The Brief – How Trump trounced Ursula

Euractiv

3 days ago

Perhaps the most humiliating aspect of the EU-US trade deal is that it's not even clear just how humiliating it actually is.
The so-called 'framework agreement' – the EU's preferred euphemism for yesterday's Mafia-style shakedown – will likely see the average US tariff rate on EU exports increase from 13.5% to 16% on 1 August, according to Bloomberg Economics: about seven times higher than before Donald Trump's return to the White House in January.
In exchange for America's beneficence, the EU pledged to reduce its already-minuscule levies on numerous products, including cars, chemicals, and food. Brussels will also boost purchases of US fossil fuels and weapons by more than $250 billion per year – an almost comically high figure that will soon turn the bloc's €50 billion net surplus with the US into a yawning deficit.
Arguably, striking a deal this bad is something of an achievement in itself: the UK, a country with an economy and population less than a fifth as large as the EU, received considerably better terms – and was mercilessly mocked by European officials for doing so.
Unfortunately for Europe, the deal – which EU chief Ursula von der Leyen preposterously claimed was 'the best we could get' – will probably end up being even worse than Brussels is alleging. This is for three reasons.
First, the EU claims it has been granted a 'quota system' for steel and aluminium exports, in which a limited amount is taxed below Trump's 50% rate. (Somewhat pathetically, Brussels also says this provision is modelled on the UK's deal.) Trump, however, has explicitly denied that the agreement covers these metals – a claim corroborated by senior US officials.
Similarly, the bloc alleges that pharmaceuticals are also included in the agreement, and in particular that pharma products will be hit by a maximum levy of 15% once Washington's so-called 'Section 232' investigation is concluded in a few weeks' time.
Once again, however, Trump yesterday flatly denied that Europe's €120 billion worth of pharma exports are covered by the deal – a contradiction that EU officials, apparently, didn't believe was worth clarifying before proudly announcing the "biggest trade deal ever".
(Adding to the confusion, a White House 'Fact Sheet' has since claimed that steel and aluminium are not included in the deal but that pharma products will be immediately hit with a 15% levy.)
Finally, EU officials have offered virtually no details on the pledged $600 billion worth of 'additional' investments in US infrastructure – which come on top of the energy and weapons purchases – over the next few years.
As it turns out, the deal that the EU is most closely modelled on, namely Japan's, offers worrying signs. The US has claimed, in true Godfather-fashion, that a staggering 90% of the profits from Japan's $550 billion worth of promised investments will accrue to the US taxpayer: a claim furiously rejected by Tokyo.
Asked about the profit allocation of the EU's pledged investments, Commission officials refused to elaborate but instead sought to reassure reporters that, whatever happens, only private investors will be affected.
'From our side, it's private money,' said one official. 'From Japan, it's mostly public money.'
There is a hint of comic (and perhaps cosmic) justice here. In her shambolic presentation of the EU budget earlier this month, von der Leyen clearly demonstrated that she didn't care about – or, really, understand – what she was planning to do with €2 trillion in public money. Demonstrating equal ambivalence about private cash is, in contrast to yesterday's agreement, only fair.
But Sunday's events also offer wider political lessons. Indeed, upon reflection, the deal is the almost inevitable outcome of a declining great power placing its faith in an economically illiterate, mendacious, image-obsessed narcissist – and then asking that person to negotiate with Donald Trump. Roundup How bad can it get? – Barely a day after Ursula von der Leyen signed a trade pact with Donald Trump, it looks less like she averted a trade war and more like she surrendered in one.
Trade isn't everything – The EU-US trade agreement is also "about Ukraine", Brussels' trade chief Maroš Šefčovič said on Monday, in an apparent admission that the much-criticised agreement with Washington was clinched to ensure continued American military support for Kyiv.
How to spend tobacco tax – The Commission's plan to fund the bloc's next long-term budget with tobacco taxes could help reduce smoking, health experts say, while warning that the revenue should be deployed to support public health, rather than defence. Across Europe Belgian pharma looks for answers – 'President Trump stated that medicines are excluded from the agreement. However, the official statement from the European Union refers to a 'clear ceiling' of 15% on tariffs on pharmaceutical products,' pharma.be told Euractiv.
Curbing medicine fraud – Bulgaria has completed the full implementation of the European Union's medicines verification system, a milestone aimed at curbing the circulation of falsified pharmaceuticals and mitigating financial fraud.
Give the man a break – Spanish premier Pedro Sánchez is beset by a corruption scandal that will likely haunt him his annual summer retreat. Despite his outer calm, the political crisis isn't going away.