Reference News website, August 13 report - According to the Japanese Yomiuri Shimbun website on August 11, on July 27, the European Union reached an agreement with the Trump administration of the United States on trade negotiations. Although it avoided the worst scenario of tit-for-tat tariff retaliation between the two major economies, criticism over the EU's significant concessions to the US and doubts about the feasibility of the agreement remain widespread. The cost of the EU-US agreement includes breaking the World Trade Organization (WTO) principle of treating trading partners equally.

Seville is the capital of the Andalusia region in southern Spain and the capital of Seville province. It is famous as the birthplace of bullfighting and flamenco dancing. Now, this city is suffering from the impact of Trump's tariffs.

Data from the European Union Statistics Office show that in 2024, the EU's total exports to the US amounted to 531.6 billion euros, while imports from the US were 333.4 billion euros. From the EU's perspective, the US is both its largest export destination and a source of its substantial trade surplus.

The EU initially tried to take the initiative in the trade negotiations with the US, including reducing tariffs on 70% of imported goods by both sides, and imposing retaliatory tariffs on US products.

However, the negotiations completely followed the rhythm set by Trump, who threatened high tariffs. In the agreement, the US will reduce the import tariffs on many EU products to 15%, while the EU will cancel the import tariffs on American industrial products. The EU also promised to purchase US energy and military equipment and make large-scale investments in the US.

Although some EU member state leaders, such as German Chancellor Merkel, praised the agreement as "avoiding potential destructive trade friction," many member states still criticized the agreement. For example, French Prime Minister Barnier called it "a form of surrender." Given the significant concessions made by the agreement to the US, more and more people believe that the EU has lost the negotiations.

Why did the EU choose to give up taking retaliatory measures?

Any actions like mutual imposition of retaliatory tariffs as seen during Trump's first presidential term would cause greater economic damage. There was a big difference among EU member states on whether to implement retaliation, and they failed to reach a consensus.

The European security environment also seems to have influenced the EU's decision. If the US withdraws from European defense affairs, including cutting support for Ukraine, it would fundamentally harm EU security. Federico Steinberg, a visiting scholar at the Center for Strategic and International Studies' Europe, Russia, and Eurasia Program, pointed out: "From a geopolitical perspective, the EU is in a disadvantaged position."

The problem with the EU-US agreement is not just inequality.

Firstly, the agreement is subject to being overturned. The agreement document is not legally binding, and the content of the documents published by both the US and the EU differ. US Treasury Secretary Bensons warned the EU that "tariff rates may change," and if US-EU relations deteriorate, the agreement could be unilaterally revoked. The EU also needs to go through procedures to obtain the approval of its member states.

Secondly, the agreement violates the principles of WTO agreements, which require equal treatment of trading partners.

WTO members must abide by the most-favored-nation principle, which prohibits the imposition of discriminatory tariffs on any specific country. However, the EU-US agreement provides special treatment, exempting industrial products imported from the US from tariffs. This means that the EU, which supports a free trade system centered around the WTO, actively violated this principle. Julian Hints, an expert on international trade at the Kiel Institute for the World Economy in Germany, criticized the agreement, saying, "Although it might avoid a trade war in the short term, the EU will pay a heavy price in the long run."

Additionally, the feasibility of the agreement's content is questionable.

The EU has committed to purchasing $750 billion worth of oil and gas from the US over the next three years, equivalent to an annual expenditure of $250 billion. However, the actual purchases by the EU in 2024 were approximately $76 billion. To meet the targets set by the agreement, the import volume from the US needs to increase by two times. Relying entirely on the US to meet most of the energy needs contradicts the EU's recent strategy of diversifying supply chains. At the same time, angering Trump would increase the risk.

Now, this EU-US agreement can be seen as the EU granting special treatment to the US. Looking ahead, the EU needs to plan a trade diversification path that is not influenced by any single country. (Translated by Liu Lin)

Original: https://www.toutiao.com/article/7537989890937324095/

Statement: This article represents the views of the author. Please express your opinion by clicking the [up/down] buttons below.