The European Commission's new Director-General of Trade, Sabine Weyand, has said that while the EU is keen to work alongside Washington on WTO reform and shared challenges to global trade, the bloc would retaliate is the threat to raise tariffs on European cars in the US is followed through.
During her first official visit to the US capital in her new role, the former deputy Brexit negotiator said that there had been "little movement" so far on trade talks with the US to reduce industrial tariffs.
Ms Weyand outlined the EU's interest in avoiding escalating tariffs on cars, aircraft and various other goods, and willingness to work with the US in addressing shared concerns about China's behaviour on world markets.
However, she added that Brussels would not be bullied by US threats of sanctions and that the EU's view was that it would be illegal to impose them under WTO rules.
"It is natural that friends sometimes disagree with each other, but this is something else. There are real threats elsewhere, yet we find ourselves in a morale-sucking, growth-slowing series of skirmishes. We have to overcome this," she told a Center for Strategic and International Studies event in Washington DC.
"We will not negotiate under WTO illegal action. Nor will we go down the road of managed trade," she said.
If the US goes ahead with the threat to raise auto tariffs to 25%, Brussels would respond with its own tariffs.
“We need to build trust by making progress in areas where we agree,” Weyand said, adding, “The EU would be forced to respond to American tariffs on cars. Tit-for-tat tariffs would result in a lose-lose situation.”
Negotiators on both sides of the Atlantic have been meeting after a truce was agreed to by US President Donald Trump and European Commission President Jean-Claude Juncker last year.
Ms Weyand pointed to progress that had been made on certain issues such as liquefied natural gas shipments and setting standards and conformity assessments for trade, though also highlighted the lack of progress in many other areas.
Brussels has also been hoping to resolve a near 15 year dispute over government subsidies to US aerospace giant Boeing and Europe’s Airbus for aircraft development. A decision by a WTO arbitrator is expected in September regarding the level of sanctions that can be imposed by Washington after the US won a case on EU subsidies to Airbus. It is expected that the WTO will rule in the EU's favour this September.
Washington has said it should be able to impose £11.2-billion (€10-billion) of European goods.
Ms Weyand said that Brussels would comply with WTO rules and decisions and, beyond that, rules must be negotiated on aircraft launch aid.
But she added she was uncertain if Washington would agree. "I cannot anticipate the result. This is something we will have to see in the next days and weeks," she said.
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