Europe postpones ratification of the trade agreement with the US

The EP’s move comes in the context of recent US-European tensions escalating over the Greenland issue. As planned, in the next few weeks, the EP will vote on removing tariffs on US industrial goods – one of the terms of the agreement.

Postponing ratification does not mean the agreement is broken. However, this move is a strong message of protest to the White House. EU parliamentarians said that this could worry US businesses.

“This is a very strong lever. I don’t think businesses will accept to give up the European market,” Valerie Hayer – President of the centrist parliamentary group in the EP told reporters.

After this move by Europe, when speaking at the World Economic Forum (WEF) in Davos (Switzerland) on January 21, Mr. Trump also criticized the economic situation of European countries. He assessed that public spending in these countries is “increasingly ballooning”. Along with migration and trade policies, some regions in Europe have become “unrecognizable” compared to before.

The US President said that Europe should operate its economy in a more similar way to the US, and “do what we are doing”. “I love Europe and want to see Europe develop well, but Europe is going in the wrong direction,” he said.

Last week, Mr. Trump threatened to increase import tariffs on eight countries because of the Greenland issue. These countries include Denmark, Norway, Sweden, France, Germany, UK, Netherlands and Finland. This group includes 6 EU countries, including economic leaders such as France and Germany. EU leaders plan to hold an emergency summit in Brussels on the evening of January 22 to discuss this.

The EU is considering many response options if Mr. Trump does not withdraw his threat, such as suspending the implementation of the trade agreement and imposing retaliatory tariffs on 93 billion euros (108 billion USD) of US goods. This tariff plan was agreed upon when EU-US trade tensions peaked last year, but was then postponed until February 6, to avoid a full-blown trade war.

In addition, French President Emmanuel Macron is also pushing to activate the EU’s anti-coercion trade tool (ACI), also known as the “commercial bazooka”. However, this tool has never been used and could lead to many economic and political consequences.