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MNI POLICY: Trump May Extend EU Auto Tariff Probe For Leverage

Wider Trade Talks With EU Complicated By Aircraft Subsidies
By Brooke Migdon
     WASHINGTON (MNI) - U.S. President Donald Trump will miss a deadline next
week on the investigation of cars imported from the European Union to keep his
leverage in broader trade talks, former officials told MNI.
     Trump has until Nov. 13 to respond to results of the Commerce Department's 
automobile probe under a clause known as Section 232 covering national security.
     The White House is "jockeying for position" and the statute's hazy language
allows the president to take any actions deemed necessary, said Bernd Janzen, a
former attorney in the Office of the Chief Counsel for Import Administration.
That could allow Trump to call for an extended review following the deadline. 
"It may be more powerful to keep the card of the threat of tariffs than to
actually use it," said Janzen, now a partner at Washington-based law firm Akin
Gump specializing in Section 232. "So long as there is the threat of tariffs,
the EU is going to be nervous about what might happen, and I think that
translates into leverage for the White House."
     Originally designed as a Cold War safeguard, Section 232 of the Trade
Expansion Act of 1962 has served alternative purposes including economic ones.
Although a statutory timeline exists for investigations, the scope of the
inquiries and the executive branch's interpretation of security can be broad.
Trump used the clause to put tariffs on steel and aluminum from longtime
military ally Canada and Mexico when renegotiating NAFTA.
After receiving the results of the investigation in February, Trump wrote in a
presidential proclamation in May that foreign markets impose "significant
barriers to automotive imports from the United States," referencing the EU and
But the proclamation was drafted before the U.S. struck a preliminary deal with
Japan, the USMCA was signed and KORUS was renegotiated. That likely places
Japan, Mexico, Canada and Korea outside the investigation.
"Section 232 is becoming a U.S.-EU issue," said Jeremie Cohen-Setton, a research
fellow at the Peterson Institute for International Economics.
Cohen-Setton said the trade relationship between the U.S. and Europe is often
"underemphasized" by the Trump administration, which has focused more on China.
"There are already many obstacles toward reaching a deal with the EU," the
lawyer Janzen said, noting considerable discord over agriculture. "Without the
232 auto investigation, I'm skeptical that there can be any broader trade deal
with the EU reached quickly." 
     The U.S. also imposed $7.5 billion of tariffs on European imports last
month, following a ruling on a 15-year-old World Trade Organization dispute over
the EU's illegal subsidies to aircraft supplier Airbus.
EU trade chief Cecilia Malmstrom said the EU will move forward with tariffs when
the WTO decides on a similar dispute over U.S. subsidies to Boeing. European
Commission President Jean-Claude Juncker said last year the EU would "respond in
kind" if the U.S. imposed car tariffs.
Cohen-Setton doesn't see the EU responding ahead of the president's 232
decision, no matter how long that may take. "It's in a wait-and-see mode until a
decision is made on autos," he said.
The EU shouldn't hold its breath, according to Gary Hufbauer, a former U.S.
Treasury official and trade expert at the Peterson Institute for International
Hufbauer said the president will likely "keep the tariff option alive" into 2020
as the U.S. enters a presidential election year. 
"An election year is always an inauspicious time for an agreement," he said.
"And the complexities of the U.S. political situation are not favorable to an
U.S. Secretary of Commerce Wilbur Ross said Sunday during an interview with
Bloomberg Television the administration has held conversations with individual
European, Japanese and Korean automakers which should determine the nature of
the president's decision. 
He said the administration's "hope" is those negotiations will "bear enough
fruit" for the U.S. to abandon or only partially enforce Section 232 tariffs on
imported automobiles and parts.
--MNI Washington Bureau; +1 202 371 2121; email:
[TOPICS: M$U$$$,MC$$$$,MI$$$$,MGU$$$]

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