1 00:00:02,520 --> 00:00:08,799 Speaker 1: Bloomberg Audio Studios, podcasts, radio news, keeping an eye on 2 00:00:08,880 --> 00:00:11,880 Speaker 1: everything that's been going on in the currency space. Here 3 00:00:11,920 --> 00:00:14,480 Speaker 1: on this Monday, as we welcome our audiences across all 4 00:00:14,520 --> 00:00:18,640 Speaker 1: of our Bloomberg television and radio platforms, a special conversation 5 00:00:18,720 --> 00:00:21,520 Speaker 1: starts right now with Valdez Dombroskis. He's the Commissioner for 6 00:00:21,680 --> 00:00:25,640 Speaker 1: Economy and Productivity for the European Commission, effectively the man 7 00:00:25,680 --> 00:00:29,160 Speaker 1: in charge and overseeing that trade block's economic policy. Great 8 00:00:29,200 --> 00:00:31,040 Speaker 1: to have you here, a Valdis you are here in 9 00:00:31,080 --> 00:00:34,080 Speaker 1: the United States at the New York Stock Exchange. Last 10 00:00:34,080 --> 00:00:36,960 Speaker 1: week you were down in Washington for the IMFN World 11 00:00:36,960 --> 00:00:40,000 Speaker 1: Bank meetings. I know there was a big message delivered 12 00:00:40,200 --> 00:00:43,000 Speaker 1: by our US counterparts with regards to trade and with 13 00:00:43,040 --> 00:00:46,760 Speaker 1: regards to the geopolitical conditions. I am curious about what 14 00:00:46,880 --> 00:00:49,800 Speaker 1: message you brought to the table for your US counterparts. 15 00:00:49,800 --> 00:00:51,760 Speaker 1: What did you tell them? 16 00:00:52,280 --> 00:00:57,680 Speaker 2: Good afternoon. Well, the main message is that we continue 17 00:00:57,720 --> 00:01:01,840 Speaker 2: to engage with United States. We see United States as 18 00:01:01,960 --> 00:01:06,280 Speaker 2: our strategic ally and we have largest trade and investment 19 00:01:06,480 --> 00:01:09,960 Speaker 2: relationship in the world. So we are willing to invest 20 00:01:10,000 --> 00:01:16,160 Speaker 2: in this relationship, continue our cooperation, including finding negotiated solution. 21 00:01:16,319 --> 00:01:19,240 Speaker 2: As regards trade and tariffs. 22 00:01:19,000 --> 00:01:22,480 Speaker 1: Are there active negotiations at the high level between the 23 00:01:22,480 --> 00:01:24,800 Speaker 1: EU and the United States. 24 00:01:26,280 --> 00:01:31,280 Speaker 2: Well, indeed, negotiations are ongoing. Also last week I was 25 00:01:31,319 --> 00:01:34,560 Speaker 2: meeting Scott Vesant in Washington and we were also patching 26 00:01:34,680 --> 00:01:37,800 Speaker 2: up on these issues. But I would say there's also 27 00:01:37,959 --> 00:01:40,080 Speaker 2: still lots of ground to cover. 28 00:01:40,640 --> 00:01:43,560 Speaker 3: So what happens when you see somebody like Georgia Maloney 29 00:01:43,560 --> 00:01:47,480 Speaker 3: of Italy acting like she's been given a mandate to 30 00:01:47,720 --> 00:01:49,640 Speaker 3: make some kind of a deal with the United States. 31 00:01:50,000 --> 00:01:52,680 Speaker 3: Can you stop that from happening or do you lean 32 00:01:52,720 --> 00:01:55,880 Speaker 3: into it and say, well, if Italy can leave the negotiations, 33 00:01:55,880 --> 00:01:56,920 Speaker 3: maybe we'll get somewhere. 34 00:01:58,800 --> 00:02:03,880 Speaker 2: Well, first of all, it's clear that also individual EU 35 00:02:03,960 --> 00:02:07,760 Speaker 2: member states like Italy and others are having the bar 36 00:02:07,800 --> 00:02:12,720 Speaker 2: lateral relationships with US and continues their engagement at the 37 00:02:12,720 --> 00:02:17,640 Speaker 2: same time. As regards specifically trade, trade, external trade is 38 00:02:17,840 --> 00:02:23,440 Speaker 2: exclusive competence of European Unions, so negotiated by European Commission 39 00:02:23,600 --> 00:02:26,960 Speaker 2: on behalf of EU member states, and all EU member 40 00:02:27,000 --> 00:02:30,480 Speaker 2: states know it and respecting, so there's no issues there. 