U.S. and E.U. Are Headed for a Food Fight Over Trade
American and European negotiators are at odds over what to include in a prospective trade deal, ratcheting up trans-Atlantic tensions and jeopardizing talks before they even begin. Trump administration officials insist that any deal must address the agricultural trade barriers that the president says put American farmers at a disadvantage, in part because such an agreement would be more likely to win congressional approval. European officials counter that agriculture was never on the table — not last July, and not now.
“It should cover industrial goods, and that’s it,” Cecilia Malmstrom, the European trade commissioner, said in Bucharest, Romania, last month. “We are not talking about agriculture.”
The United States disagrees. Top Trump administration officials say agriculture was always going to be part of the trade equation, even if that is not what the president and Mr. Juncker initially agreed to in their meeting.
“We were aware of that issue from Day 1,” Larry Kudlow, the director of the National Economic Council, said in an interview last week. The United States always assumed agriculture would be included in any deal, he said, adding, “You’re not going to have a far-reaching E.U. trade deal without agriculture.”
The competing narratives of what European and American officials agreed to cover in trade talks are the latest spat between traditional allies whose relations have fallen to their lowest point in decades. Mr. Trump has imposed stiff tariffs on steel and aluminum from the European Union, prompting Europe to retaliate with levies on American orange juice, motorcycles and tobacco. The president has taken to criticizing the European Union’s trade practices and its treatment of American farmers as being “even worse” than China’s. And Mr. Trump continues to threaten Europe with tariffs on imported autos and auto parts.
The threat of auto tariffs is what got Mr. Juncker to the negotiating table, according to Mr. Trump. The president views the tariffs — which would be particularly harmful for German automakers — as his key to unlocking what he wants from Europe, namely more access for American beef, chicken, dairy and wine.
“We’re trying to make a deal,” Mr. Trump said at the White House last month. “They’re very tough to make a deal with, the E.U. If we don’t make the deal, we’ll do the tariffs.”
But while Mr. Trump sees the car tariffs as leverage, the Europeans see them as a bomb that could shatter negotiations.
“If there ever were to be the unilateral imposition of tariffs, the talks would be ended,” David O’Sullivan, the departing European Union ambassador to the United States, said late last month.
The two sides are trying to move forward. Ms. Malmstrom is scheduled to meet with Robert Lighthizer, the United States trade representative, on Wednesday, while Mr. Kudlow and Martin Selmayr, the European Commission’s secretary general, will convene on Thursday.
Mr. Trump technically has until mid-May to make a decision on the auto tariffs, though legal experts say he could continue to delay as long as talks continue. The Commerce Department, which has been studying the tariffs, sent a report with its findings to the White House on Feb. 17.
The details have not been made public, but a draft that circulated in early February determined that auto imports threatened the United States’ national security, according to one person who viewed it. Such a finding would pave the way for Mr. Trump to impose across-the-board tariffs. The report also presented other actions the president could take to stem imports, including trade barriers focused exclusively on autonomous vehicles and parts, according to several people familiar with the findings.
Mr. Trump had prioritized restarting trade talks with the Europeans as part of his global push to negotiate deals on his own terms. But as the president dangled the threat of tariffs last July, the Americans and the Europeans were not sure they could even reach an agreement to begin negotiating.
The night before the July 25 Rose Garden ceremony, Mr. Kudlow and Mr. Selmayr met over Diet Cokes at the Hay-Adams hotel near the White House. Mr. Kudlow had been encouraged by common interests between the United States and Europe, particularly a European offer to import large volumes of natural gas and soybeans.
The next day, the two sides worked furiously to iron out a statement outlining the scope of a trade deal. Mr. Kudlow shuffled drafts of the joint statement back and forth between the Americans and the Europeans, who were holed up in separate rooms in the White House. The Americans inserted agriculture into the draft, only to watch the Europeans take it out, according to one person involved in the discussions who was not authorized to speak publicly. The two sides finally settled on the phrase “open markets for farmers and workers,” which the Europeans say referred only to the bloc’s offer to buy American soybeans.
