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EU heads discuss bold-or-fold strategy toward Trump tariffs

Reuters  |  SOFIA/BRUSSELS 

By Baczynska and Philip Blenkinsop

SOFIA/(Reuters) - European leaders sought unity on Wednesday toward threatened U.S. import tariffs on and aluminium, balancing the views of those most fearful of a trade war and those determined not to be bullied into concessions.

U.S. has imposed import duties of 25 percent on and 10 percent on aluminium on grounds of national security, but granted EU producers a temporary exemption until June 1 pending the outcome of talks.

French and other EU leaders, who meet for a summit in from Wednesday, have said the bloc will not negotiate with a gun held to its Donald Tusk, who chairs the summits, said on Wednesday EU unity was key.

"Here again, unity is our greatest strength and my objective is simple - we stick to our guns," Tusk told a conference. "This means a permanent exemption from U.S. tariffs on aluminium and if we are to discuss possible trade liberalisation with the U.S."

"The EU and U.S. are friends and partners. Therefore U.S. tariffs cannot be justified on the basis of national security. It is absurd to even think that the EU could be a threat to the "

In bitter comments, Tusk said Trump has rid of "all illusions" with the trade dispute and by pulling out of an international nuclear deal with

"Looking at the latest decisions of Trump someone could even think: with friends like that who needs enemies. But frankly speaking, should be grateful to President Trump. Because thanks to him we have got rid of all illusions. He has made us realise that if you need a helping hand, you will find one at the end of your arm," Tusk said.

EU diplomats say the need to find a unified stance goes beyond just tariffs. The has withdrawn from the nuclear deal, posing a threat to European companies doing business there, and has blocked appointments to the World Trade Organization, undermining its ability to settle trade disputes.

The debate will continue among trade ministers on May 22 with urging its EU partners to show more flexibility in the run-up to the June 1 deadline. is Europe's biggest exporter to the with more than 1 million jobs at stake.

An EU source said after the dinner the 28 EU leaders agreed that, in exchange for permanent exemptions, they could discuss with deeper LNG cooperation, a WTO reform and better access to each other's markets for cars and public procurement.

"These talks will be based on the principles of reciprocity and WTO compatibility and with the objective of avoiding a trade war," the source said.

Another one quipped that the EU wanted to "make trade - not trade wars" with Trump.

DON'T CALL IT TTIP

German Peter Altmaier, a former of Angela Merkel's cabinet, has acknowledged that finding a common stance with and formulating an offer to the United States were "equally difficult".

The European Commission, which oversees trade policy for the 28 EU members, has insisted that the EU be granted a permanent exemption without conditions.

It has also said it would respond to tariffs with its own duties on U.S. products, including motor bikes and whisky. It is expected to notify the WTO of its potential plans this week.

The Commission has mooted the idea of negotiating an agreement with the United States to lower import duties, but only once the permanent exemption is granted.

The idea would be to dust off bits of the planned and (TTIP), on which negotiations were frozen after Trump came into office.

Such an agreement would be far simpler, limited largely to tariff reduction, and would not be known as "TTIP", a red rag to anti-globalisation protesters.

The EU view is that the first step would be an assessment of what both parties wish to negotiate, and then it would need EU members to approve a mandate. Negotiations proper could be years away.

Altmaier said the Europeans should discuss this regardless of any exemption.

A further issue is that the United States has agreed permanent exemptions with countries such as and South Korea, but only by imposing import quotas instead of tariffs.

U.S. Wilbur Ross, who talked with EU again on Tuesday, has been on the phone to EU capitals telling them to accept export restraints, according to EU diplomats.

However, trade specialists in say that quotas on industrial goods are not allowed under WTO rules and that, in any case, the EU demand is that no measures be imposed. ($1 = 0.8444 euros)

(Additional reporting by Maytaal Angel in London, Writing by Philip Blenkinsop, Editing by and Lisa Shumaker)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, May 17 2018. 03:41 IST
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