EU trade chief calls Trump 'obsessed', questions US-China deal

New EU trade chief Phil Hogan urged the US government to work with the EU to uphold open commerce.
New EU trade chief Phil Hogan urged the US government to work with the EU to uphold open commerce.ST PHOTO: KELVIN CHNG

WASHINGTON (BLOOMBERG) - The European Union's new trade chief pulled no punches on an inaugural visit to Washington, saying President Donald Trump's tariff threats amount to short-sighted electioneering, and warning him about widespread economic damage from protectionism.

Mr Phil Hogan said Mr Trump's "America First" agenda has helped bring about "a high-pressure crisis moment for the international trading system". He urged the United States government to work with the EU to uphold open commerce.

"If we go about this in the right way, working together, the mutual benefits can be very significant," Mr Hogan told a conference in the US capital on Thursday (Jan 16).

"But, if we fail to do so, the damage will be significant, not alone for us both, but for the world."

Mr Hogan is seeking to prevent a deterioration in transatlantic commercial ties that have been fraying for months as a result of disagreements over everything from aircraft subsidies to farm tariffs. He spoke bluntly about growing EU unhappiness over US unilateralism, saying it was driven by Mr Trump's desire for re-election.

'MANAGED TRADE'

"It's short-term thinking," Mr Hogan said in a separate video interview with Global Counsel chairman Peter Mandelson, a former EU trade commissioner. "Between now and the November elections is what Mr Trump is thinking about."

Mr Hogan took a swipe at a preliminary trade agreement reached between the US and China, saying the deal smacked of "managed trade" and threatening an EU complaint to the World Trade Organisation (WTO). The pact was signed with much fanfare in Washington on Wednesday, two days after Mr Hogan arrived in the city.

The EU is concerned about a Chinese pledge in the accord to increase purchases of US goods and services by at least US$200 billion (S$269 billion) over the next two years.

"We haven't analysed the document in detail, but we will, and if there's a WTO-compliance issue, of course we will take the case," Mr Hogan told the Washington conference at the Centre for Strategic and International Studies.

"We're not trigger-happy about taking cases to the WTO - we don't want to create that impression. But we'll stand up for our own economic interests."

Mr Hogan said Mr Trump is misguidedly "obsessed" with a US deficit in goods trade with the bloc and should also take into account services, where the country has a US$60 billion surplus. Altogether, transatlantic trade in goods and services is worth over US$3 billion a day, according to Mr Hogan.

"Sounds like a fairly healthy relationship to me," he said. "So why put tariffs on these EU products to make them more expensive for your people?"

 
 
 
 

'LET'S TALK'

Mr Hogan sharply criticised the Trump administration's invocation of national security to apply duties in 2018 on EU steel and aluminium, and to threaten similar levies on European cars and auto parts. The metal duties prompted tit-for-tat EU tariffs, and the bloc has pledged to react the same way were European automotive goods to be targeted.

"We reject the US labelling the EU as a security risk in order to justify the imposition on tariffs," Mr Hogan said. "This narrative is hurtful to both our people."

The two sides are locked in arguments on other points too, including: A US threat to hit US$2.4 billion of French goods with tariffs as retaliation over a digital tax in France, a deadlock on the WTO's appellate body caused by a US refusal to consider new panellists, US tariffs on a range of European products following a WTO ruling about illegal aid to Airbus, and American demands to add agriculture to the agenda of talks that are due to address charges on industrial goods.

Mr Hogan, who has met US government officials as well as member of Congress this week, pleaded for a more diplomatic and collaborative approach from the Trump administration.

"If we continue to beat each other up then the future risks being lost to new competitors," he said. "Let's talk, let's cooperate, let's lead."

In remarks to reporters later on Thursday, as he prepared to depart Washington after meetings with US Trade Representative Robert Lighthizer and Commerce Secretary Wilbur Ross, Mr Hogan toned down some of his earlier criticisms. He praised the "cooperative spirit" of the American side, and said its trade accord with China also has "positive elements" that offer opportunities for the US and EU to work together.

"It's a good start, I would describe this week," he said. "A lot done, and more to do."