EU clears way for start of formal trade talks with U.S

European Union countries gave initial clearance on Thursday to start formal trade talks with the United States, EU sources said, a move designed but not guaranteed to smooth strained relations between the world`s two largest economies.

The European Commission, which coordinates trade policy for the 28 member European Union, has sought clearance for two negotiating mandates -- one to cut tariffs on industrial goods, the other to make it easier for companies to show products meet EU or U.S. standards.

The Commission presented its mandates in January and found support from most EU members. France resisted, however, insisting that agriculture should not feature in the talks but that climate change provisions should -- a difficult demand given U.S. President Donald Trump`s withdrawal from the Paris climate agreement.

The European Union and the United States reached a detente last July when Trump agreed to hold off from imposing punitive tariffs on EU cars as the two sides sought to improve economic ties.

U.S. tariffs still apply to EU steel and aluminium, however, while Trump threatened on Tuesday to impose further tariffs on $11 billion worth of EU products related to a long-running aircraft subsidy dispute.

A joint EU/U.S. statement in July referred to a goal of removing tariffs on "non-auto industrial goods".

EU sources said ambassadors agreed to the mandates at a meeting on Thursday.

National ministers will still need to give final approval, although they would normally do so without debate. One source said the mandates had been added to the agenda of an agriculture ministers` meeting in Brussels on Monday. CARS, FARM PRODUCTS IN OR OUT?

The Commission has repeatedly said it will not discuss tariffs or barriers to trade in farm products, but is willing to discuss cars, setting it on a possible collision course with Washington.

The Trump administration has a wide-ranging wish list, including comprehensive agricultural market access.

Diplomats say Germany, whose exports of cars and parts to the United States are more than half the EU total, wants to press ahead with talks to ward off tariffs on carmakers Volkswagen, Mercedes maker Daimler and BMW.

France, with very few U.S. car exports, had been seeking to push the issue beyond the European Parliament election in May, convinced that dealing with Trump is not a vote winner.

The U.S. Trade Representative has meanwhile proposed targeting a list of $11 billion worth of EU products for tariffs, ranging from large commercial aircraft to dairy products and wine, as retaliation against European subsidies for Airbus. A final list is expected this summer.

The European Commission said it had started to draw up plans to retaliate over subsidies for U.S. planemaker Boeing.

Both sides have won partial victories at the World Trade Organization in claiming the other`s planemaker received unlawful subsidies but disagree on the amount involved and whether each has complied with earlier WTO rulings.

Some analysts see the aircraft dispute as the start of a tit-for-tat conflict to which Trump could add auto tariffs by mid-May.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)