After nearly four years of tense trade negotiations, the United States and the European Union have reached a deal on an arrangement that addresses Washington’s complaints about unfair EU tariffs on dozens of products.
Talks were accelerated after President Donald Trump took office. The EU, after a period of post-financial crisis growth, was hit by a deep slowdown in Europe in the middle of the last decade and has kept up high trade barriers against U.S. goods.
“The President and the Prime Minister concluded that this agreement delivers significant and very positive results for Europe, the United States and their industries,” Treasury Secretary Steven Mnuchin said.
The agreement signed Sunday, which has yet to be approved by officials in the United States and Europe, provides for steep reductions in all duties on a wide range of goods, ranging from steel and aluminum to tomatoes and cucumbers. The restrictions will have to be reduced for at least five years.
Beyond the immediate cuts to U.S. and EU tariffs, the agreement would set up a “global dispute settlement process” to resolve disputes. Countries can use the system to pursue lawsuits, but the rules will be applied to disputes between the United States and the European Union.
The agreement will also establish a “toolkit” to more accurately determine whether goods sold in the United States are genuinely derived from American manufacturing and materials. That would help contain the increasing use of tariffs, called countervailing duties, to protect foreign industries from competition.
The agreement is only a small part of the more ambitious Trans-Atlantic Trade and Investment Partnership, or TTIP, that was initiated in 2013 by the Obama administration and was scrapped after Trump took office. It also does not address the concerns of American farmers about EU subsidies that threaten their exports to U.S. markets.
Both the EU and Trump want other countries to increase market access for U.S. goods.
“We are deeply pleased that Secretary Mnuchin and Prime Minister Theresa May agreed that this interim agreement will allow market access to be put in place through the cross-border negotiations,” European Commission president Jean-Claude Juncker said.
Trump is pushing allies to join the United States in reducing its large trade deficit. The deficit, caused by the increased supply of American goods, far exceeds the United States’ total foreign investment in other countries. In May, the United States ran a deficit of $55.4 billion with China and a surplus of $36.1 billion with the rest of the world.
The current Trans-Atlantic Trade and Investment Partnership failed to reach agreement as it drew in several countries in South America, where many agricultural subsidies are concentrated.