Thread by @remkorteweg

Some thoughts on the “deal” that Trump and Juncker struck yesterday.

*Thread*

/1

reuters.com/article/us-usa…

1) It’s very good that the US and the EU have agreed to continue discussions on trade liberalisation. But the question is, at what cost (to the EU and the international trade system)?

/2

2) Apparently, the EU “gave” the US a commitment to buy more US LNG and soybeans. Let’s look at these two in a bit more detail.

/3

On LNG: it makes sense for the EU to have access to more diversified sources of gas. Single-source dependency (primarily on Russian gas) is still too high in many places, primarily in CEE.

/4

US LNG is a welcome alternative. But…the EU cant simply decide to consume more US gas; the market will determine the supplier.

What the EU can do, and is already doing, is invest in extra LNG import capacity in CEE states, so LNG can compete better with Russian gas. /5

But more EU LNG import capacity is no guarantee that more US LNG will actually flow to the CEE.

So, this commitment is vague.

Tho' it probably makes sense to let Trump sell this as a win.

/6

On soybeans, the story is different.

This was a hot topic during the #TTIP negotiations.

The EU has been protecting its market, a.o. out of concern about American GM crops.

Remember: The prospect of US GM crops in EU foodchain fuelled anti-TTIP protests.

/7

Soybeans are, of course, very important to Trump, now that China has slapped tariffs on US soybeans and he plans to cough up $12 billion to support US farmers

/8

cnbc.com/2018/07/24/tru…

Caveat: we don't know what was agreed in detail.

Did the EU grant more access to US soy farmers? Or was there a vague commitment to import more soybeans from the US, which was going to happen anyway.

HT @TomaszBielecki

bloomberg.com/news/articles/…

/9

Let's assume the EU granted more access to US soy farmers.

As @MacaesBruno pointed out, if the EU conceded on soybeans without getting something in return, that would be a big win for the US.

And I’m still struggling to find a real US concession.

/10

Such a unilateral concession suggests that either the EU agrees with Trump that the US-EU trade relationship is skewed and Europe unlawfully discriminates against US soy-producers. Or....

/11

...Or the EU has caved in to Trump’s threats and is now helping the US to fund its trade conflict with China.

(I’m sure folks in Beijing would be amused.)

/12

And here's the zinger.

Juncker says Trump gave a “major concession” by not putting tariffs on European cars.

But it's not.

/13

For Trump not to follow through on a threat is not a concession!

Instead it rewards Trump’s behaviour: he can bully trading partners, even those of equal size - like the EU - w threats of tariffs.

And that's problematic for future EU-US trade discussions & global trade

/end