EU needs to lower non-tariff barriers, including VAT, White House trade adviser says

WASHINGTON (Reuters) - The European Union will need to lower its non-tariff barriers, including those created by value-added taxes, if it wants to reach a deal to lower U.S. tariffs imposed by President Donald Trump, White House trade adviser Peter Navarro said on Monday.

Navarro told CNBC television that the EU's willingness to negotiate with Trump to lower tariffs was merely "a good, small start," but non-tariff barriers, which also include food safety regulations, are "orders of magnitude" more important than tariff rates.

His comments came after European Commission President Ursula von der Leyen told a press conference in Brussels that the EU stood ready to negotiate a "zero-for-zero" tariff pact with the U.S. for industrial goods. EU ministers agreed to prioritize negotiations over retaliation.

"I would say to the EU when you make those announcements, would you be very careful to tell us you're going to lower your non tariff barriers?" Navarro said. "EU, drop your 19% VAT. EU, respect the WTO (World Trade Organization) decisions to let us sell us our pork, our corn, our beef" in EU countries, Navarro said.

Navarro, who is a key architect of Trump's massive tariff offensive, said non-tariff barriers are a problem for U.S. trade with many countries, including Vietnam, which has a growing trade surplus with the U.S. partly due to the shift of supply chains away from China.

"So when you ask if we're willing to negotiate, the President will always listen," Navarro said. "But let's understand what the problem is when you have a country like Vietnam, let's take Vietnam. When they come to us and say, we'll go to zero tariffs, that means nothing to us, because it's the non-tariff cheating that matters."

He defended the White House Council of Economic Advisers' methodology used to calculate a 46% tariff on Vietnamese goods and a 20% tariff on EU goods, saying it was "perfectly sound," despite widespread derision by academic economists as simple arithmetic of a country's trade surplus with the U.S. divided by its exports to the U.S.

(Reporting by David Lawder and Andrea Shalal; Editing by Chizu Nomiyama)