Prospects for a trade agreement between the United States and the European Union improved when the European Parliament’s International Trade Committee passed a resolution calling for the initiation of formal trade discussions with the United States on February 29, 2019. As a result of the resolution, USTR Robert Lighthizer and European Trade Commissioner Cecilia Malmström are expected to resume discussions on a number of trade issues, including a possible new trade agreement between the United States and the European Union (“EU”).

Within the last month, USTR and the European Commission (the “EC”) both released their objectives for the new trade agreement. The negotiating objectives announced by USTR are ambitious in scope, while the EC released a much narrower set of goals for the agreement. USTR seeks a comprehensive agreement covering a wide range of trade issues, including agriculture, trade in goods, intellectual property rights, labor, and the environment. In contrast, the EC has rejected the idea of addressing agricultural issues in the agreement, and would prefer to focus on a narrower group of issues, such as the reduction of tariffs on goods and the use of non-tariff barriers.

It is expected that the discussions will also address the United States’ possible imposition of new tariffs on imports of European automobiles and auto parts. Last week, the U.S. Department of Commerce submitted to the White House its Section 232 report on the national security implications of imports of automobiles and auto parts. The report has not yet been made public, but the press has reported that Commerce may recommend the imposition of 20 to 25 % tariffs on automotive imports into the United States. Given the importance to the European economy of automotive exports to the United States, the imposition of U.S. tariffs on automobiles and automotive part imports is likely to be a significant aspect of the upcoming talks.

The EU continues to express strong concerns about the possible U.S. tariffs on automobiles and automotive parts. On February 18, 2019, Margaritis Schinas, a spokesperson for the EU, warned that, if the U.S. government went ahead with the proposed tariffs on automobiles and automotive parts, “the European Commission would react in a swift and adequate manner.” Similarly, on February 22, 2019, EU Trade Commissioner Cecilia Malmström told reporters that the European Union has “started internally to prepare a list of rebalancing measures,” including a list of U.S. products that could be subject to retaliatory tariffs. The list of products covered by the tariffs would reportedly include products made by Caterpillar, Xerox, and Samsonite.

Ultimately, both sides appear to be interested in avoiding a repeat of the unsuccessful negotiations for the Transatlantic Trade and Investment Partnership. According to Commissioner Malmström, there remains “strong unanimity” in the European Union for a “positive {trade} agenda with the United States.”