Depth report

　　

On July 25, 2018, U.S. President Trump and the visiting European Commission President Juncker announced after the meeting that the U.S. and Europe would negotiate to resolve the issue of steel and aluminum tariffs, and agreed to temporarily not implement new tariffs during trade negotiations, and A joint statement on the two parties' commitment to building a zero-tariff free trade zone was issued. One stone stirred up waves, and the US and Europe statement shocked the world.

    After Trump came to power, the White House first announced that the United States would withdraw from the Trans-Pacific Partnership Agreement (TPP), and then issued an administrative order imposing punitive tariffs on imported steel and aluminum, and insisted on starting a "tariff war" with China. The world is worried about whether the Trump administration will single-handedly overthrow the free trade system established after World War II. In the US-Europe joint statement, Trump changed his previous trade protectionist stance and radically proposed the “three zero principles” of “zero tariffs, zero barriers, and zero subsidies for non-auto products”. The flag bearer of a round of global free trade.

U.S.-Europe trade war presses the pause button

 The US-EU joint statement contains four core contents: first, the two sides will work to build a zero-tariff free trade zone, reduce subsidies, and reduce other non-tariff trade barriers; second, strengthen energy cooperation, the EU will import from the United States More LNG; third, reform and upgrade the existing International Trade Organization (WTO) to reduce global unfair trade; fourth, work together to protect companies in the United States and the European Union to better protect them from unfair trade Violations of global trade practices.

 　 The above four points are basically in line with the overall policy tone of the "Presidential Trade Policy Agenda" issued by the Office of the United States Trade Representative (USTR) in February this year. The report pointed out that the Trump administration’s foreign trade policy agenda includes five pillars. The first is to safeguard US national security, the second is to consolidate the development of the US economy, the third is to promote better trade negotiations, the fourth is to strengthen trade law enforcement, and the fifth is to reform multilateralism. The trading system. Although the Trump administration’s trade protection actions and the just-announced US-Europe joint statement seem to be very different “special style” actions, they have faithfully fulfilled the overall goals of the US trade policy and reflect the “America first” policy. Action intention.

 　 In fact, the background of the US-EU joint statement is precisely the escalating trade frictions between the US and Europe. On March 8, 2018, Trump officially signed an executive order imposing additional tariffs of 25% and 10% on imported steel and aluminum, which is considered the first shot in a trade war with the world. Subsequently, although the United States expressed that it temporarily exempted the EU's steel and aluminum tariffs until June 1, there was no obvious progress in the subsequent negotiations.

 　 At the Group of Seven (G7) summit held in Canada in June, the six Western countries, including the EU powers, and the United States even encountered the biggest split. As Trump refused to sign the joint communiqué, EU countries’ efforts to obtain tariff exemptions to avoid trade frictions once again failed. Soon, the European Union decided to fight back against US trade protectionism. On June 22, the European Union decided to impose retaliatory tariffs on US imports worth 2.8 billion euros (approximately 20.7 billion yuan). After the EU implemented countermeasures, Trump threatened to impose a 20% import tariff on all EU assembled cars on the same day. As the trade friction between the United States and its traditional European allies escalated, European Commission President Juncker visited the United States and the European Union Trade Commission Malmström accompanied him. Obviously, tariffs and trade issues were the focus of the negotiations between the two sides.

 　 The joint statement released after the talks undoubtedly pushed the pause button for the possible spiraling "trade war" between the United States and the European Union. The two sides agreed to negotiate to resolve the issue of steel and aluminum tariffs and retaliatory tariffs, and announced that bilateral relations have entered a new stage.

Blueprint for the "Super Free Trade Area" of the United States, Europe and Japan

 The intention of the United States to actively promote the US-Europe Free Trade Area this time is not only an amendment to Trump’s previous actions in disregarding the traditional alliances between the United States and Europe, but also because the Japan-Europe Economic Partnership Agreement has brought the United States into consideration. Re-planning under pressure.

