Transcription
Welcome everyone. Thank you so much for being here. And as always, a special thank you to every single one of you who has become a subscriber on Substack, here on YouTube, Patreon, or who has otherwise supported my work. I appreciate every single one of you.
The European Union is facing a sobering reality. Its trade agreement with the United States. The same trade agreement that Ursula Von der Leyen sealed with Donald Trump in Scotland about a month ago. It is not going to evolve into a full-fledged, reciprocal, WTO-compliant free trade deal. In other words, it's impossible to fulfill. The EU understands it. And now EU officials are publicly admitting what many insiders have long suspected: that this was really never on the table in the first place.
The European Commission's top trade official, Sabine Weyand, made it clear in recent remarks that Brussels should stop pretending that this is headed toward a comprehensive free trade agreement. Political reports here, according to her, if the EU asked Washington to agree on transforming the current deal into a full World Trade Organization-compliant accord, the answer would be, in her words, a resounding no.
That statement is more than a reality check. Of course, it's a major policy moment because what the EU has on its hands is a patchwork arrangement that doesn't meet WTO standards, doesn't ensure reciprocity, and certainly doesn't reflect the EU's official commitment that, let's be honest, it bans however it wants the commitment to the rules-based trade order. The same commitment that it claims to defend as it simultaneously uses economic coercion for its own political benefit.
At the heart of the issue here is the WTO framework itself, which we will discuss in a second, as well as a simple fact that the EU has never purchased $600 billion worth of energy resources from the United States, not even close. That number was pulled from thin air. Even Ursula Von der Leyen knew this, and that is precisely why she backtracked just two days after shaking hands with Trump in Scotland.
Besides that, the EU is now pointing to a specific article within the WTO framework, Article 24, I believe, that allows countries to eliminate tariffs between themselves without offering the same deal to even other WTO members, but only if the agreement is broad enough to cover substantially all trade. The EU-US deal does not come close to meeting that threshold, to meeting that standard.
The EU is increasingly unhappy with the deal, specifically because it eliminates EU tariffs on a range of US industrial goods and cars. But it's a one-sided affair. There's no equivalent move from Washington, and there wouldn't be. And that's where things start to seemingly fall apart. Brussels is now seeking further discussions with Washington. But now critics are asking, how can the EU defend WTO rules when it's breaking them for political convenience?
For Europe, the US-EU relationship is complicated. Europe is fully reliant on American security guarantees as it seeks to continue funding the West's proxy war in Russia. There is a very clear reluctance among EU leaders to publicly challenge Trump's trade tactics for fear of weakening US military support. And so, because, as we know, the United States is NATO, and NATO without the United States simply wouldn't survive. It wouldn't exist long-term. So Brussels appears to be unwilling to gamble when it comes to trade talks with Trump.
"Are known as a uh tough negotiator and deal maker."
"What is in front?"
"And fair and what is in front of us?"
"That's less important."
"If we are successful, I think it would be the biggest deal each of us has ever struck."
"Mr. Trump, can you do better than 15 a 15% tariff rate for the EU?"
"Better meaning lower."
"Yeah."
"Yeah."
"Mr. return to..."
The Scotland deal itself was framed by Trump as a strategic victory. He celebrated it. During the announcement, Von der Leyen acknowledged that there is a surplus between the EU and the United States, and that, of course, was a very politically sensitive topic for Trump. That admission gave his administration exactly what it needed: a win.
In the days that followed, Trump's trade team declared that the United States was building a new global trading system, one that is based not on multilateralism, but on strategic transactional deals. Jameson Greer, a senior trade official under Trump, went as far as to say that the Turnberry framework was laying the foundation for a new order. But that seems to be just rhetoric, to be honest, with no substance whatsoever. The world has already rejected this intense level of protectionism and transactionalism, and the global South has united to counter it. So this new order, based on Greer's own words, was dead on arrival.
In general, economists warned that Trump's purely transactional approach to global trade in reality weakens the core principles of the WTO, which are reciprocity and non-discrimination. The current deal doesn't meet either standard, and it is quite clear nobody can argue with that. The United States hasn't made matching concessions, and the EU, by offering the United States special treatment, violates the most-favored-nation rule. The idea that any benefit given to one member must be extended to all others unless covered by a full, broad trade agreement.
In the end, the EU's dilemma is a strategic one. Does it preserve the relationship with the United States at any cost as a guarantee of American military protection and funding? Or does it dare to even imagine pushing back, risking political fallout with Trump? Clearly, the EU has lost so much of its sovereignty already over the past several years that it's in no position to be seen as a credible actor in Trump's eyes.
"That is..."
"Europe is no more the top priority of the US. The US top priority is US, which is normal and fair. The second top priority is China, and for the rest, it depends on the moment. They are super loyal and reliable partner in Ukraine. Will it last? I don't know. But let's be clear, at the same time, in Afghanistan, we we didn't have the call before in the Ous did in Australia. I didn't have the call before. But it's not a reproach. I I try to be listen. The EU is not the priority of the US. And this is why part of the wakeup call period of time we we are living, and part of what we have to completely reshape is our defense and security strategy. We are part of NATO. No discussion. We are strong ally of the US. No discussion. But we have to derisk our model from the US agenda."
The downside of this dilemma is that the global economic system and global trade is becoming increasingly fragmented, which has the potential to harm emerging economies and developed nations too. As the EU acknowledges that the US-EU trade deal is a no-go, we have yet to hear how Washington reacts. Stay tuned. I will share an update. Thanks so much for watching. I hope you enjoyed this quick update. Make sure that you are subscribed. Give this video a like and follow me on Substack and Patreon. I would love to see you on my alternative platforms. Have a wonderful rest of your day. Bye for now.