Trade

Trump and Juncker: The art of the no-deal

For all the love and kisses, all U.S. President Donald Trump and European Commission President Jean-Claude Juncker agreed on was to leave things as they are.

After a three-and-a-half-hour meeting Wednesday, Trump promised Juncker he would “hold off on further tariffs” on Europe. In exchange, Juncker assured the U.S. president that Europe would import more American soybeans and facilitate imports of liquefied natural gas.

“I came for a deal; we made a deal,” Juncker said at a joint Rose Garden appearance after the meeting.

Nothing the two men agreed to, however, reflects a shift in policy — for now (they did agree to longer-term measures such as setting up a working group to work toward reducing tariffs).

Simply put, the EU offered what it was already going to do. And in exchange, the U.S. agreed not to do what it hasnt done yet.

Even if Juncker did want to boost imports of U.S. soybeans, theres not much he could do.

Take soybeans. The EUs livestock sector relies heavily on imports to feed farm animals, and indeed the Continents companies have ramped up purchases of U.S. soybeans.

But thats not because of anything EU officials have done. Its a result of the trade war Trump started with China.

Chinese tariffs on U.S. soybeans have encouraged the countrys importers to switch from U.S. to Brazilian and Argentinean producers. That has driven up prices in South America, while driving them down in the U.S.

“There is a reality in the free market that U.S. soy is far more attractive, far more competitive than other sources,” said Alexander Döring, the secretary-general of FEFAC, Europes animal feed lobby. He added that drought across much of Northern Europe and Argentina has also increased demand for U.S. soybeans.

Commission President Jean-Claude Juncker | Jim Lo Scalzo/EPA

Even if Juncker does want to boost imports of U.S. soybeans, theres not much he can do.

There are no EU tariffs on U.S. soybeans. And Brussels does not have the power to tell private European companies what to buy.

“We are not the Soviet Union,” Jean-Luc Demarty, the Commissions director general for trade, told senior trade envoys from EU capitals in a private briefing Thursday, according to two people in the room.

André Sapir, a trade expert from Bruegel, a think tank, agreed. “This isnt a real deal, its just the market working,” he said.

The same is true for Junckers other promise, regarding liquefied natural gas (LNG).

The U.S. is already exporting LNG to Europe. Market forces will largely determine whether its share will go up in the future.

“The process is driven by markets, which means U.S. LNG will arrive in more substantial quantities when the price will be more attractive,” said Marco Giuli, an energy policy expert at think tank European Policy Centre.

“I wouldnt take the statement so seriously” — Marco Giuli

Juncker did say during the Rose Garden press conference that the EU will invest in more LNG terminals. But that too is nothing new.

The EU has been promoting LNG infrastructure for years, as part of its efforts to diversify away from Russian gas supplies, especially in Central and Eastern European countries, which have long been highly dependent on their former Soviet master. New LNG terminals have come online in Poland and Lithuania in recent years.

“I wouldnt take the statement so seriously … what I am saying is — theres nothing much here,” said Giuli.

Hans von der Burchard contributed reporting.

Read this next: As old Western powers cosy up, China goes on trade offensive

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