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