[This is an op-ed by Robert A. Rogowsky, professor of trade and diplomacy at the Middlebury Institute of International Studies and adjunct professor at Georgetown University’s School of Foreign Service in the U.S. He is a former chief economist and director of operations at the U.S. International Trade Commission.]
[...]
[The EU-US trade deal] is not technically a deal. It is filled with numerous “commitments” such as “work to address” and “intend to work together,” or “intend to address” and, curiously, “take complementary actions to address.” This is the type of language used in a preliminary phase of a framework agreement, which would be the precursor to a serious trade negotiation.
The White House is claiming that, first, that the EU will invest $600 billion directly in the U.S. during Trump’s term (three times the rate it has invested in the past). This is, if not delusional, at least fantastical.
The second concrete claim by the White House is that “the EU will double down on America as the Energy Superpower by purchasing $750 billion of U.S. energy exports through 2028.”
[...] These numbers simply do not make sense. But then, they need not. They serve their performative purpose well enough. Chalk up a specious victory and move on.
[...]
If the EU reaches the $250 billion a year goal, U.S. [energy] imports would account for 85 percent of its total spending on those energy commodities. While this appears to be a plus for U.S. producers, it would massively disrupt global energy markets (not to mention violate many long-term supply contracts).
But more startling, it would exceed total current U.S. exports. Putting together the value of U.S. exports for all three energy commodities totals $165.8 billion, Russell calculates, “meaning that even if the EU bought the entire volume it would still fall well short of the $250 billion.” [...] So the EU’s commitment to buy [annually] $250 billion worth of American energy is entirely unrealistic and unachievable. “The smart people in the room must know this,” Russell writes, so “why agree to what is obviously a ridiculous number?”
[...]
So, despite substantive criticisms of the EU team, they in fact made a perfectly understandable agreement. Specifically, when only attention matters and the substance of the deal is a mere side story of the performance, one can agree to almost anything. In this case, the more fantastical the better.
[...]
Why didn’t EU Commission President Ursula von der Leyen promise $900 billion? Trump would be even happier and Europe even less likely to uphold the “agreement.” Smile, suck-up, sign, shrug and move on. The real negotiation is somewhere down the road; perhaps tomorrow afternoon. Well, maybe. Trump’s authority even to make such a deal is still being litigated.
The one unavoidable fact is that America has abandoned the rules-based trading system it carefully built over three-quarters of a century. It is a brave new world of U.S. trade “agreements” based on rapid-fire, plainly meaningless commitments — but what a performance!
[Edit to insert the link.]