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Between Trump and Brussels, Trade Talks Face Myriad Challenges

Between Trump and Brussels, Trade Talks Face Myriad Challenges

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Robert E. Lighthizer, the United States trade representative, on Monday held the first of a series of formal discussions with the European Union’s top trade official, Cecilia Malmstrom.CreditCreditTom Brenner/The New York Times

By Milan Schreuer and Jack Ewing

BRUSSELS — When it comes to trade negotiations, there is Trump speed, and then there is Brussels speed. Reconciling the two will be more laborious and hazardous than expected, exposing the world’s biggest trade partnership to further turmoil in the months ahead.

That was the message after President Trump’s top trade negotiator concluded talks with his European counterpart on Monday, with both signaling that any negotiations would be unlikely to produce the quick wins Mr. Trump prefers. If the president runs out of patience, there is a high risk the talks could fall apart entirely, disrupting the $ 1 trillion in goods and services that flow across the Atlantic every year.

Robert E. Lighthizer, the United States trade representative, met in Brussels with Cecilia Malmstrom, the European commissioner for trade, in the first in a series of formal discussions about what officials described as a far-reaching trans-Atlantic trade agreement.

Mr. Lighthizer, in a statement afterward, called the talks “constructive,” while Ms. Malmstrom described them in a tweet as “forward looking.”

Progress, though, could be halting. In particular, the European Union appeared to step back from a major concession it made in August.

Ms. Malmstrom said then that the bloc was willing to cut tariffs on motor vehicles to zero, if the United States did the same. The president, his bluff called, immediately declared that the concession was inadequate. Now, the European line is that Ms. Malmstrom will need the approval of the union’s 28 member states before further talks on the issue.

By promising something and then backtracking, Ms. Malmstrom seemed to be taking a page from Mr. Trump’s own playbook. She also made it clear that Europe will not be as accommodating as Mexico, which agreed to revisions to the North American Free Trade Agreement last month, allowing Mr. Trump to claim a victory.

“The E.U. is not going to work that way,” said Jacob Kirkegaard, a senior fellow at the Peterson Institute for International Economics in Washington. “They are not going to roll over the way the outgoing Mexican government did. There isn’t going to be an easy win here.”

The talks Monday were an attempt to add substance to a promising, but vague, agreement in July between Mr. Trump and Jean-Claude Juncker, the president of the European Commission, the European Union’s executive arm and the organization that leads the bloc’s trade negotiations.

The two leaders agreed after a meeting at the White House on July 25 to “launch a new phase” that would include “strong trade relations in which both of us will win.” The United States and Europe also promised not to further escalate a trade dispute that already includes tariffs on European steel and aluminum. Europe has retaliated with tariffs against American products like motorcycles, pleasure boats, corn and orange juice.

Businesses on both sides of the Atlantic are rooting for negotiators to not only avert a trade war but also eliminate barriers to commerce between the United States and the European Union. Such a deal would benefit both sides, trade experts say, and help them compete better with China, whose trade practices have been criticized by both Washington and Brussels.

European leaders have already achieved one of their main goals, which was simply to delay Mr. Trump from carrying out his threat to slap the tariffs on car imports. The tone of discourse with the United States has also improved.

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A Porsche assembly line in Germany. President Trump’s threat of a 25 percent tariff on European car imports is already making potential buyers reluctant to place orders, analysts said.CreditRalph Orlowski/Reuters

“It’s the start of something,” said Peter Chase, a senior fellow at the German Marshall Fund in Brussels who is an expert on trans-Atlantic trade relations. “Right now both parties are more constructive than they were a couple of months ago.”

Mr. Trump could, however, easily grow tired of the European Union’s glacial decision-making process and follow through on threats to impose 25 percent tariffs on imported automobiles and car parts. He has taken particular issue with the trade deficit, calling Europe “as bad as China, just smaller.”

The mere prospect of tariffs has already begun to take a toll. German manufacturing unexpectedly fell in July largely because of falling demand for vehicles, according to data published last week.

And there are other points of dispute that could complicate the chances for an agreement. United States officials have said they want to discuss food imports, an area where Europe has a substantial trade surplus. The Europeans refuse to discuss agricultural products, a politically explosive topic in countries like France. Neither side mentioned farm products on Monday.

Europe’s ultimate goal is a broader agreement on industrial goods, eliminating not only tariffs but also regulations that, for example, require different kinds of bumpers or seatbelts on cars and add to manufacturing costs.

Trade advisers and diplomats have been holding informal talks since Mr. Trump and Mr. Juncker met in July, but Monday marked the start of formal discussions. Mr. Lighthizer said he was optimistic there would be progress to report in November. He and Ms. Malmstrom agreed to meet at the end of this month, though they did not specify a date.

The United States representative did not speak to reporters before or after arriving at the European Commission’s headquarters in Brussels. But the commission posted a short video of him walking down a hallway at the building and greeting Ms. Malmstrom.

“Hey, good morning to you, how are you?” Ms. Malmstrom said cheerfully in the video, pulling Mr. Lighthizer toward her to receive kisses on her cheeks.

Mr. Lighthizer replied somewhat cryptically that the greeting, involving a total of three kisses on alternating cheeks, was “the Ukrainian version.”

After representatives of the two sides took their seats, Ms. Malmstrom explained that she chose a smaller space where they would not have to shout at each other.

“It is a very good sign that the European Union and the United States are now engaged in dialogue at the highest level,” said Margaritis Schinas, the commission’s chief spokesman. “Of course, we’ll need to wait and see that this process crystallizes in results.”

Mr. Trump’s mercurial presence looms over the talks. Officials and business leaders in Europe are keenly aware that he could undercut progress with a single tweet or comment.

After European leaders said late in August that they were willing to eliminate tariffs on vehicles, a major concession, Mr. Trump was dismissive. “It’s not good enough,” he said in an interview with Bloomberg News.

Follow Milan Schreuer and Jack Ewing on Twitter: @MilanSchreuer and @JackEwingNYT.

Milan Schreuer reported from Brussels, and Jack Ewing from Frankfurt.

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