As Mr. Juncker said in a statement, the US and the EU have a $1 trillion bilateral trade relationship - the largest economic relationship in the world. This is why the two men agreed to work together toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods. The two parties will also work to reduce barriers and increase trade in services, chemicals, pharmaceuticals, medical products, as well as soybeans.
This of course is based on the understanding that, as long as we are negotiating, unless one party would stop the negotiations, we hold off further tariffs and we reassess existing tariffs on steel and aluminium.
Jean-Claude Juncker explained.
In addition, US and EU will strengthen their cooperation on energy. Namely, the European Union will build more terminals to import LNG from the US.
In summary, the agreement is based on the following four pilars:
- Zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods. This will be complemented by reduced barriers and increased trade in services, chemicals, pharmaceuticals, medical products, as well as soybeans.
- Strategic cooperation with respect to energy. The European Union wants to import more LNG from the US to diversify its energy supply.
- Close dialogue on standards in order to ease trade, reduce bureaucratic obstacles, and slash costs.
- Collaboration to protect American and European companies better from unfair global trade practices. EU and US will work closely together with like-minded partners to reform the WTO and to address unfair trading practices, including intellectual property theft, forced technology transfer, industrial subsidies, distortions created by state owned enterprises, and overcapacity.
Now, an Executive Working Group will be established to carry this joint agenda forward. In addition, it will identify short-term measures to ease commercial exchanges and assess existing tariff measures. EU and US also want to resolve the steel and aluminum tariff issues and retaliatory tariffs.
Of course, this development was welcomed as a major success by EU officials and other European governments, with many saying that this agreement is very crucial and can avert the trade war.
As Reuters reported, the EU was trying not to raise expectations before the meeting, however the parties reached an agreement.
What is more, earlier this week WTO Director General, Roberto Azevedo called for a political agreement between world leaders to end the global trade war, as if this situation continues it will eventually damage the global economy.
Jean-Claude Juncker stated after the meeting:
We met today in Washington, D.C. to launch a new phase in the relationship between the United States and the European Union - a phase of close friendship, of strong trade relations in which both of us will win, of working better together for global security and prosperity, and of fighting jointly against terrorism.
During June, after the US announced that they established a 25% tax on steel and 10% tax on aluminium from the EU, Mexico and Canada, the three parties announced their own tariffs on the US.
The EU had submitted eight pages at the World Trade Organization (WTO), setting out 25% tariff increases for the US regarding steel and aluminum.
As Reuters reported, a second EU list was also published at the WTO, describing new targets for the future if the dispute does not end. EU leaders said that they do not wish a trade war with the US, but they have to protect their interests.