EU-U.S. Trade Talks Face Delay, Risking Trump Backlash

(Bloomberg) --

European Union governments are struggling to reach consensus on a mandate to begin trade talks with the U.S., risking a delay that would further provoke Donald Trump's ire after the bloc's refusal to include agriculture in the negotiations.

At a meeting of EU ambassadors in Brussels on Wednesday, France is expected to resist giving the European Commission the green light to start negotiations to eliminate industrial tariffs between the regions, according to two officials familiar with the matter, who asked not to be named because the talks are private. Failure to get France on board would mean the EU's executive arm won't be given a mandate to negotiate.

The main sticking points include the role of climate and environment in the mandate given the U.S. decision to withdraw from the Paris climate accord and a clarification of what this negotiation would mean for the shelved Transatlantic Trade and Investment Partnership, according to the officials.

A draft mandate prepared ahead of the meeting of ambassadors and seen by Bloomberg reiterates that the EU seeks trade accords only with countries that have signed up to the Paris agreement against climate change, even though the U.S. has pulled out.

An escalation of tensions with the U.S. would come at a very bad time for Europe's economy, which is already struggling amid a global slowdown. Germany's car industry is already facing a tough environment of tighter emissions rules and weaker demand, and surveys show manufacturing in the euro area is shrinking at the fastest pace in six years.

The EU has been trying to kick start trade deliberations with the U.S. in a bid to show President Trump progress in enacting a political accord that he reached with Commission President Jean-Claude Juncker in July. That agreement helped put on hold the American threat of tariffs on European cars and auto parts.

A 25 percent U.S. levy on foreign cars would add 10,000 euros ($11,346) to the sticker price of European vehicles imported into the country, according to the commission, the EU's executive arm. The EU exported about 58 billion euros worth of cars and auto parts to the U.S. in 2017.

Washington has shown frustration over the lack of progress since, with U.S. Ambassador to the EU Gordon Sondland saying in a February interview that “so long as the EU leadership plays the delay game the more we will have to use leverage to realign the relationship.”

To contact the reporters on this story: Viktoria Dendrinou in Brussels at vdendrinou@bloomberg.net;Nikos Chrysoloras in Brussels at nchrysoloras@bloomberg.net

To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Richard Bravo, Nikos Chrysoloras

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