Speaker 1: Bloomberg Audio Studios, podcasts, radio news, keeping an eye on
Speaker 1: everything that's been going on in the currency space. Here
Speaker 1: on this Monday, as we welcome our audiences across all
Speaker 1: of our Bloomberg television and radio platforms, a special conversation
Speaker 1: starts right now with Valdez Dombroskis. He's the Commissioner for
Speaker 1: Economy and Productivity for the European Commission, effectively the man
Speaker 1: in charge and overseeing that trade block's economic policy. Great
Speaker 1: to have you here, a Valdis you are here in
Speaker 1: the United States at the New York Stock Exchange. Last
Speaker 1: week you were down in Washington for the IMFN World
Speaker 1: Bank meetings. I know there was a big message delivered
Speaker 1: by our US counterparts with regards to trade and with
Speaker 1: regards to the geopolitical conditions. I am curious about what
Speaker 1: message you brought to the table for your US counterparts.
Speaker 1: What did you tell them?
Speaker 2: Good afternoon. Well, the main message is that we continue
Speaker 2: to engage with United States. We see United States as
Speaker 2: our strategic ally and we have largest trade and investment
Speaker 2: relationship in the world. So we are willing to invest
Speaker 2: in this relationship, continue our cooperation, including finding negotiated solution.
Speaker 2: As regards trade and tariffs.
Speaker 1: Are there active negotiations at the high level between the
Speaker 1: EU and the United States.
Speaker 2: Well, indeed, negotiations are ongoing. Also last week I was
Speaker 2: meeting Scott Vesant in Washington and we were also patching
Speaker 2: up on these issues. But I would say there's also
Speaker 2: still lots of ground to cover.
Speaker 3: So what happens when you see somebody like Georgia Maloney
Speaker 3: of Italy acting like she's been given a mandate to
Speaker 3: make some kind of a deal with the United States.
Speaker 3: Can you stop that from happening or do you lean
Speaker 3: into it and say, well, if Italy can leave the negotiations,
Speaker 3: maybe we'll get somewhere.
Speaker 2: Well, first of all, it's clear that also individual EU
Speaker 2: member states like Italy and others are having the bar
Speaker 2: lateral relationships with US and continues their engagement at the
Speaker 2: same time. As regards specifically trade, trade, external trade is
Speaker 2: exclusive competence of European Unions, so negotiated by European Commission
Speaker 2: on behalf of EU member states, and all EU member
Speaker 2: states know it and respecting, so there's no issues there.
Speaker 3: There has been some suggestion that Europe and China are talking,
Speaker 3: and I think the idea is that perhaps you might
Speaker 3: agree to something in order to pressure the United States.
Speaker 3: Is that or has that been happening?
Speaker 2: Well as regards these US and China, well, first of all,
Speaker 2: we note that basically right now the US market is
Speaker 2: close to Chinese goods, so tariffs are approhibitively high. And
Speaker 2: as the question is what is going to happen with
Speaker 2: all those goods which are not now reaching US market,
Speaker 2: where they are going? Are they going, for example, to
Speaker 2: the EU market? So our message to our Chinese counterparts
Speaker 2: is that it's important also that China shows restraints that
Speaker 2: it does not put all this now our capacity of
Speaker 2: goods to other markets, including EU, because then we will
Speaker 2: have to react to how to close our market to
Speaker 2: protect protect our economy, our companies, and that will lead
Speaker 2: even to further global economic fragmentation. And it's in everyone's
Speaker 2: interest actually to preserve multilateral rules based trading system.
Speaker 1: But we have a White House here in the United
Speaker 1: States all this that is not pursuing a multilateral rules
Speaker 1: based system. I mean, that is very clear. So how
Speaker 1: do you negotiate a deal with the United States and
Speaker 1: potentially at the same time negotiate a deal if necessary
Speaker 1: with China.
Speaker 2: Well, that's exactly the point where we think that at
Speaker 2: the end of the day, sticking to the rules following
Speaker 2: multilateralism is going to be better for everyone. Right now, obviously,
Speaker 2: it's the fact that Trump administration has put those tariffs,
Speaker 2: including on European Union, so we are willing to negotiate.
Speaker 2: By the way, we have suspended our first set of
Speaker 2: contact tariffs, which already decided, because we also suspended them
Speaker 2: for ninety days to give those negotiations a chance, and
Speaker 2: we do hope to find a negotiated solution for our.