 　 On July 17, Japan and the European Union signed an economic partnership agreement in Tokyo. According to this agreement, the EU will abolish 99% tariffs on Japanese imports, and Japan will abolish 94% tariffs on EU imports, including 82% of aquatic products and agricultural products; this agreement covers 1/3 of the world’s economic output. Will create the world's largest free trade zone.

 　 From the perspective of rulemaking power and trade welfare, the United States naturally does not want to be excluded from the largest trading "circle of friends." In addition, the Trump administration has successively imposed tariffs on China, the European Union, Canada, Mexico and other countries. This trade protectionist behavior has brought about trade frictions between the United States and many countries. Trump's unwillingness in trade policy not only made himself a lone person internationally, but also attracted fierce opposition from domestic liberals.

 　 It is against this background that Juncker's visit to the United States intends to ease trade relations between the European Union and the United States, while the United States took the opportunity to propose the establishment of a "zero tariff, zero barrier, and zero subsidy" US-EU free trade area. Subsequently, the long-standing US-Japan Free Trade Agreement was also put on the agenda. Lighthizer, a representative of the Office of the United States Trade Representative, expressed his hope that a consensus will be reached with Japan as soon as possible in the upcoming new round of US-Japan Free Trade Agreement negotiations. To a large extent, the US-EU Joint Statement, the Japan-EU Economic Partnership Agreement and the possible future US-Japan Free Trade Agreement will herald the embryonic form of a new international trading system dominated by the United States, Japan and Europe.

 　 Since the beginning of the 21st century, the US-led World Trade Organization (WTO) has indeed faced problems of inefficiency and decentralization. The Doha Round of negotiations has continued for many years without results. The United States needs a new platform to establish standards for free trade agreements in the new century.

 　 During the Obama era, the United States tried to use the Trans-Atlantic Partnership Agreement (TTIP) and TPP to resolve trade and investment issues in the Trans-Atlantic and Trans-Pacific regions, respectively, in order to consolidate and expand the United States’ leadership in the global economic system. However, due to differences between the United States and the European Union on issues such as technology supervision, government procurement, and the principle of origin, TTIP negotiations have come to a standstill. The Trump administration’s direct announcement of its withdrawal from the TPP undermined Obama’s efforts to build a new regional economic order in the Asia-Pacific region. On the one hand, the United States cannot accept the WTO’s existing rules, and on the other hand it is difficult to implement its own new rules through regional free trade agreements, so it once faced a dilemma.

 Judging from the US-EU joint statement, Trump does not intend to give up the issues and rule-making powers of free trade agreements. Instead, he hopes to take advantage of the US’s asymmetry in market size and technological level in bilateral trade negotiations. More flexible bilateral free trade agreements replace multilateral economic and trade rules. The previous trade war seems to be just a "prelude" to future trade negotiations. This may be a demonstration of Trump's tactical style of "promoting talks with fights".

 　 For a long time, the United States hopes to continue to open the door to the agricultural market of EU member states, but with the end of the Doha negotiations and the TTIP agreement, this goal has become increasingly difficult to achieve. However, Trump received a promise that "the EU may purchase more soybeans from the United States in the future" during the meeting with Juncker, which sent a positive signal on this issue. The content of the U.S.-Europe joint statement on "building a zero-tariff free trade zone, reducing subsidies, and reducing trade barriers" shows that Trump is expected to implement new trade concepts to the possible future "super free trade zone" of the United States, Europe and Japan. China, and the United States, by signing free trade agreements with the European Union and Japan respectively, is more conducive to giving play to the United States’ negotiating advantages.

 　 The new generation of international trade system built by the United States will no longer be a broader economic integration, but a higher standard trade arrangement. In WTO multilateral trade negotiations, it is difficult for the increasing number and diversity of participants to reach a unified agreement on various topics, especially on relatively sensitive topics, which makes the process of multilateral trade negotiations difficult. Therefore, the United States hopes to take the lead in establishing a zero-tariff "super free trade area" with the European Union and Japan, and determine the development path of a free trade agreement in accordance with the needs of the United States.

