Trump's deal threatens the EU's image as an advocate of rules-based trade

The European Union and the United States reached a fragile truce on tariffs at the end of July. According to Politico, the deal, struck at Trump's golf resort in Scotland, may have relieved European exporters and temporarily sustained U.S. support for Ukraine, but at the cost of tarnishing the EU's reputation as a defender of rules-driven trade.

The joint declaration sets a 15% US basic tariff, reduces tariffs on European cars, limits tariffs on pharmaceuticals and semiconductors and completely exempts aircraft from the EU. Commission President Ursula von der Leyen while acknowledging that the EU has a trade surplus with the US, which the agreement is intended to "balance". This was water on the mill for the Trump administration, which is presenting the move as a victory for itself.

"We are still hostage to American military and strategic protection with the terribly sensitive point that is Ukraine," said the former commissioner Pascal Lamy for Politico. He added that if the EU reacted harshly, Trump could challenge the aid to Ukraine.

However, experts say the agreement violates the WTO's basic principles of reciprocity and non-discrimination. Marco Molina, a former WTO reform negotiator, told Politico: "It will be very difficult for the EU to say, 'We are defending the multilateral trading system,' when it is just one of many members that have decided to negotiate a bilateral agreement with the United States."

Critics argue that the EU is jeopardising its own credibility as a guardian of multilateral trade. "The EU's credibility as a pillar of the WTO rules-based system would be seriously undermined if it decided to implement tariff reductions on a preferential basis," warned a former senior Commission official Ignacio García Bercero.

Europe is therefore looking for ways to strengthen cooperation with other trading blocs. At the June summit, von der Leyen proposed closer coordination with members of the CPTPP. German Chancellor Friedrich Merz he welcomed the idea: "If the WTO is as dysfunctional as it has been for years, and appears to remain so, then we who continue to see free trade as important need to come up with something else."

According to Politico, negotiations are now expected between the EU and the CPTPP to defend rules-driven trade against Trump's tariff offensive. As Molina said, "the only way the EU can restore confidence in the system is by coordinating with other members, except the US, to ensure compliance with WTO rules".

Politico/gnews.cz - GH