EU open to discussing cars, not farming in U.S. trade talks

By Philip Blenkinsop

BRUSSELS (Reuters) - The European Union is willing to discuss car tariffs but will not remove duties on farm products in trade talks with the United States, its trade chief said on Friday, setting it on a possible collision course with Washington.

The European Commission, which coordinates trade policy for the 28 member European Union, published two negotiating mandates on Friday, which were notable more for what they left out than for what they included.

The EU proposal on tariffs falls far short of the wide-ranging wish-list, including comprehensive agricultural market access, set out by U.S. President Donald Trump's administration a week ago.

"There is a lot that is not covered. We are not proposing any negotiations with the U.S. to reduce or eliminate (duties) on agricultural products," EU Trade Commissioner Cecilia Malmstrom told a news conference.

"That area was left outside, like many other topics where it would be difficult to reach an agreement," she continued, adding that the EU was not planning to restart the broad negotiations dubbed TTIP, which drew thousands to streets in Europe in protest.

Last week's 17-page list of U.S. objectives began by saying that the United States wanted to reduce its trade deficit with the European Union - which was 119.6 billion euros ($136 billion) in 2017, according to EU statistics office Eurostat, almost a third of which was related to cars and car parts.

The section of the U.S. document on agriculture includes a reference to trade commitments for products developed through biotechnologies, which could include hormone-treated beef banned in Europe and GM crops currently given to EU livestock, but not directly eaten by people.

EU READY TO PUT CARS ON TABLE

The two EU negotiating mandates will need to be approved by EU governments. One would lead to talks on removing tariffs from industrial goods and the other on rules to allow testing bodies in the United States to clear products for sale in the European Union and vice versa.

Any deal would have to be approved by the European Parliament. The head of its trade committee, German Social Democrat Bernd Lange, said the bloc should not be negotiating with Washington while metal tariffs were in place and car tariffs threatened. A deal should also include workers' rights and environmental standards, he said.

The EU and United States reached an entente in July, ending a stand-off of several months, when Trump agreed to hold off imposing tariffs on EU car imports while the two sides looked to improve trade ties.

The parties committed to work toward removing existing tariffs on "non-auto industrial goods" and to discuss standards strengthen energy cooperation, while the EU said it wanted to import more U.S. liquefied natural gas.

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They would also look into U.S. import tariffs that EU steel and aluminum producers have faced since June.

Malmstrom said the proposed EU mandate on tariffs did include vehicles.

"We also saw that the U.S. did not exclude cars from their negotiating directives. We are prepared to put our vehicle tariffs on the negotiating table as part of a broader agreement if the U.S. agrees to work together toward zero tariffs for all industrial goods," she said.