WEBVTT - Former EU Trade Negotiator John Clarke Talks Possible US Tariff Deal

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>President Trump pushed back against doubts over his seriousness on

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<v Speaker 2>the tariff deadline. He said the August first deadline won't

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<v Speaker 2>be extended, while hinting on progress towards a deal with

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<v Speaker 2>the European Union. Joining us now to discuss this in

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<v Speaker 2>more detail is John Clark, a former EU trade negotiator

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<v Speaker 2>and Director of International Affairs at the European Commission. John,

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<v Speaker 2>thank you for joining us on such a busy morning

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<v Speaker 2>when it comes to news about trade. How are you

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<v Speaker 2>reading the latest comments from the US and the EU

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<v Speaker 2>on this? Does it sound like they're close to a

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<v Speaker 2>deal to you?

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<v Speaker 3>I think this is the most difficult negotiation in memory,

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<v Speaker 3>frankly for the europan Union, and I would not want to

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<v Speaker 3>be any trade negotiator on this one. The go posts

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<v Speaker 3>are moving all the time, leaves negotiating with a gun

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<v Speaker 3>against its head of twenty percent or fifty percent tariff

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<v Speaker 3>in August, depending on what daily week it is. There

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<v Speaker 3>are doubts I think whether any any deal that Trump

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<v Speaker 3>incs will be actually honored. And then the Commission is

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<v Speaker 3>very divided about whether it should stick to principles not

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<v Speaker 3>accept anything which is w two illegal or be quote

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<v Speaker 3>unquote pragmatic and go for a quick thirty deal of

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<v Speaker 3>the kind that the British did and the end men

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<v Speaker 3>the states are also quite divided, and then we've got

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<v Speaker 3>the whole Ukraine dimension, which which in the background. So

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<v Speaker 3>it's a very difficult situation. There is there's no white

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<v Speaker 3>smoke coming out of the bussles at the moment, but

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<v Speaker 3>there have been a few hints and signs that a

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<v Speaker 3>deal may be reached today or over overnight tomorrow, which

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<v Speaker 3>would basically basically be EU accepting that there will be

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<v Speaker 3>a ten percent tariff more or less across the board,

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<v Speaker 3>carve outs for airbus or aircraft, aerospace and wines and

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<v Speaker 3>spirits the biggest sivily weather that can be a carve out,

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<v Speaker 3>and no tariffs for cars and pharmaceuticals which have been

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<v Speaker 3>almost important to several member states. So this is a

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<v Speaker 3>very difficult negotiation. I think nobody will be happy with

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<v Speaker 3>the result. But I don't think the EU is willing

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<v Speaker 3>to go to a full blown trade war with the

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<v Speaker 3>USA because that would that would end any any prospect

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<v Speaker 3>of the US sticking in there with support for Ukraine.

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<v Speaker 1>You point in some of the complexity of this arrangement.

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<v Speaker 1>We've been speaking to our reporters who've been giving details

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<v Speaker 1>on some of those carveat negotiations that have been happening

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<v Speaker 1>as well. I mean, are those is that going to

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<v Speaker 1>be enough for EU member states? If there are managed

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<v Speaker 1>to be successful on car utes for wine and spirits

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<v Speaker 1>and aircraft parts. As we've been discussing, the car is

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<v Speaker 1>issue seems even more complicated.

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<v Speaker 3>No, I don't think that would that would be be satisfactory.

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<v Speaker 3>The auto sector is very important, The pharmaceutical sectory is

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<v Speaker 3>very important, and I think at least one of those

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<v Speaker 3>sectors would need to get a carve out zero beauty

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<v Speaker 3>exporting to the USA if none of them are there,

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<v Speaker 3>I don't think the EE you could accept a deal.

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<v Speaker 2>That's interesting that you mentioned that Trump did mention that

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<v Speaker 2>two hundred percent tariff that threat on pharmaceuticals, but he

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<v Speaker 2>did mention a longer timeline when he threatened that, saying

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<v Speaker 2>companies will have a year a year and a half

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<v Speaker 2>to move production to avoid that kind of tariff. But

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<v Speaker 2>I want to car maybe dig into a little deeper

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<v Speaker 2>on the auto situation. There were some reporting that some

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<v Speaker 2>German car makers would be given maybe some reprieves such

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<v Speaker 2>as BMW, Mercedes and Volkswagen who produced some cars in

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<v Speaker 2>the US, they'll be given maybe a quota of some

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<v Speaker 2>terraff free imports. What's the latest reading on the discussions

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<v Speaker 2>around the auto sector.

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<v Speaker 3>Well, I'm not privy to the discussions that they're in

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<v Speaker 3>the so called tunnel now in GRN secrecy, but there

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<v Speaker 3>are lots of ways in which you can carve out

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<v Speaker 3>craft a deal on autos which would, as you say,

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<v Speaker 3>involve boosting production in the USA, which you know BMW

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<v Speaker 3>is quite able to do. Volkswagen as well. The Japanese

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<v Speaker 3>have been doing it with Hayundai and offsetting that against

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<v Speaker 3>increased imports from Europe. So I mean anything as possible.

