Interesting read. Of course the headline lured me, but further reading was reminiscent of a Brit comedy show that featured someone involved with the lingerie business and in exasperation he blurted out something to the effect that, "Do you realize that the European guidelines for brassiere manufacture is over 300 pages long????"
What Lobsters and Chickens Tell Us About Europe’s Trade Logic
The European Union struck a trade deal that protected political priorities, like chicken and beef standards, while allowing headline-grabbing concessions. Consider lobsters.
The European Union’s trade deal with the Trump administration has met with fierce criticism because on its face, it is full of giveaways to Washington and devoid of victories for the bloc’s 27 nations.
But to understand Europe’s approach, consider the lobster.
E.U. officials made a variety of concessions to seal the agreement. Among them was keeping tariffs on lobster imports at zero, extending
a 2020 deal that had been set to expire. Other sweeteners included a pledge to buy $750 billion in American energy over three years and a loose promise to make hundreds of billions in investments in American firms and technologies.
Look closely at those offerings, though, and a pattern emerges. The European Union has handed America feel-good triumphs while dodging, at least for now, several of its most painful demands.
Lobsters are a case in point. They are politically relevant in the United States, where the Maine-centric industry is a point of pride and has powerful champions in Congress. But they are neither economically important nor especially politically sensitive in Europe.
And while Europeans offered to freely import the crustaceans, they resisted the Trump administration’s demands that they change other food-related rules to allow for more imports of
America’s beef or chicken — far more politically explosive topics across the bloc.
“They must be giggling to themselves in Brussels,” said Marc Busch, a professor of international business diplomacy at Georgetown University who has for years followed food tariffs.
He noted that Europe has not agreed to change crucial sanitary regulations that ban hormone-raised beef or acid-washed chicken. Those can still be used to block more politically important agricultural imports, Mr. Busch said, “literally until the cows come home.”
European officials have been clear that the setup happened by design. A senior E.U. official on Tuesday told reporters that while the bloc will extend the zero tariffs on lobsters and drop trade barriers on bison meat, which is not widely produced in Europe, it will not be changing its policies to take more beef.
The cattle industry has a powerful political presence in France, Belgium and elsewhere. Lobsters were a simpler way to create agricultural good will.
Europe has spent the past several months threatening to impose sky-high tariffs on the New England seafood if no trade deal were reached. By extending zero tariffs instead, the European Union will give American lobster exporters a chance to expand their footprint on the continent. Europe
is a major market for lobster, but it buys most of the crustaceans from Canada, with which the bloc has a free-trade agreement.
It may not yet be time for the lobstermen to celebrate, though, because the new trade framework has not been finalized. The two sides have yet to publish a formal joint statement announcing the deal, and although the European Union indicated this past week that one was coming soon, negotiations continue — which means things could still fall apart.
Still, if the agreement holds, it is full of features like the lobster deal. Several of the incentives the European Union used to clinch the agreement may look like gifts, but if so, they are gifts unearthed from the back of the closet, dressed up in nice wrapping paper and topped with a fancy bow. They look good, but they did not cost Europe much.
Take Europe’s promise to buy $750 billion in energy. That number is spread across three years, and it includes Europe’s existing purchases of American gas and oil, expected future additional purchases and anticipated investments in things like nuclear infrastructure by American companies in Europe.
But while the European Commission, the bloc’s executive arm, can estimate how much European companies might spend, those decisions are up to the private sector. The European Union cannot force businesses to buy American energy if the math does not make sense.
Likewise, the bloc’s promise to invest hundreds of billions of dollars in the United States is a tally of expected spending from European companies. It is simply an expectation of how much money could flow toward America, not even a commitment of how much will.
And although the bloc has agreed that it will not adopt network usage fees, which
would have forced big tech companies like Netflix and YouTube to pay internet providers to deliver their content to consumers, its negotiators have said they have not bent on more important digital regulations.
The Trump administration wanted the European Union to soften its rules policing speech online, for instance, but those have not changed, at
least for now.
The new trade deal does include some unambiguous losses for the Europe Union.
About 70 percent of the bloc’s exports to the United States now face a 15 percent tariff, one that kicked in at midnight Thursday. That is up from the low single digits before this year. And the bloc has promised to drop tariffs on American industrial goods and cars to zero, which could expose European manufacturers to more U.S. competition.
Although European negotiators say they dodged worse outcomes, follow-through will be critical.
For instance, the European Union’s 15 percent rate is expected to eventually apply to cars and pharmaceuticals. That is a relief for automakers, which were previously facing 27.5 percent tariffs, and for drugmakers, which President Trump has warned could contend with levies as high as 200 percent. But the United States has yet to put its commitments on car tariffs into practice or to formally finish its plans on pharmaceuticals, keeping uncertainty alive.
The European Union has been following through on its promises, hoping the deal will hold. It has
suspended a retaliation package and committed to extending the zero tariffs on lobsters past their July 31 expiration date.
That timing was lucky. Lobster season kicks off in earnest in July, said Marianne LaCroix, the executive director at the Maine Lobster Marketing Collaborative, a marketing group for the industry. More stable rules of the road will make it easier for lobster processors and sellers to plan.
“The challenging thing for the industry this year has been all of the uncertainty,” she said.