By Leela de Kretser
DAVOS, Switzerland (Reuters) -The European Union wants to engage and negotiate with U.S. President Donald Trump, European Commission President Ursula von der Leyen said on Tuesday, warning of the risk of a “global race to the bottom” using tools such as tariffs.
Speaking at the World Economic Forum’s annual meeting a day after Trump’s inauguration, Von der Leyen spoke of a new era of harsh global competition that had developed over the past quarter of a century.
Trump said on Monday he wanted to reverse the U.S. trade deficit with the EU, either with tariffs or more energy exports. In one of his first moves, he has directed federal agencies to investigate persistent U.S. trade deficits and unfair trade practices and alleged currency manipulation by other countries.
Von der Leyen did not mention Trump by name, but referred to the increasing use of sanctions, export controls and tariffs to safeguard national interests.
“…we will need to work together to avoid a global race to the bottom,” she said.
“Because it is in no one’s interest, to break the bonds in the global economy. Rather we need to modernize the rules to sustain our ability to produce mutual gain for our citizens.”
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Von der Leyen, who won a second term at the head of the Commission last July, said Europe needed to step up efforts to become more competitive and boost integration in its capital markets. She met company CEOs who were in Davos on Tuesday.
Von der Leyen said the first trip she planned with her new Commission would be to India, where she said the EU would work with Prime Minister Narendra Modi “to upgrade the strategic partnership with the largest country and democracy in the world”.
She also called for constructive engagement with China.
Her comments chime with the EU’s senior finance officials, who said on Monday that Trump’s return was a wake-up call to fix their economies and become more competitive.
Von der Leyen voiced her support for the Paris Climate agreement as the best hope for all humanity after Trump once again withdrew the United States from the deal on Monday.
But she called the U.S. one of the closest partners of the 27-nation EU.
“No other economies in the world are as integrated as we are,” she said, noting the trade volume between the EU and the U.S. was 1.5 trillion euros ($1.55 trillion), representing 30% of global trade.
“So our first priority will be to engage early, discuss common interests, and be ready to negotiate,” she added. “We will be pragmatic, but we will always stand by our principles. To protect our interests and uphold our values – that is the European way.” ($1 = 0.9662 euros)
(Reporting by Bart Meijer, Charlotte Van Campenhout; Writing by Keith Weir; Editing by Alison Williams, Alexander Smith and Alex Richardson)
