EU states told not to expect stable trade relationship with US
EU member states have been warned not to expect a stable trade relationship with the United States, especially on the issue of European pharmaceutical exports, even if both sides reach an agreement in principle ahead of next Wednesday’s deadline, when a pause on the imposition of US tariffs expires.
In Brussels yesterday, EU ambassadors were briefed by Bjoern Siebert, the chief of staff of European Commission President Ursula von der Leyen, ahead of his trip to Washington along with trade commissioner Maroš Šefčovič.
The EU team is due to hold two days of talks with US Trade Secretary Jamieson Greer and Commerce Secretary Howard Lutnick before returning to Brussels on Friday.
According to an account of yesterday’s meeting, “to those [member states] asking about the likelihood of stability, [the European Commission] was blunt: ‘that won’t happen’.”
RTÉ News understands that EU ambassadors were informed that the ongoing Section 232 investigation into the pharmaceutical sector would continue and would lead to measures “one way or another”.
So-called Section 232 investigations are carried out by the US Department of Commerce and focus on the effect of imports on “national security”.
Tánaiste Simon Harris spoke to Mr Greer by phone on 12 June. It is understood that Mr Grier told him that they were working on “creative solutions” for the pharmaceutical sector, upon which the Irish economy is heavily dependent.
At yesterday’s briefing, the commission told member states that officials had been lobbying the US to agree zero-for-zero tariff rates – whereby both sides mutually agree to bring down tariffs to zero – on pharmaceuticals, medical devices, and semiconductors.
However, Mr Siebert is understood to have told EU ambassadors that any agreement “is unlikely to constrain President Trump in the future”.
Mr Šefčovič is in Turkey today and will fly to Washington tomorrow for talks with senior Trump administration officials ahead of next week’s deadline for a trade agreement that would be needed to avoid 50% tariffs placed on EU exports to the US.
On 2 April, US President Donald Trump imposed large, across-the-board tariffs on a large swathe of global trading partners, including the EU.
After markets tanked, Mr Trump paused those tariffs for 90 days, although he did leave intact a 10% baseline tariff on EU goods.
Since then, EU and US officials and technical experts have been locked in negotiations to reach a framework trade agreement by next Wednesday to avoid tariffs being hiked to 50%, a move that would prompt the EU to hit back with tariffs on €95 billion of US goods.
Bloomberg has reported that the EU could accept a baseline 10% tariff on some goods, so long as there were reduced rates on key sectors, such as aviation, semiconductors and pharmaceuticals.
Mr Šefčovič and his team will meet Mr Greer and Mr Lutnick over the next two days and then report back to member states on Friday.
Officials are also pressing for a series of exemptions and quotas that would further blunt the impact of the 10% baseline.
The EU insists its regulation of the tech sector, which mostly impacts US tech giants, is not up for negotiation.
It is understood the EU’s own drive for simplification of rules is being offered as a concession, as well as plans to increase purchases of LNG and AI technology.
Meanwhile, Minister for Finance Paschal Donohoe has said that the EU has worked to assemble a comprehensive response to the issues that have been raised by Mr Trump, while at the same time protecting very important European interests.
Speaking on his way into Cabinet, he said “I do hope that an agreement can be found, because this is a trade agreement that is worth billions of Euros per day between the United States and the European Union.”
The minister said it is a real possibility that we could be in a global trading environment that has a higher level of tariffs than was the case in recent years, which he said will have really big implications for global trade.
The Taoiseach has said public expenditure has risen by 8% to 9% per year in recent years and “such high levels of expenditure are not sustainable on the current basis”.
Speaking in Japan, where he is leading a trade mission, Micheál Martin said he met with the Tánaiste and Ministers for Finance and Public Expenditure at the weekend and “it was a sobering enough meeting, to be frank, given the challenges that lie ahead, given the backdrop of tariffs and uncertainty in trade”.
He said he had agreed with the Tánaiste and Ministers Donohoe and Chambers that there will not be a cost-of-living package this year “and what we’re going to try and do is mainstream reforms and commitments in the Programme for Government into the budget, that will be sustained then over a period of time, but that will create challenges for us in the first year”.
He added the cost-of-living packages last year and the year before were once off measures and “they’re not provided for in the estimates of individual minsters, be they in Social Protection, Higher Education or Education, so there will be a difference this year”.
He said the “envelope” of how much will be spent on current expenditure has not been agreed yet and then the allocations for each individual minister will have to be decided.
He added that trade with Japan is of increasing importance as Ireland has now entered a new era of uncertainty in trade relations with the United States and that is reflected by the fact that six Cabinet ministers will have visited Japan by the end of this year.
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