It is necessary to break a cycle of penalties and retaliation. Dialogue should be repeated steadily to avert a trade war.
During their meeting, U.S. President Donald Trump and European Commission President Jean-Claude Juncker agreed to launch a new round of trade negotiations.
The United States and the EU will discuss an abolition of tariffs on industrial products, excluding automobiles. To reduce a U.S. trade deficit, the EU will also consider increasing imports of U.S. products, including soybeans and liquefied natural gas.
With punitive tariffs on European car imports in mind, Trump said during a press conference after the meeting with Juncker that the United States would not do anything that runs counter to the spirit of the agreement while negotiations are held.
Trump apparently indicated his idea of shelving the introduction of trade penalties for the time being.
If the trade dispute escalates between the United States and Europe, two of the world's leading economies, it will lead to stagnating trade and investment. It could also trigger major turmoil in financial markets.
It is laudable that the two sides have made mutual concessions to avoid penalties for now.
Car manufacturing is a key industry in Europe. If its vehicle exports decline due to high tariffs levied by the United States, the European economy will suffer a great blow. Concern had grown stronger also in the United States as its industrial circles warned that trade friction with the EU would adversely affect the U.S. economy and employment.
The two sides have managed to come to terms with each other apparently because they shared the recognition that it would not be advisable to escalate the transatlantic trade dispute.
Constructive approach vital
Nevertheless, it can hardly be imagined that Trump will largely change his modus operandi of trying to draw concessions by threatening negotiating partners.
If future negotiations fail to achieve a desirable outcome, there is a high possibility that Trump will rescind his decision on postponement of new penalties and revert to a hardline stance.
It is essential for both sides to hold talks on an abolition of tariffs and other matters in a proactive manner and thus heighten the momentum toward resolving the bilateral trade friction.
Conflicts of interest tend to occur among members in the EU, which consists of many nations. They are called on to work together in tackling negotiations with the United States.
Japan is scheduled to begin a new round of trade talks with the United States as early as this summer.
In return for holding back on the imposition of punitive tariffs on car imports, there is a high possibility that Washington will press Japan to further open its markets to U.S. agricultural produce among other products.
Closely monitoring the U.S.-EU trade talks process will be beneficial for Japan to assess the future course of U.S. trade policy.
Intensification of trade friction between the United States and China also poses a huge risk to the world economy.
In the recent U.S.-EU summit, an agreement was also reached to work together toward correcting such unfair trade practices as the infringement of intellectual property rights and provision of a huge amount of subsidies. The accord is intended as a check on a China that disregards international rules.
Leading the U.S.-EU mutual concessions to a constructive dialogue with China will also become an important challenge to tackle in the future.
(From The Yomiuri Shimbun, July 27, 2018)
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