EU takes on Trump’s ‘illegal’ sanctions on Iran

 In Politics

With help from Doug Palmer, Megan Cassella, Adam Behsudi, Helena Bottemiller Evich and Maxime Schlee

EU TAKES ON TRUMP’S ‘ILLEGAL’ SANCTIONS ON IRAN: Senior European officials on Monday were quick to criticize President Donald Trump’s renewed sanctions on Iran as “illegal,” and vowed to intensify efforts to thwart the U.S. measures.

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Trump promised tough enforcement of new sanctions and warned violators of “severe consequences.” But the EU and the three European architects of the Iran nuclear accord — France, Germany and the U.K. — are pushing back in an effort to preserve the nuclear deal. That puts the United States in direct crossfire with its largest and strongest NATO allies.

Trump’s spin: “The United States is fully committed to enforcing all of our sanctions, and we will work closely with nations conducting business with Iran to ensure complete compliance,” Trump said in a statement on Monday. “Individuals or entities that fail to wind down activities with Iran risk severe consequences.”

Tehran’s reaction: Iranian President Hassan Rouhani accused Trump of hypocrisy by offering to meet with Iranian leaders to begin talks on a new nuclear deal. “What’s the meaning of negotiations when you impose sanctions at the same time? It’s like someone pulling a knife to stab a rival or an enemy in the arm while at the same time claiming we should be talking and negotiating,” Rouhani said.

Brussels says the law is on its side: EU diplomats argue the Joint Comprehensive Plan of Action reached between Iran, the United States, Russia, China and leading European powers in 2015 has the strength of international law because it is part of U.N. Security Council Resolution 2231.

To underscore its intention to protect JCPOA, an EU “blocking statute” will take effect early this morning to shield European companies that continue doing business with Iran from U.S. secondary sanctions. It would allow EU companies to recover any damages, including legal costs, from entities — including U.S. banks and businesses — acting to enforce the U.S. sanctions.

However, senior Trump administration officials on Monday said they weren’t worried the blocking statute would significantly weaken the impact of the United States reimposing sanctions on Iran. “We’re very pleased that nearly 100 international firms have announced their intent to leave the Iranian market, particularly in the energy and the finance sectors,” a U.S. official told reporters during a conference call.

Prepare for November: Some U.S. sanctions against Tehran “snapped back” into effect at midnight Monday, but the most direct conflicts likely won’t come until November. U.S. sanctions intended to cripple Iran’s oil industry — the lifeblood of its economy — will come back into effect then.

China has already said it will continue buying oil from Iran. European officials also said they will look for ways to keep Iran’s oil business alive. POLITICO Europe’s David M. Herszenhorn has more.

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FORD, GM, FCA RANK HIGHEST ON ‘MADE IN AMERICA’ INDEX: U.S. brand automakers scored highest on American University’s annual “Made in America Auto Index,” which ranks 544 U.S. and foreign-brand cars based on seven criteria, including whether the vehicle is assembled in the United States and whether the engine and transmission are made in the U.S. It also considers where the company is headquartered and where it does its research and development.

“Our members have 10 of the Top 10 vehicles, 17 of the Top 20, and 19 of the Top 25,” Matt Blunt, president of the American Automotive Policy Council, which represents Ford, GM and Fiat-Chrysler, said in a statement touting the latest findings. “We have the top two trucks, top five SUVs, and top 10 cars. The U.S. auto industry is critical to our economy, and American automakers are driving more growth and jobs in the auto manufacturing sector.”

The latest findings come as Trump is threatening to impose tariffs on imported autos and auto parts to encourage more domestic production, and as USTR is pushing for stricter rules-of-origin in NAFTA to achieve the same objective. The index shows 181 car models, many made by foreign brand automakers, that have at least 50 percent U.S. content based on the seven criteria. However, more than 250 of the models have less than 10 percent domestic content and more than 300 have less than 30 percent domestic content, the index showed.

The index is compiled annually by Frank Dubois, an associate professor of international business at the Kogod School of Business at American University. Dubois said he is agnostic about the nationality of vehicles and notes that some consumers use the index to identify the most Japanese, Korean or German car they can buy. He also said Trump’s idea of imposing a 20 percent or 25 percent tariff on auto imports is “a terrible idea” that would lead to higher car prices, fewer new car purchases and ultimately fewer cars being manufactured in the United States.

GRAHAM TALKS TRUMP’S TRADE ‘END GAME’: Sen. Lindsey Graham, one of Trump’s closest allies in the Senate, says that when it comes to trade, the president is focused first on wrapping up NAFTA talks, then on reaching a deal with the European Union, and then on working with those allies to combat the larger problem of China.

Graham, speaking to reporters in his home state while the Senate is on recess this week, said Monday that he believes the U.S. can wrap up NAFTA negotiations “by September” and then will “eventually” get a deal with Europe that allows for better U.S. market access and leads to the removal of tariffs.

“Then we focus on China,” Graham said a day after he played golf with the president. “The goal of President Trump is to unite the world against Chinese business practices that are outside the norm.”

The South Carolina Republican said he believes tariffs “are not the best way to deal with this, but it’s the only way on the table right now.” Trump also understands that “there’s some pain involved” for farmers, manufacturers and others, Graham said, but he indicated that pain in the short term will be worth it for a long-term solution.

“It’s gonna take a while,” Graham said. “You’re going to see some increase in prices. The supply chain is going to become more costly and you’ll pay more in the short term, but here’s the way I look at China: Pay now or pay later. They cheat us too much, and I’m glad Trump is finally standing up to them.”

EU REQUESTS MORE WTO INPUT OVER AIRBUS DISPUTE: The European Union has requested a second compliance panel to certify its assertion that it has fully complied with World Trade Organization rulings involving government support for Airbus. The EU’s request marks the latest in an almost 14-year-old dispute over government supports from the EU for Airbus and the U.S. for Boeing.

Stopping U.S. retaliation: If the WTO says the EU has complied with its earlier ruling, it could prevent the Trump administration from potentially retaliating on billions of dollars of European goods.

The EU on July 31 formally asked for the establishment of the panel under Article 21.5 of the Dispute Settlement Understanding and Article 7.4 of the Subsidies and Countervailing Measures Agreement.

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