Mr. Trump had raised the issue of agriculture in his meeting with Mr. Juncker, according to people present, who declined to be named because they were not authorized to speak publicly. But when Mr. Juncker made clear that a negotiation that included agriculture would also include other hard-to-resolve issues, the president acquiesced.
“I’m a results man,” Mr. Trump said, arguing for a quicker turnaround.
The scope of the deal was announced but, almost immediately, American negotiators began lobbying to get agriculture back into the mix.
The day after the announcement, Mr. Lighthizer, Mr. Trump’s top trade negotiator, told a Senate committee that he would not recommend negotiating a trade deal with the European Union without agriculture. “Our view is that we are negotiating about agriculture, period,” Mr. Lighthizer said. “That’s part of the process.”
Mr. Trump’s advisers now say the initial announcement was an attempt to reap what they call an “early harvest,” and circle back later for a more comprehensive deal. But some analysts say Mr. Trump’s penchant for announcing victory before the details are finalized is now coming back to haunt him.
“It clearly frustrated the president’s advisers, who apparently did not expect him to give that one away,” wrote William Reinsch, the Scholl chair in international business at the Center for Strategic and International Studies in Washington.
Mr. Kudlow said that American negotiators knew what they were trading and that they were just hoping to get the talks restarted.
“We decided to take what we could get — in effect reopening E.U. trade talks,” Mr. Kudlow said. “And don’t forget, looming in the background was the issue of auto tariffs.”
Agriculture accounts for less than 2 percent of the European Union’s gross domestic product, but the sector is heavily subsidized. It also reliably stirs emotions among European voters and mobilizes public opposition.
Farmers are a powerful and militant constituency, especially in France, which is Europe’s biggest producer of agricultural products and the biggest recipient of European Union subsidies.
Emmanuel Macron, the French president, is struggling with mass protests against his plans to overhaul the French economy, and farmers are already restive. Last week, they rumbled through cities like Bordeaux and Nantes in convoys of tractors and blocked a highway interchange near Lyon. They were protesting a trade deal being negotiated with several South American countries that, according to some reports, would allow more beef imports.
Even Europeans who live in cities are often sympathetic to farmers, who are seen as custodians of a rural way of life. In many countries, food is closely linked with national identity.
Parmesan cheese from Italy, Ibérico ham from Spain and many other products are protected by trademarks reserved exclusively for the regions that produce them. Farmers and consumers fear an influx of American products, which suffer generally from the perception, often false, that they contain more pesticides, hormones or artificial ingredients than European products.
The European Union and the United States have long recognized the need to present a united front on global trade practices, especially as China’s power and influence have grown.
But despite deep cultural and historic ties, the American-European trade partnership has not been easy. The two sides have squabbled for decades over differences in farm subsidies, food safety standards, government procurement practices and retaliatory tariffs — including the United States’ 25 percent tariff on foreign trucks, a legacy of a 1960s trade fight.
Those differences slowed talks over the Trans-Atlantic Trade and Investment Partnership, a prospective Obama-era trade deal that was scrapped when Mr. Trump came into office.
The experience of negotiating that pact taught the two sides a valuable lesson: A deal that involved agriculture and other thorny issues would be time-consuming, while one focused on industrial goods could be done quickly, Mr. O’Sullivan said.
“This is not an accident,” he said of the agreement reached last summer.
European political leaders and legislators are expected within weeks to give Ms. Malmstrom a formal mandate to negotiate with the United States. Europe has already more than doubled its imports of American soybeans since Mr. Trump and Mr. Juncker met in July.
But many European political leaders are livid at Mr. Trump for, in their view, undermining the trans-Atlantic alliance and damaging the European economy when it is already vulnerable. They are not in a mood to give Mr. Trump a victory.
“The current U.S. attitude is: ‘We want this, this and this, and if not, beware of the consequences,’” said Marietje Schaake, a member of the European Parliament’s delegation for relations with the United States.
Ana Swanson and Jack Ewing