Talks between the US and European Union to reach a deal on steel are going down to the wire, as they aim to avert the return of billions of dollars of Trump-era tariffs ahead of a summit in Washington later this week.
(Bloomberg) — Talks between the US and European Union to reach a deal on steel are going down to the wire, as they aim to avert the return of billions of dollars of Trump-era tariffs ahead of a summit in Washington later this week.
Negotiators are still haggling over whether a political agreement on global steel and aluminum arrangements would prolong the suspension of tariffs imposed by the Trump administration or instead provide a clear path for them to be removed permanently, according to people familiar with the matter.
The EU has been pushing to shelve the measures, while the US wants to retain the option of using them in future to ensure Brussels adequately implements any accord, said the people, who spoke on condition of anonymity to discuss confidential talks.
Another unresolved issue is the compatibility of the so-called Global Arrangement on Sustainable Steel and Aluminum, or GSA, with international trade rules, particularly amid concerns it looks like a way for Brussels and Washington to gang up on Beijing, the people said.
The US and EU want to reach a deal in time for a meeting on Friday between Joe Biden, European Commission President Ursula von der Leyen and European Council chief Charles Michel. Both sides are eager to find a compromise that would escalate a trade dispute, but such negotiations often go to the last minute with countries aiming to avoid significant concessions.
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Top White House and EU officials have been negotiating a provisional political agreement that would cover the two main planks of the GSA: tackling excess production and reducing carbon emissions, the people said. Talks are ongoing, and European officials are in Washington ahead of the summit for meetings with their US counterparts.
While an interim deal would fall short of a legally binding agreement, the GSA seeks to settle a dispute that started when President Donald Trump slapped tariffs on metals imports from Europe, citing risks to national security. Failure to reach an accord by Oct. 31 would mean that levies on $10 billion of exports between the EU and US would automatically come back into force at the start of 2024.
On excess capacity, the EU is discussing launching new investigations in the coming months that could lead to new tariffs aimed at the non-market practices of economies such as China, while the US could introduce new levies of its own, Bloomberg previously reported.
The US has imposed a 25% tariff on steel imports since 2018 and the EU applies about the same level of duties on an array of steel imports under its own safeguard measures. That level of tariff would act as a reference point.
The EU would implement its part of the accords aimed at dirty steel through the carbon border adjustment mechanism, while the US could introduce additional tariffs and measures.
The two sides could look to coordinate more closely after the US election and once the EU has finalized its rules to determine which systems are equivalent to its own. The Biden administration had previously looked to be exempted from CBAM and is concerned that US exports could be hit by the European levies.
Failure to reach a deal structured on these terms could see a narrower understanding that essentially buys more time, some of the people said. Any agreement would need sign off from EU member states.
Other details that need to be ironed out are the scope of countries — other than China — that would be affected by the excess capacity measures and what happens to the existing tariff quota deals that currently target European metal imports and were put in place when the Trump-era dispute was paused. One of the people said the coverage of the measure could use international studies as the basis for evidence gathering.
If a political agreement can be signed off this week, the two allies will work toward an international agreement open to other like-minded countries.
China is by far the world’s largest producer of steel, accounting for more than half of global crude steel making, according to data from the Organisation for Economic Cooperation and Development.
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