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Dombrovskis : Deep and comprehensive trade deal with the US ‘not feasible’

Garry Knight

Euractiv | 26 November 2020

Dombrovskis : Deep and comprehensive trade deal with the US ‘not feasible’

By Jorge Valero

European Commission executive vice-president, Valdis Dombrovskis, believes that Joe Biden’s victory will bring a fresh start to the EU-US relations. But there are limits, as he considers that it would not be feasible to try again to negotiate a deep and comprehensive trade deal like the TTIP, he told EURACTIV in an interview on Wednesday (25 November).

Valdis Dombrovskis is the Commission vice-president for Economy and Trade.

There are high hopes on the European side following Biden’s victory in the US election. One of the most urgent bilateral issues to address will be the tariff dispute triggered by the Airbus-Boeing case. Have you received any signal from Biden’s team that this issue could be solved when they take over ?

We are negotiating the Airbus-Boeing dispute with the current administration, which is still in office. But indeed, on a more general note, we expect more engagement in multilateralism and a fresh start in the transatlantic relationship.

President-elect Biden said that he is a strong supporter of international alliances and multilateralism, and he wants to improve relations with the EU. Those are all very encouraging messages. We hope that we will be able to have this fresh start and to resolve some of our bilateral disputes, and also to have a more intense and meaningful multilateral engagement.

Together we can be a force for the good globally. We are strategic allies, we share the same values. We are like-minded partners. I think there is a good basis to engage, once again, very strongly with the US.

The Trump Administration disregarded, at least until recently, your proposal to solve the Airbus-Boeing dispute. Are they open to finding a solution now ?

We are negotiating very intensively the question of future disciplines in the area of civil aviation. If there is some agreement on this, we can hopefully arrive at a situation where we both can withdraw or suspend the tariffs we imposed on each other.

Technically speaking, the agreement is feasible. Of course, it will require some push. If it is not possible, then we will have to continue to work with the new Administration.

Another controversial issue between the EU and the US has been the digital tax. Do you think that the Biden Administration would retaliate if the tax was implemented in Europe, as President Trump threatened ?

I think it might be a bit premature to give a definite view about how the new Administration will react on the digital tax. But there are hopes for a different approach from the new Administration, and that we would be able to reach a global solution on the digital tax at the OECD level. If this is not the case, we are ready to come up with our proposal at the EU level.

The Commission put the Transatlantic Trade and Investment Partnership (TTIP) “in the freezer” after Trump’s victory, as former Trade commissioner Cecilia Malmström said. Are you considering taking the TTIP negotiations out of the freezer now that the Trump era is over ?

There was strong opposition to TTIP in the US and the EU. We do not see it feasible going back to that sort of deep and comprehensive Free Trade Agreement negotiations with the US. All the same issues we had at that time would resurface.

We saw that the negotiations were not making too much of a progress. For that reason, it’s not something we now would be actively pursuing.

In terms of mini-deals, we are looking in areas of conformity assessment to facilitate the trade of goods. We are definitely ready to explore further liberalisation of trade of goods, other than agricultural goods, if there is a willingness on the US side.

Biden said that his administration will buy US good and services (“Buy America”) for the recovery. Is the Commission considering a similar approach, perhaps as part of its nascent strategic autonomy ?

The EU is committed to free and fair trade and to its bilateral and international agreements. We always insist on including public procurement chapters in free trade agreements. Therefore, we are not looking into that.

There are some targeted measures which we may need to look at. For example, the distortive effects of foreign subsidies in our public procurement market. Or the so-called international procurement instrument. This tool would allow the EU to restrict access to its public procurement market to those countries which are restricting access to their public procurement market.

We hope that there will be more progress on this issue during the Portuguese presidency next semester, as there was not so much momentum during the German presidency.

On the EU-UK negotiations, it is not clear whether an agreement will be reached. How confident are you that the two sides can finalise a deal in the next few days ?

We remain committed to reaching an agreement. Negotiations are at a very advanced stage. But there are still those important elements where substantial movement is needed from the UK side, including the level playing field, fisheries and governance.

We need to enter in some kind of end game. We are in the last days to reach an agreement. We need really to finalise these negotiations now.

Could we say that we are in extended time ?

One could say so. EU institutions are, in a sense, willing to be very accommodative in terms of the procedures. The European Parliament has already flagged that they are ready to call in extraordinary session between Christmas and New Year to ratify the agreement if needed.

From the Commission side, we are committed to taking all the necessary procedures to allow for the ratification of this agreement before New Year, so it can enter into force as of January 1 next year.

Has there been any progress on the controversial issues – governance, fisheries and state aid – over the last few days ?

There has been progress, not only during the last days but already during the last months. We had shown some flexibility and understanding of the difficulties.

But there are limits about what we can do. If we look at the level playing field, the UK requested zero tariffs and zero quotas to access the EU market.

We are willing to grant a ‘zero tariffs, zero quota’ access. But in this case, it is important that the UK does not start to undermine us with lower environmental, labour or any other regulatory standards.

Given the geographical proximity of the UK, this can quickly become a major problem for the single market, if the level playing field is not properly addressed.

Do you think European companies are prepared for a no-deal outcome ?

We have been urging EU companies and other EU stakeholders for a long time already to be prepared. Companies had sufficient time to prepare for different scenarios. We published almost 90 preparedness notices for different sectors.

In this case, it’s not so much an issue of preparedness, but more about the economic disruption that Brexit will cause.

You are going to propose an instrument to address “coercive” practices from other economies. China has been accused of unfair trade and economic practices, and imposing forced transfer of technology on foreign companies. Would China be hit by this instrument, if it was in place ?

Well, as regards to this anti-coercion instrument, we intend to have a proposal by the end of next year. It is an EU legislative instrument not aimed against any specific country. It is a horizontal instrument.

The main idea is that it gives a proper legal basis for the EU to respond in a proportionate way, in situations where certain countries take some coercive actions manifestly outsides international trade frameworks, the WTO framework or our bilateral or regional agreement.

Once again, it is not aimed at any specific country. But we know that in general, as the international trade environment has become more conflictual and complex over the last years, we need better tools to defend ourselves.

 source: Euractiv