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<v Speaker 1>What about the question of the tech rules. This is

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<v Speaker 1>something that Donald Trump has brought up again and again,

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<v Speaker 1>and even last night while he was saying that the

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<v Speaker 1>EU and Ursula von Zlin had been quote very nice recently,

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<v Speaker 1>he still pointed to some of the fines being issued

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<v Speaker 1>to big tech companies in the from the US, but

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<v Speaker 1>by the EU. Now, our conversations with the European Commission

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<v Speaker 1>have said that they're not looking to change the rules

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<v Speaker 1>Stefan Serjean I told us that only around a week ago.

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<v Speaker 1>Is that something that could a compromise. Do you think

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<v Speaker 1>be found around that where the EU could be seen

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<v Speaker 1>to be giving something on that area to the US

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<v Speaker 1>without necessarily giving up on its framework.

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<v Speaker 3>No, I don't. I think on this the the EU

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<v Speaker 3>will will not waive it's it's legal requirements and its

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<v Speaker 3>enforcement requirements on on on big tech, on on data platforms.

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<v Speaker 3>I mean, only last week the EU find Apple five

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<v Speaker 3>hundred million euros for anti competitive behavior in terms of

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<v Speaker 3>access to its it's it's apps site. I mean, I

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<v Speaker 3>think that's a that's a very clear sign that the

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<v Speaker 3>EU is not going to give up on its the

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<v Speaker 3>Digital Service Act or other tech regulations. I think that

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<v Speaker 3>would be a bridge too far, and it's hard to

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<v Speaker 3>see what kind of sweetheart understanding could be made otherwise.

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<v Speaker 3>So I don't think this area is going to be

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<v Speaker 3>featured very strongly in any EU U S deal.

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<v Speaker 2>Can you talk to us about a little bit about

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<v Speaker 2>how you're viewing, you know, the broader trade situation within

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<v Speaker 2>the EU or sorry outside you with partners other than us.

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<v Speaker 2>Do you think that this is putting more strain on

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<v Speaker 2>their relationship with China, for example.

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<v Speaker 3>Well, that's one of the big, big unknowns that I've

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<v Speaker 3>been writing about quite a bit and commenting on. You know,

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<v Speaker 3>I would be very unhappy if any EU US deal

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<v Speaker 3>included commitments to bash bash China in any kind of

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<v Speaker 3>W two illegal manner. Obviously the US want the EU

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<v Speaker 3>to align with it in hitting China in whatever ways

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<v Speaker 3>it can. That would be very, very unwise and dangerous approach.

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<v Speaker 3>I think the EU should not be forced to choose

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<v Speaker 3>between America and China, not least because we have a

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<v Speaker 3>summit coming up EU China in a few days, and

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<v Speaker 3>I think we don't want to see a breakdown in

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<v Speaker 3>EU China relations at this particular point in time.

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<v Speaker 1>Going back to the negotiations with the US, I'm wondering

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<v Speaker 1>if what you would see as being the red lines

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<v Speaker 1>that the EU won't cross to get a deal. Obviously

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<v Speaker 1>there's a lot of pressure and we're told there is progress.

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<v Speaker 1>But I just wonder, from your experience and negotiating on

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<v Speaker 1>behalf of the EU, what what issues you think that

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<v Speaker 1>could see all of this fall apart over.

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<v Speaker 3>Well, I think there are there are two two red lines,

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<v Speaker 3>perhaps two and a half one is that I don't

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<v Speaker 3>think the European Union would accept to give the USA

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<v Speaker 3>any preferential market access for US exports. That would be

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<v Speaker 3>clearly illegal. And the w t O and the EU does,

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<v Speaker 3>I think still care about its credibility and as a

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<v Speaker 3>defender of multilateralism and the kind of international rules. So

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<v Speaker 3>I think that's that's not going to happen. That that's

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<v Speaker 3>that would be a red line for the European Union.

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<v Speaker 3>I think the second one is, as I said earlier,

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<v Speaker 3>the EU will not, in my opinion, accept a deal

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<v Speaker 3>in which there is no improved access for pharmaceuticals or cars,

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<v Speaker 3>one or the other, perhaps not both, but one or

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<v Speaker 3>the others. I think they will demand good treatment for

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<v Speaker 3>either their farmer or their car exports. And then thirdly

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<v Speaker 3>that the half is that as I said, I don't

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<v Speaker 3>think the EU would accept to agree with the Americans

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<v Speaker 3>any kind of again w two illegal actions against China.

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<v Speaker 1>John, thank you very much for joining us this morning,

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<v Speaker 1>John Clark, their former EU Trade Negotiations director Franchashal Farres

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<v Speaker 1>at the European Commission. We appreciate your insight as we're

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<v Speaker 1>watching for the latest news out of those trade talks.