41 00:02:31,120 --> 00:02:34,400 Speaker 3: There has been some suggestion that Europe and China are talking, 42 00:02:34,440 --> 00:02:36,600 Speaker 3: and I think the idea is that perhaps you might 43 00:02:36,639 --> 00:02:38,880 Speaker 3: agree to something in order to pressure the United States. 44 00:02:39,080 --> 00:02:40,960 Speaker 3: Is that or has that been happening? 45 00:02:43,000 --> 00:02:51,919 Speaker 2: Well as regards these US and China, well, first of all, 46 00:02:52,120 --> 00:02:56,480 Speaker 2: we note that basically right now the US market is 47 00:02:56,560 --> 00:03:02,000 Speaker 2: close to Chinese goods, so tariffs are approhibitively high. And 48 00:03:02,120 --> 00:03:04,240 Speaker 2: as the question is what is going to happen with 49 00:03:04,639 --> 00:03:07,680 Speaker 2: all those goods which are not now reaching US market, 50 00:03:08,080 --> 00:03:10,400 Speaker 2: where they are going? Are they going, for example, to 51 00:03:10,480 --> 00:03:14,399 Speaker 2: the EU market? So our message to our Chinese counterparts 52 00:03:14,440 --> 00:03:17,760 Speaker 2: is that it's important also that China shows restraints that 53 00:03:17,840 --> 00:03:20,760 Speaker 2: it does not put all this now our capacity of 54 00:03:20,840 --> 00:03:24,639 Speaker 2: goods to other markets, including EU, because then we will 55 00:03:24,680 --> 00:03:27,280 Speaker 2: have to react to how to close our market to 56 00:03:27,320 --> 00:03:31,240 Speaker 2: protect protect our economy, our companies, and that will lead 57 00:03:31,320 --> 00:03:35,840 Speaker 2: even to further global economic fragmentation. And it's in everyone's 58 00:03:36,120 --> 00:03:41,280 Speaker 2: interest actually to preserve multilateral rules based trading system. 59 00:03:41,400 --> 00:03:43,760 Speaker 1: But we have a White House here in the United 60 00:03:43,800 --> 00:03:47,920 Speaker 1: States all this that is not pursuing a multilateral rules 61 00:03:47,960 --> 00:03:50,920 Speaker 1: based system. I mean, that is very clear. So how 62 00:03:50,960 --> 00:03:54,040 Speaker 1: do you negotiate a deal with the United States and 63 00:03:54,080 --> 00:03:57,760 Speaker 1: potentially at the same time negotiate a deal if necessary 64 00:03:58,160 --> 00:03:58,760 Speaker 1: with China. 65 00:04:01,360 --> 00:04:04,520 Speaker 2: Well, that's exactly the point where we think that at 66 00:04:04,600 --> 00:04:07,000 Speaker 2: the end of the day, sticking to the rules following 67 00:04:07,080 --> 00:04:12,360 Speaker 2: multilateralism is going to be better for everyone. Right now, obviously, 68 00:04:12,400 --> 00:04:16,400 Speaker 2: it's the fact that Trump administration has put those tariffs, 69 00:04:16,480 --> 00:04:21,279 Speaker 2: including on European Union, so we are willing to negotiate. 70 00:04:21,560 --> 00:04:25,280 Speaker 2: By the way, we have suspended our first set of 71 00:04:25,360 --> 00:04:29,760 Speaker 2: contact tariffs, which already decided, because we also suspended them 72 00:04:29,800 --> 00:04:33,640 Speaker 2: for ninety days to give those negotiations a chance, and 73 00:04:33,680 --> 00:04:37,640 Speaker 2: we do hope to find a negotiated solution for our. 74 00:04:37,560 --> 00:04:40,400 Speaker 1: TV and radio audiences. We're in conversation right now with 75 00:04:40,480 --> 00:04:44,240 Speaker 1: Baldis dombrotskis the EU