 In the Japan-Europe Economic Partnership Agreement, the two sides canceled most of the tariffs on imported goods. Even in the areas of automobiles and agricultural products where the negotiations were quite different, the EU agreed to exempt the tariffs imposed on Japanese cars seven years after the agreement entered into force in exchange. Japan will also further open its own agricultural product market. The current mutual import tariffs between the United States and the European Union are already relatively low, and even if they are completely abolished, they will not create too many domestic political obstacles. Once the "Super Free Trade Area" of the United States, Europe and Japan is formed, it will attract more countries to join.

 　 In this way, countries with high domestic subsidies and low market access will have to accept the trade rules stipulated by the United States to integrate into a new generation of international trade system dominated by the United States, Europe and Japan. Judging from the US's interpretation of "unfair" trade practices in the US-Europe Joint Statement, intellectual property rights, domestic subsidies, and competition policies will become important rules in the new generation of international trading systems.

"The Big Day of Free and Fair Trade"

 　 Once a new international trade system dominated by the United States, Japan and Europe is formed, it will have an impact on China's foreign trade. In the joint statement, the United States and the European Union expressed their joint commitment to protecting companies in the United States and the European Union to better protect them from unfair global trade practices; jointly promote WTO reforms and resolve unfair trade practices, including intellectual property rights. Theft, forced technology transfer, industrial subsidies, distortions caused by state-owned enterprises, and overcapacity problems.

 Although the accusation of unfair trade practices in this statement did not clearly point to a certain country, this is not the same as the WTO’s criticism of the Chinese government’s subsidies to state-owned enterprises and foreign investors’ investment in China in the seventh review report on China’s trade policy in July this year. The behavior of investment barriers is the same. Previously, the United States imposed punitive tariffs on imported steel and aluminum, provoking global trade disputes, and China did not enjoy any exemption procedures.

 　 However, judging from the various erratic actions taken by Trump after he took office, the United States may also reverse its attitude on the issue of establishing a "super free trade area" dominated by the United States, Europe and Japan. As Trump is facing the upcoming mid-term elections, the Trump administration’s trade policy is inevitably tied up by domestic politics. Its easing of trade relations between the United States and Europe is a temporary move to stabilize the votes of agricultural and energy states. It is not impossible.

 　 The major agricultural states in the Midwest of the United States, as important votes for Trump's participation in the general election, have expressed strong dissatisfaction with the Trump administration during the Sino-US trade war. Although the U.S. Department of Agriculture announced that it would provide US$12 billion in subsidies to American farmers affected by the trade war to fund farmers in the "piaocang state" injured by the countermeasures, it has not received significant results. "Piaocangzhou" farmers in the Sino-US trade war due to the loss of the vast export market for agricultural products caused much more losses than this temporary relief check.

 In the US-EU joint statement, the EU stated that it will purchase additional soybeans from the US in the future, which will to some extent alleviate the negative effects of the Sino-US "trade war" on the United States and help Trump to stabilize before the midterm elections. Live in the agricultural state ticket warehouse. But Trump's claim that he "helped farmers open the door to the European market" is too optimistic. In 2017, China imported 32.85 million tons of soybeans from the United States, nearly 12.3 billion U.S. dollars. This year, China’s advance purchase of US soybeans has fallen by 60% compared to the average level of the past ten years, and soybean prices have fallen by nearly 20% since April. Although the EU has expressed its willingness to expand imports of US soybeans, even if the 1,500 tons of soybeans imported by the EU each year come from the US, it will be difficult to make up for the huge gap caused by the loss of the Chinese market.

 　 Not only that, but it is worth noting that after the announcement of the joint statement, EU member states have also made different voices on this. Germany praised the easing of trade friction between the United States and Europe for worrying about possible US auto tariffs, but France is more cautious. On July 26, French President Macron and Spanish Prime Minister Sanchez jointly expressed their opposition to the inclusion of agricultural issues in the trade agreement. This is a far cry from Juncker’s statement during his visit to the United States. Juncker promised to purchase more of the United States. Whether soybeans can really be implemented is questionable. It can be seen that it is too early for Trump to call this meeting with Juncker a "big day for free and fair trade".