/or auto parts, U.S. imports of all light trucks from the countries and 2.6 million passenger vehicles per year from each country would be exempted from tariffs.
The U.S. also agreed to exempt $32.4 billion in parts from Canada and $108 billion in parts from Mexico on a per-year basis.
The Commerce Department is due to submit its Section 232 report on automotive imports to the White House in February, and President Donald Trump is due to decide on whether to impose any trade measures in May.
During an engagement with reporters at the EU Delegation to the U.S. on Wednesday, Malmstrom reiterated that agriculture would have to be omitted from any trade agreement with the U.S., which she has repeatedly described as a deal that would apply specifically to industrial goods.
“We have been very clear that from the EU’s side, we are not going to discuss agriculture, as from the U.S. side, they will not discuss the Jones Act, Buy America public procurement, geographical indications,” Malmstrom said.
The U.S. has also requested that automobiles be left out of negotiations, but the EU would be willing to include that area if the Trump administration wants, she said.
The European Commission is finalizing an internal exercise to determine the potential agreement's scope, which all EU member states must approve to give the commission an official mandate to enter negotiations.
An EU mandate that omits agriculture would make it very difficult for U.S.-EU trade agreement talks to make significant progress, U.S. Chamber of Commerce Head of International Affairs Myron Brilliant told reporters on Thursday.
“I would say there are still gaps between the EU framework and the U.S.,” he said. “The U.S. has made it very clear that agriculture should be part of these talks, but the EU has a different perspective.”
It’s very important that the U.S. and EU find common ground as two-way investment and trade totals $5 trillion annually, Brilliant said.
“We certainly have common ground in reforming the WTO, and we certainly have common ground in addressing some of the challenges with China,” he said. “How we move forward in the bilateral context is still to be worked out.”