Economic Affairs Commissioner, live from the 76 00:04:44,360 --> 00:04:48,520 Speaker 1: NYSC and mister Commissioner, I am curious as to what, 77 00:04:48,600 --> 00:04:52,280 Speaker 1: if any demands the US has made with regards to 78 00:04:52,440 --> 00:04:55,599 Speaker 1: what your tariffs or effectively or barriers, if you will, 79 00:04:55,640 --> 00:04:58,200 Speaker 1: would have to be in order to get the United 80 00:04:58,240 --> 00:05:02,279 Speaker 1: States to remove potential tariffs and bury US from that side. 81 00:05:02,320 --> 00:05:05,560 Speaker 1: Is this a conversation about zero for zero in terms 82 00:05:05,600 --> 00:05:08,200 Speaker 1: of tariffs or is there more that they're asking for. 83 00:05:10,040 --> 00:05:14,400 Speaker 2: Well as regards tariffs themselves. It's worth noting that actually, 84 00:05:14,440 --> 00:05:23,039 Speaker 2: well before the recent introduction continued, Yes, I'm hearing you. 85 00:05:24,080 --> 00:05:30,160 Speaker 2: So before the recent introduction of those tariffs, the tariffs 86 00:05:30,160 --> 00:05:33,719 Speaker 2: which EU was putting on US was a trade weighted 87 00:05:33,800 --> 00:05:36,880 Speaker 2: average of one point two percent. US tariffs on the 88 00:05:36,960 --> 00:05:40,600 Speaker 2: EU trade weighted average was one point four percent. So actually, 89 00:05:40,640 --> 00:05:43,839 Speaker 2: we have very low tariffs on each other, and indeed 90 00:05:43,880 --> 00:05:46,279 Speaker 2: one of the offers for EU side was to go 91 00:05:46,640 --> 00:05:50,440 Speaker 2: zero for zero on industrial tariffs. We are also exploring 92 00:05:50,480 --> 00:05:56,000 Speaker 2: possibility to buy more LNG from the United States, to 93 00:05:56,080 --> 00:05:59,520 Speaker 2: cooperate more in area of energy, and are willing to 94 00:05:59,560 --> 00:06:01,039 Speaker 2: explore other areas. 95 00:06:01,520 --> 00:06:04,080 Speaker 1: Does one of those other areas include the bad tax? 96 00:06:05,600 --> 00:06:09,159 Speaker 2: Well, no, Actually, that's the point that we don't think 97 00:06:09,200 --> 00:06:12,640 Speaker 2: it belongs to trade negotiations because our value added tax 98 00:06:13,080 --> 00:06:18,960 Speaker 2: is consumption tax. It's applied equally on both domestically produced 99 00:06:19,000 --> 00:06:22,480 Speaker 2: and imported goods, and as such is not trade distortile. 100 00:06:22,720 --> 00:06:27,200 Speaker 2: It's like similarly, US states have sales taxes, which are 101 00:06:27,240 --> 00:06:31,960 Speaker 2: also consumption taxes, which are not trade distortile, and they 102 00:06:32,040 --> 00:06:33,720 Speaker 2: just do not belong to trade versations. 103 00:06:34,120 --> 00:06:37,359 Speaker 3: Commissioner, the administration has said the first to the table 104 00:06:37,400 --> 00:06:40,159 Speaker 3: will get the best deal. Are you concerned that we'll 105 00:06:40,200 --> 00:06:44,080 Speaker 3: see deals from other large blocks of countries or countries, 106 00:06:44,520 --> 00:06:46,080 Speaker 3: and that you might be a little bit late, that 107 00:06:46,160 --> 00:06:48,359 Speaker 3: you'll get maybe worse of the deal at that point. 108 00:06:49,760 --> 00:06:53,080 Speaker 2: Well, we don't think we are in a race here. 109 00:06:53,160 --> 00:06:56,640 Speaker 2: What's import that to reach agreement on a substance and 110 00:06:56,720 --> 00:06:58,720 Speaker 2: to find mutual acceptable solution. 