Commissioner Valdis Dombrovskis Talks EU Trade Strategy
09:29 Share

When you're with Amex Business Platinum, you have the card that helps businesses dream bigger. Get a flexible spending limit that adapts with your business and earn 1.5 times membership rewards points on select business purchases so you can stock up on what you need to take your business further and get rewarded for growing bigger. That's the powerful backing of American Express. Not all purchases will be approved. Terms apply. Learn more at americanexpress.com slash AmexBusiness.

Bloomberg Audio Studios. Podcasts. Radio. News. Keeping an eye on everything that's been going on in the currency space here on this Monday as we welcome our audiences across all of our Bloomberg television and radio platforms.

A special conversation starts right now with Valdis Dombrauskas. He's the Commissioner for Economy and Productivity for the European Commission, effectively the man in charge in overseeing that trade bloc's economic policy. Great to have you here, Valdis. You are here in the United States at the New York Stock Exchange. Last week, you were down in Washington for the IMF and World Bank meetings.

I know there was a big message delivered by our U.S. counterparts with regards to trade and with regards to the geopolitical conditions. I am curious about what message you brought to the table for your U.S. counterparts. What did you tell them? Good afternoon. Well, the main message is that we continue to engage with the United States. We see the United States as our strategic ally, and we have the largest trade and investment relationship in the world.

So we are willing to invest in this relationship, continue our cooperation, including finding negotiated solution as regards trade and tariffs. Are there active negotiations at the high level between the EU and the United States?

Well, indeed, negotiations are ongoing. Also, last week I was meeting Scott Besant in Washington and we were also touching upon these issues. But I would say there is also still a lot of ground to cover. So what happens when you see somebody like Giorgia Maloney of Italy acting like she's...

been given a mandate to make some kind of a deal with the United States. Can you stop that from happening or do you lean into it and say, well, if Italy can lead the negotiations, maybe we'll get somewhere?

Well, first of all, it's clear that also individual EU member states like Italy and others are having their bilateral relationships with the US and continue their engagement. At the same time, as regards specifically trade, external trade is exclusive competence of

European Union, so negotiated by European Commission on behalf of EU member states and all EU member states know it and respect it, so there's no issues there. There has been some suggestion that Europe and China are talking and I think the idea is that perhaps you might agree to something in order to pressure the United States. Is that or has that been happening?

Well, as regards this US and China, well, first of all, we know that basically right now the US market is close to Chinese goods, so tariffs are prohibitively high.

And the question is, what is going to happen with all those goods which are not now reaching U.S. market? Where they are going? Are they going, for example, to the EU market? So our message to our Chinese counterparts is that it's important also that China shows restraint, that it does not put all this now over capacity of goods supply.

to other markets including EU because then we will have to react, we will have to close our market to protect our economy, our companies and that will lead even to further global economic fragmentation. And it's in everyone's interest actually to preserve multilateral rules-based trading system.

But we have a White House here in the United States, Valdez, that is not pursuing a multilateral rules-based system. I mean, that is very clear. So how do you negotiate a deal with the United States and potentially at the same time negotiate a deal, if necessary, with China?

Well, that's exactly the point why we think that at the end of the day, sticking to the rules, following multilateralism is going to be better for everyone. Right now, obviously, it's a fact that Trump administration has put those tariffs, including on

European Union. So we are willing to negotiate. By the way, we have suspended our first set of counter tariffs, which we already decided, but we also suspended them for 90 days to give those negotiations a chance. And we do hope to find a negotiated solution.

for our TV and radio audiences. We're in conversation right now with Valdez Dombrovskis, the EU Economic Affairs Commissioner, live from the NYSC. And Mr. Commissioner, I am curious as to

What, if any, demands the U.S. has made with regards to what your tariffs or effectively or barriers, if you will, would have to be in order to get the United States to remove any potential tariffs and barriers from that side? Is this a conversation about zero for zero in terms of tariffs or is there more that they're asking for?

Well, as regards tariffs themselves, it's worth noting that actually, well, before the recent introduction... Continue, Commissioner. Yes, I'm hearing you. So before the recent introduction of those tariffs...

The tariffs which EU was putting on US was trade weighted average of 1.2%. US tariffs on the EU trade weighted average was 1.4%. So actually we have very low tariffs on each other. And indeed one of the efforts for EU side was to go zero for zero on industrial tariffs. We are also exploring possibility to

by more LNG from the United States to cooperate more in area of energy and are willing to explore also other areas. Does one of those other areas include the VAT tax?

Well, no. Actually, that's the point, that we don't think it belongs to trade negotiations because our value-added tax is consumption tax. It's applied equally on both domestically produced and imported goods, and as such, it's not trade distortive. It's like similarly, U.S. states have sales taxes.

which are also consumption taxes, which are not trade distortive and they just do not belong to trade negotiations. Commissioner, the administration has said the first to the table will get the best deal. Are you concerned that we'll see deals from other large blocks of countries or countries and that you might be a little bit late, that you'll get maybe worse of a deal at that point?

What are sticking points right now?

Well, since those are ongoing negotiations, I cannot go into much detail. I indicated some of the ideas which we are exploring, but as I was also saying, there is still quite a bit of ground to be covered. I am curious, Commissioner, about the relative strength that we've seen over the last few weeks in the euro relative to the dollar. And it's got a lot of investors questioning whether that's something sustainable. What types of discussions have you had with your peers over there in Europe

about capitalizing on at least for what right now is a modest reallocation away from U.S. assets into European assets.

Well, first of all, as regards to the euro exchange rate, the European Central Bank is not targeting the exchange rate. So the exchange rate is determined by the markets and also the level we see now is not like historical highs of the euro. We have seen actually also the euro at higher levels. But in any case, indeed, we see interest from

investors in Euro denominated papers and there is going to be quite a strong supply of these Euro denominated papers in this and next year. So there is going to be opportunities for investors to invest in Europe.

So if investors want predictability, they want stability, respect for the rule of law, Europe is a good place to invest. Does that include an increase in bond sales, particularly common bond sales?

Well, actually we have a strong pipeline of bond sales due this year and next. We have close to 300 billion euros of recovery and resilience facility bonds still. We recently proposed a new common borrowing facility, safe facility for common procurement of defense equipment for member states.

Another 150 billion euros if we talk about common borrowing, but also Germany has recently announced additional 500 billion euros package to strengthen investment in infrastructure and defense. So also other countries, so as you see, there is going to be quite substantial supply also from European side.

All right, Commissioner, really appreciate you taking time for us. Valdez Dombrovskis, the Commissioner for Economy and Productivity for the European Commission.

Time is precious, and so are our pets. So time with our pets is extra precious. That's why we started Dutch. Dutch provides 24-7 access to licensed vets with unlimited virtual visits and follow-ups for up to five pets. You can message a vet at any time and schedule a video visit the same day. Our vets can even prescribe medication for many ailments, and shipping is always free. With Dutch, you'll get more time with your pets and year-round peace of mind when it comes to their vet care.