Von der Leyen before the most tense commercial autumn for the European Union

If there is something in which the European Union has been effective in recent years, it is in closing trade agreements. Canada, Japan, Singapore, Vietnam and, after almost twenty years of negotiation, Mercosur, are the last texts to which Brussels has put the finishing touch. However, the new European Commission, with Germany's Ursula Von der Leyen in front, will have to deal with the ratification process - with a new European Parliament and many pending issues - in addition to the consequences of global trade tensions in its first months of mandate.

Eternal tension with the US

From the arrival of Donald Trump to the White House, Washington has done nothing but create problems for European allies, from the withdrawal of the Paris agreement for the Climate until the reimposition of sanctions to the Iranian regime, passing, of course, by the trade war

In July last year, the still president of the European Commission, Jean-Claude Juncker, traveled to Washington to meet with Trump. He did so with the intention of calming the spirits and looking for a negotiated way out of what threatened to become a trade war.

The United States had decided to impose tariffs on European steel and aluminum exports, under the premise that they posed a threat to national security. The Trump administration threatened to do the same with car imports, and the car industry took the lead.

Some member states, particularly France, refused to negotiate "with a gun in their heads." Juncker took the risk and although he failed to get the US to reconsider its position on tariffs on aluminum and steel, it gained some time. The EU and the United States pledged in a joint communiqué to advance regulatory cooperation that made trade flow easier and to negotiate an agreement to reduce barriers, whether tariff or not, to trade in industrial goods. "While we work on this, we will not go against the spirit of this agreement, unless either party ends the negotiations," the text read.

The problem is that, one year later, the negotiations are in neutral. On the one hand because, although the Commission has been in office since April, some member states oppose the negotiation. France, for example, refuses to negotiate free trade agreements with countries that do not adhere to the Paris Agreement on climate. One of Trump's first decisions in the White House was to withdraw from it. On the other, the United States wants the negotiation to include agricultural goods and will not sit at the table until then. "This is a red line for us," acknowledged the Union Commerce Commissioner, Sweden's Cecilia Malmström.

As if this were not enough, the moratorium on car tariffs expires in November. "The simple notion that European vehicles can be a threat to the national security of the United States is, of course, absurd," Malmström warned during an appearance at the International Trade Commission of the European Parliament in July. But Brussels is ready. The Commission has a list of products to retaliate for 35,000 million euros . "I hope we don't have to use it," said the Swedish.

To this we must add, in addition, the account pending for more than a decade by Boeing and Airbus. The United States and the EU accuse each other of granting illegal aid to aircraft manufacturers. The conclusion of the World Trade Organization (WTO) is that both were right. In the coming weeks the WTO could determine the value of the potential sanctions that Washington and Brussels could impose on each other. However, the parties are in time to reach an agreement and close the case, the preferred option in Brussels. At the end of last July, the Commission's Director General of Commerce, Sabine Weyand, met with her American colleagues to find a way to seal the dispute. "We hope we can close this chapter in our relationship," said Cecilia Malmström. But for now, it does not seem that the conflict is over.

United Kingdom after Brexit

The United Kingdom will leave the European Union on October 31, no matter what happens, with or without agreement, "no doubt, complaints or buts," warned the new British Prime Minister, Boris Johnson , just swear in office. And whatever happens on that Halloween that has become a nightmare for Brussels, the United Kingdom and the EU will have to sit down and negotiate their future relationship.

With the signed exit agreement, the parties would have a transition period of two years that would allow them to negotiate with some peace of mind. Without agreement, London and Brussels would have to sit at the table with the relations rarefied by the crash and in the middle of the damage control of an abrupt Brexit. Trade negotiations last for years, even with the closest partners. But it is the first time that the EU talks about how to avoid weakening relations with a country, not to strengthen them. With the change of government, in addition, it is not clear to what future relationship London aspires, whether a strategic partnership agreement - where cooperation would go beyond the commercial sphere - or a simple trade agreement. At the head of the EU negotiations, by the way, will also be Sabine Weyand, the former right-hand man of the chief negotiator of Brexit, Michel Barnier , and a major headache for London.

Meanwhile, and given the prospect of confrontation with Brussels, the United Kingdom approaches positions with the United States. It is no secret that Johnson and Trump understand each other. But Washington could simply benefit from a desperate negotiation with the United Kingdom and take a slice of Brexit. "The United States is our biggest bilateral trading partner. President Trump has made it clear again that he wants an ambitious free trade agreement with the United Kingdom, so I hope we can achieve it as soon as possible after we leave the EU on 31 October, "said Secretary of State Dominic Raab , visiting Washington. "We will be hand in hand at the door, ready to sign a new free trade agreement as soon as possible," confirmed his American colleague Mike Pence.

The rapprochement between the United Kingdom and the United States after Brexit could have consequences for the already complicated relations between the EU and the White House. Even so, the European market remains much more important - and appealing - for the Trump administration in the long term.

Stamps and dialogue tables

In recent months, the EU has closed trade agreements with Vietnam and Mercosur and started the dialogue with Australia and New Zealand. One of the main challenges for the new Commission will be to conclude the process of ratification of the first two and move forward in the negotiations of the latter, with an eye on potential new opportunities, and pending accounts, for example, with China. All this, in the middle of a trade war between Beijing and Washington that threatens to sharpen the slowdown in the world economy.

In the case of Vietnam , it is an agreement for trade and investment that eliminates almost all customs duties and 65% of import taxes on European products, according to the Commission. The agreement also opens the public procurement market to European actors, seeks to work to reduce non-tariff barriers in particular in the automobile sector and provides for the protection of geographical indications such as, by employment, Rioja wine.

Although the agreement includes special provisions, since it is a treaty with a developing country, critics point to the risks of establishing trade agreements with countries where human rights violations occur and labor rights are not sufficiently protected. However, the Commerce Commissioner, Cecilia Malmström, argues that trade agreements "can be a tool for doing good" by pushing these countries to meet higher standards.

The conclusion of the trade agreement with Mercosur, after almost twenty years of negotiation, will undoubtedly be one of the great successes of the Juncker Commission ... but it will be the executive of von der Leyen who has to close the fringes and achieve its ratification . The pact implies access to European companies to a market of more than 260 million consumers and a saving of 4,000 million euros in tariffs. The pact is one of the most ambitious trade agreements in the history of the EU, only behind Japan. But it also lifts blisters.

France has not hidden its reluctance, since Brazil, with Jair Bolsonaro in front, also intends to abandon the Paris agreement because of the weather. In addition, the agreement poses a major challenge for European farmers, which could bring problems to Emmanuel Macron at home. So far, the French government has announced an evaluation of the agreement by a group of experts, before proceeding to its ratification.

The process of ratification of both agreements is now moving forward. In the case of Mercosur, the official approval of the member states is still missing, in addition to the consent of the European Chamber. In the case of Vietnam, in addition to the European Parliament, national parliaments will have to give the green light before they can enter into force. The text is closed, negotiation, not yet.

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