On Monday, 15 April the Council decided to adopt the negotiating directives for trade talks with the United States on a Free Trade Agreement. Now concerns are raised regarding the US administrations departure from its commitments to combat climate change envisaged in the Paris Agreement. On the other hand, supporters of the FTA argue that due to the current state of international trade it would be important to reach such an agreement to avoid further escalation. However, when it comes to trade the EU has failed to observe its climate commitments as part of negotiating schedules, questioning its willingness to be in the forefront of the fight against climate change.

On Thursday 21 March, the European Parliament failed to
approve two negotiating mandates that authorise the European
Commission to start formal trade talks with the US. This only adds to the
challenges the forthcoming trade talks face. Five years ago, negotiations on
TTIP (Transatlantic Trade and Investment Partnership) were started between the
US and the EU. However, the Trump administration suspended negotiations on that
Free Trade Agreement (FTA) and in the EU protests against TTIP rose. As parts
of this FTA would have needed unanimous
consent from all 28 EU member states, the European Commission suspended
negotiations likewise.

The USA is the EU’s most important economic partner, as together they
account for more than 50 percent of global GDP. However, since Donald Trump is
US-President, tensions arose between the EU and US, due to the ‘America First’
foreign policy. The US raised additional tariffs on steel and aluminium of 25%
and 10%, which also applies for imports from the EU. Following that, the EU
responded with rebalancing measures on a list of products from the US, and even
initiated legal proceedings at the World Trade Organisation (WTO). Facing these
disagreements, a political agreement was reached by European Commission
President Jean-Claude Juncker and Trump in July 2018 to avoid further escalation.
This agreement included commitments from the EU and USA to, amongst other
things, prepare exploratory
talks on a potential bilateral trade agreement in order to reduce
hurdles and reduce political tensions.

Hence, continuing negotiations on a potential FTA could be critical to
avoid a potential trade war between the US and EU. That the European Parliament
did not approve the trade mandate shows that further obstacles in negotiations
can be expected. Although a fully-fledged US-EU free-trade agreement is
unlikely to be achieved, it could be argued that strengthened efforts should be
made by the EU to conclude an FTA to continue dialogue and to prevent further
political tensions between the two major economic powers. If the EU would make
a shared effort, such an FTA could be concluded, as the US administration has
an interest to agree on a trade deal to show Trump’s
abilities to conclude FTAs to gain an advantage in the presidential elections
in 2020.

On the other hand, pursuing a trade agreement with the US, would come
short of the claim to conclude deals only with countries committed to the Paris
Agreement obligations. In July 2018, the European Parliament announced efforts
to “make
ratification and implementation of the Paris Agreement a condition for future
trade agreements”. The latest deals the EU concluded with Japan and
Mexico also refer to the Paris Agreement. Since Trump abandoned the Paris
Agreement, this would mean that no FTAs should be concluded with the US. Europe
claims to lead
the way to meet the Paris goals of keeping climate change well below
2°C. Therefore, it could be argued that the non-approval of the negotiating
mandated by the European Parliament sent the right signal that the EU stands
strong regarding climate protection.

Preventing a potential trade war is certainly important. Against the
current backdrop of international trade, trade talks between the EU and US
should be used to find mutually agreed solutions for challenges the global
trading system currently encounters, such as the need for a reform
of the WTO. However, as leaders of the current economic system, the
EU and the US should also be committed to find global solution for climate
change. As the US has an interest in negotiating an FTA, the EU should leverage
its economic and diplomatic power to also address climate issues, possibly
making the accession the Paris Agreement or comparable commitments a condition
for further trade talks.