EU bows to US in trade deal and opts for stability instead of escalation
In the media image: Rinson Chory on Unsplash
The European Commission has agreed to unequal trade conditions with the US to avoid further escalation. On Flemish news channel VTM, Eric de Brabandere, Professor of International Dispute Settlement, points to the need for certainty for European companies and consumers.
The European Commission has agreed to a trade deal under which import tariffs on American goods will remain at 0%, while the US tariff on European goods, including pharmaceutical products, will be 15%. The decision has caused division within the European Union. France calls it a bad deal, stressing that it still has to be approved by a majority of Member States.
According to De Brabandere, ‘the European Union has opted for stability and certainty and wants to avoid further escalation. Certainty is what businesses expect in this day and age.’ The unequal tariffs mean that European companies risk losing their competitive edge in the long term, certainly in sectors such as the pharma industry. De Brabandere says that President Trump has had his sights set on this sector for some time. The European pharmaceutical industry has a high production within Europe and exports widely to the US. Trump wants to return that production to American soil.
The European Commission is defending the deal by arguing that higher tariffs would be directly passed on to European consumers, putting purchasing power under pressure. Yet there is criticism that Europe has let itself be bullied by American pressure, with no prospect of reciprocal concessions. The issue is now before the Member States. According to insiders, the fundamental principles have already been coordinated with the countries in the preliminary process. 'Ultimately, you have to negotiate as a bloc, but there are always different countries and different economies that will react differently to such an agreement,' says De Brabandere.