European Union Finalizes Retaliation Option For US Tariff Agreement Merdeup

UNSPLASH/Guillaume Périgois ILLUSTRATION

JAKARTA - The European Union is exploring a series of possible broader countermeasures against the United States as prospects for an acceptable trade agreement with Washington fades.

More and more EU members, including Germany, are now considering using broad anti-force measures that will allow the bloc to target US services or limit access to public tenders if there is no deal, according to EU diplomats.

The Erop Commission, which negotiates a trade agreement on behalf of the 27-member bloc, is likely to reach an agreement in which the European Union will still face a US rate of 10% for most of its exports, with some concessions.

This hope now seems dashed after President Donald Trump's threat to charge a 30% tariff on August 1, and follows talks between EU Trade Commissioner Maros Sefcovic and US partners in Washington last week.

Sefcovic, who said the 30% tariff would " practically ban" transatlantic trade, submitted a serious report on the current situation to EU envoys on Friday.

US colleagues have proposed different solutions during their meetings, including basic rates that could be far above 10%, EU diplomats added.

"Every interlocutor seems to have a different idea. No one can tell (Sefcovic) what Trump is really going to receive," a diplomat told Reuters on Monday, July 21.

The prospect of easing or eliminating US tariffs of 50% for steel and aluminum as well as 25% for cars and car parts appears limited.

Washington has also rejected demands by the European Union for "quiet" arrangements, in which no further tariffs will be imposed once the deal is reached.

The reason, according to diplomats, Trump cannot be bound by national security, which is the basis for the trade investigation of Article 232 of pharmaceutical, semiconductor, and wood products.

Because of that, the atmosphere has changed among EU countries, EU diplomats said, and they are better prepared to react, even though the negotiated solution is the choice they like.

The European Union has one tariff package for US goods worth 21 billion euros ($24.5 billion) which is currently suspended until August 6.

The bloc still has to decide a series of further countermeasures against US exports worth 72 billion euros.

Discussions have also increased over the widespread use of EU "anti-force" (ACI) instruments, which allow the bloc to retaliate against third countries that put economic pressure on member states to change their policies.

If implemented taking China into account, this package will allow the bloc to suppress US service trading, where the US has a trade surplus with the European Union, restricting US company access to financial services markets and public tenders in the European Union. Public procurement in the European Union is worth around 2 trillion euros per year.

The measures that may also include US investment restrictions and restrictions on intellectual property rights protection as well as restrictions on the ability to sell US chemicals or food products in Europe.