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Prof on EU-US Tariffs: 'The Real Loser' Nowadays Is the United States

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The EU and US have been holding talks in Washington amid concerns over tariffs. Sputnik discussed the negotiations between Washington and Brussels with Fabio Massimo Parenti, an associate professor of economic and political geography at the Lorenzo de'Medici Italian International Institute.

Sputnik: What could be expected from the talks in Washington now and how difficult are the negotiations likely to be given the situation unravelling between the two continents?

Fabio Massimo Parenti: It's difficult to predict because right now, the current state of affairs in US-European Union trade talks is on standby and there are many points of disagreement, as you mentioned in your introduction, and so now there is the hope that the United States doesn't insist too much on including also agricultural products because in that field there are too many borrows and obstacles. Hopefully, we should be able to reach a point of agreement in reducing mutually tariffs for industrial products, as was decided during the last meeting in July.

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Sputnik: I think one of the most contentious points with regard to the opposing sides is the inclusion of the agricultural goods; the EU is opposing US efforts to include agricultural goods in the duty-free deal. What consequences would such move have for the EU, I mean, obviously it's going to be financially not as rewarding as it was before, what else can you add?

Fabio Massimo Parenti: We have different scenarios in front of us in a sense that the main concern from the European side is that the Trump administration will raise tariffs on European cars. In this case, in comparison to the previous tariff on steel and aluminium and other products that didn't have an impact on the European economy, in this case the impact would be a big impact, surely consistent impact for the importance of the automotive industry in Europe, the important market of the United States, so we should hope that this tariff will not be put in place.

On a bigger scale, the main scenario is that the European Union is moving quickly towards Asia, also as a partial alternative to the United States market. In fact, we can see a growing rate of trade volume between Europe and Asia and this is also embedded in the new Belt and Road Initiative, whilst the United States seems to be clearly after one year of this series of tariffs around the world the real loser.

They're the real loser because macroeconomic data about the balance trade of the United States is against the Trump administration, the sign that says that the level of deficit is constantly increasing significantly reaching the highest level during the last 10 years, so the Trump administration policies in this field is a clear failure according to figures, whilst the rest of the world is moving in different directions, the same thing is happening with China. So it's important to find an agreement, there's still many obstacles but the real loser nowadays, according to my understanding, is the United States.

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Sputnik: It would appears so in terms of recent economic reports that have come out obviously the trade war between US and China, for example, it's been written by economists that it's hurting in the US economy significantly in terms of the agricultural sector. What about the agenda that Donald Trump has now in turning to the European Union? It's said that he's highly unlikely to launch a trade war with the EU; there are obviously issues within the EU in terms of its strategy. France is strongly involved in its agricultural products, whereas Germany has got the car industry. Each country has got their specific agenda, so I don't suppose that helps the European Union stance particularly when it comes to setting a uniform agenda against the US; what's your take on it?

Fabio Massimo Parenti: If we look at different sectors, you're completely right, distinguished in the highest impact in Germany for automotive industry, even though the supply chain involves East Europe and South Europe as well. The agricultural sector is a point that identifies European Union member states in a completely different way in comparison to the United States. We have been concerned how through time, in spite of the liberalisation process in trade agreements, a strong protectionist approach (has been applied) to the agricultural sector.

Above all, for cultural considerations, we have a precautionary principle that is applied to those products that can be considered hypothetically dangerous for common and public health. This is the case of the agricultural products coming from the United States; many of these products do not satisfy or match European Union standards for food quality. So I think that there is no space for negotiations, according to our political approach.

The views and opinions expressed in this article are those of the author and do not necessarily reflect those of Sputnik.

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