111 00:07:00,160 --> 00:07:01,719 Speaker 3: Are sticking points right now. 112 00:07:03,720 --> 00:07:08,400 Speaker 2: Well, since those are ongoing negansations, I cannot go into 113 00:07:08,800 --> 00:07:12,440 Speaker 2: much detail. I indicated some of the ideas which we 114 00:07:12,480 --> 00:07:15,040 Speaker 2: are exploring, but as I was also saying, there are 115 00:07:15,040 --> 00:07:16,840 Speaker 2: still quite a bit ground to be covered. 116 00:07:17,320 --> 00:07:20,760 Speaker 1: I am curious a commissioner about the relative strength that 117 00:07:20,800 --> 00:07:22,600 Speaker 1: we've seen over the last few weeks in the euro 118 00:07:22,800 --> 00:07:24,520 Speaker 1: relative to the dollar, and it's got a lot of 119 00:07:24,560 --> 00:07:28,920 Speaker 1: investors questioning whether that's something sustainable. What types of discussions 120 00:07:28,960 --> 00:07:31,440 Speaker 1: have you had with your peers over there in Europe 121 00:07:31,680 --> 00:07:34,960 Speaker 1: about capitalizing or at least for what right now is 122 00:07:34,960 --> 00:07:39,800 Speaker 1: a modest reallocation away from US assets in the European assets. 123 00:07:40,720 --> 00:07:44,560 Speaker 2: Well, first of all, as regards euro exchange rate, European 124 00:07:44,640 --> 00:07:48,560 Speaker 2: Central Bank is not targeting the exchange rates, so exchange 125 00:07:48,600 --> 00:07:52,560 Speaker 2: rate is determined by the markets. And also the level 126 00:07:52,640 --> 00:07:56,000 Speaker 2: we see now is not like historical highs of euro 127 00:07:56,320 --> 00:08:00,840 Speaker 2: we had seen actually also euro at higher levels. But 128 00:08:00,920 --> 00:08:05,160 Speaker 2: in any case, indeed we see interest from investors in 129 00:08:05,320 --> 00:08:09,200 Speaker 2: Euro denominated papers, and there's going to be quite a 130 00:08:09,320 --> 00:08:14,440 Speaker 2: strong supply of these Euro denominated papers in this and 131 00:08:14,920 --> 00:08:20,120 Speaker 2: next year. So there's going to be opportunities for investors 132 00:08:20,120 --> 00:08:25,920 Speaker 2: to invest in Europe. So if investors want predictabilities, they 133 00:08:25,960 --> 00:08:29,520 Speaker 2: want stability, respect for the role of law, Europe is 134 00:08:29,520 --> 00:08:30,400 Speaker 2: a good place to invest. 135 00:08:30,800 --> 00:08:34,280 Speaker 1: Does that include an increase in bond sales, particularly common 136 00:08:34,320 --> 00:08:34,960 Speaker 1: bond sales. 137 00:08:36,160 --> 00:08:40,560 Speaker 2: Well, actually we have a strong pipeline of bond sales 138 00:08:41,600 --> 00:08:44,400 Speaker 2: this year and next. We have close to three hundred 139 00:08:44,400 --> 00:08:48,640 Speaker 2: billion euros of Recovery and Resilience facility bond. Still, we 140 00:08:48,760 --> 00:08:54,120 Speaker 2: recently proposed a new common Borrowing Facility safe facility for 141 00:08:54,600 --> 00:09:00,640 Speaker 2: common procurement of defense equipment for member states. It's another 142 00:09:00,720 --> 00:09:03,240 Speaker 2: one hundred and fifty billion euros if we talk about 143 00:09:03,480 --> 00:09:09,280 Speaker 2: common borrowing. But also Germany has recently announced additional five 144 00:09:09,400 --> 00:09:15,240 Speaker 2: hundred billion euros package to strengthen investment in infrastructure and defense, 145 00:09:15,640 --> 00:09:18,320 Speaker 2: so also other countries. So as you see there, it's 146 00:09:18,360 --> 00:09:21,920 Speaker 2: going to be quite substantial supply also from European side. 147 00:09:22,120 --> 00:09:24,560 Speaker 1: All right, Commissioner, I really appreciate you taking time for us. 148 00:09:24,600 --> 00:09:28,240 Speaker 1: Foudystem brodskis the Commissioner for Economy and Productivity for the 149 00:09:28,280 --> 00:09:29,360 Speaker 1: European Commission.