Speaker 1: TV and radio audiences. We're in conversation right now with
Speaker 1: Baldis dombrotskis the EU Economic Affairs Commissioner, live from the
Speaker 1: NYSC and mister Commissioner, I am curious as to what,
Speaker 1: if any demands the US has made with regards to
Speaker 1: what your tariffs or effectively or barriers, if you will,
Speaker 1: would have to be in order to get the United
Speaker 1: States to remove potential tariffs and bury US from that side.
Speaker 1: Is this a conversation about zero for zero in terms
Speaker 1: of tariffs or is there more that they're asking for.
Speaker 2: Well as regards tariffs themselves. It's worth noting that actually,
Speaker 2: well before the recent introduction continued, Yes, I'm hearing you.
Speaker 2: So before the recent introduction of those tariffs, the tariffs
Speaker 2: which EU was putting on US was a trade weighted
Speaker 2: average of one point two percent. US tariffs on the
Speaker 2: EU trade weighted average was one point four percent. So actually,
Speaker 2: we have very low tariffs on each other, and indeed
Speaker 2: one of the offers for EU side was to go
Speaker 2: zero for zero on industrial tariffs. We are also exploring
Speaker 2: possibility to buy more LNG from the United States, to
Speaker 2: cooperate more in area of energy, and are willing to
Speaker 2: explore other areas.
Speaker 1: Does one of those other areas include the bad tax?
Speaker 2: Well, no, Actually, that's the point that we don't think
Speaker 2: it belongs to trade negotiations because our value added tax
Speaker 2: is consumption tax. It's applied equally on both domestically produced
Speaker 2: and imported goods, and as such is not trade distortile.
Speaker 2: It's like similarly, US states have sales taxes, which are
Speaker 2: also consumption taxes, which are not trade distortile, and they
Speaker 2: just do not belong to trade versations.
Speaker 3: Commissioner, the administration has said the first to the table
Speaker 3: will get the best deal. Are you concerned that we'll
Speaker 3: see deals from other large blocks of countries or countries,
Speaker 3: and that you might be a little bit late, that
Speaker 3: you'll get maybe worse of the deal at that point.
Speaker 2: Well, we don't think we are in a race here.
Speaker 2: What's import that to reach agreement on a substance and
Speaker 2: to find mutual acceptable solution.
Speaker 3: Are sticking points right now.
Speaker 2: Well, since those are ongoing negansations, I cannot go into
Speaker 2: much detail. I indicated some of the ideas which we
Speaker 2: are exploring, but as I was also saying, there are
Speaker 2: still quite a bit ground to be covered.
Speaker 1: I am curious a commissioner about the relative strength that
Speaker 1: we've seen over the last few weeks in the euro
Speaker 1: relative to the dollar, and it's got a lot of
Speaker 1: investors questioning whether that's something sustainable. What types of discussions
Speaker 1: have you had with your peers over there in Europe
Speaker 1: about capitalizing or at least for what right now is
Speaker 1: a modest reallocation away from US assets in the European assets.
Speaker 2: Well, first of all, as regards euro exchange rate, European
Speaker 2: Central Bank is not targeting the exchange rates, so exchange
Speaker 2: rate is determined by the markets. And also the level
Speaker 2: we see now is not like historical highs of euro
Speaker 2: we had seen actually also euro at higher levels. But
Speaker 2: in any case, indeed we see interest from investors in
Speaker 2: Euro denominated papers, and there's going to be quite a
Speaker 2: strong supply of these Euro denominated papers in this and
Speaker 2: next year. So there's going to be opportunities for investors
Speaker 2: to invest in Europe. So if investors want predictabilities, they
Speaker 2: want stability, respect for the role of law, Europe is
Speaker 2: a good place to invest.
Speaker 1: Does that include an increase in bond sales, particularly common
Speaker 1: bond sales.
Speaker 2: Well, actually we have a strong pipeline of bond sales
Speaker 2: this year and next. We have close to three hundred
Speaker 2: billion euros of Recovery and Resilience facility bond. Still, we
Speaker 2: recently proposed a new common Borrowing Facility safe facility for
Speaker 2: common procurement of defense equipment for member states. It's another
Speaker 2: one hundred and fifty billion euros if we talk about
Speaker 2: common borrowing. But also Germany has recently announced additional five
Speaker 2: hundred billion euros package to strengthen investment in infrastructure and defense,
Speaker 2: so also other countries. So as you see there, it's
Speaker 2: going to be quite substantial supply also from European side.
Speaker 1: All right, Commissioner, I really appreciate you taking time for us.
Speaker 1: Foudystem brodskis the Commissioner for Economy and Productivity for the
Speaker 1: European Commission.