BERLIN, May 28 (Xinhua) -- The European Union (EU) should agree on export quotas as a means to defuse the growing tensions between the bloc and the United States over trade, a study by the Macroeconomic Policy Institute (IMK) in Dusseldorf found on Monday.
The IMK recommended the EU to offer lowering the volumes of its current steel and aluminium exports to the U.S. slightly. In exchange, Washington would guarantee to exclude the EU permanently from new import tariffs.
"Europe could win the trade war by refusing to participate in it", a statement by study's author Sabine Stephan read. The adverse impact of a quota solution on firms with an upper limit on their exports would most likely be modest and also strategically wiser than entering a tit-for-tat spiral of protectionist measures.
Stephan highlighted that quota concessions could become obsolete and be withdrawn quickly again once the U.S. began to feel the economic pain caused by U.S. President Donald Trump's "America First" doctrine. A similar pattern was already observed back in 2002, when U.S. President George W. Bush eliminated tariffs and import quotas on steel which he had introduced two years earlier following the related loss of 200,000 industrial jobs.
As a second step in its approach to the ongoing trade conflict, the IMK urged the EU to propose a mutual tariff reduction for transatlantic trade in goods.
Stephan argued that her strategy would have two key advantages. "On the one hand, the U.S. president would be stripped of a basis for further punitive trade measures. On the other, the U.S. would have to offer concessions of its own as well and the myth of the U.S. being handicapped by one-sided EU tariffs would be debunked."
Representatives of the EU Commission are currently negotiating with U.S. trade officials in an attempt to obtain a permanent exclusion for the bloc from steel and aluminium tariffs. While business representatives have repeatedly called for reopening talks on a slimmed down version of the failed Transatlantic Trade and Investment Partnership (TTIP) ("TTIP light"), senior policymakers in Germany have voiced scepticism over whether a solution to the escalating trade conflict can still be found.
German President Frank-Walter Steinmeier expressed "genuine concern" that the trade conflict unleashed by Trump could result in lasting damage to traditionally close diplomatic ties between Berlin and Washington. Steinmeier said that "substantial change" had occurred in the nature of the wider transatlantic alliance, lamenting that European and U.S. societies were increasingly drifting apart.
The EU's second temporary exclusion from U.S. steel and aluminium imports is scheduled to expire on Friday. German Economy Minister Peter Altmaier will hold emergency talks with U.S. Commerce Secretary Wilbur Ross and EU Trade Commissioner Cecilia Malmstroem on Wednesday and Thursday.
