The US and European Union have yet to reach an accord on steel and aluminum ahead of a summit in Washington and are poised to keep negotiating until a year-end deadline, when tariffs would return on billions of dollars of transatlantic trade in the absence of a deal.
(Bloomberg) — The US and European Union have yet to reach an accord on steel and aluminum ahead of a summit in Washington and are poised to keep negotiating until a year-end deadline, when tariffs would return on billions of dollars of transatlantic trade in the absence of a deal.
The deadlock deprives US President Joe Biden, European Commission President Ursula von der Leyen and European Council President Charles Michel from being able to announce a deal on the so-called Global Arrangement on Sustainable Steel and Aluminum at the meeting in Washington Friday as hoped, according to people familiar with the discussions.
A meeting Thursday between US Trade Representative Katherine Tai and the EU’s chief trade negotiator Valdis Dombrovskis ended without an agreement, said the people, who asked not to be identified because the talks were private. Discussions among officials were expected to continue, although reaching an agreement seemed increasingly unlikely, they said.
US Steelmaker shares jumped during after-hours trading following the report. United States Steel Corp. gained as much as 1.6%, while Cleveland-Cliffs Inc. surged 2.5%.
The talks were aiming to settle a dispute that started when then-President Donald Trump slapped tariffs on metals imports from Europe, citing risks to national security, to which the EU responded with retaliatory measures. Failure to reach an accord 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.
The two sides are likely to delay an agreement on critical minerals that they were also hoping to announce this week, according to the people. That deal would allow European companies to access some of the benefits in Biden’s Inflation Reduction Act.
The GSA has two main planks: tackling excess production of non-market economies and carbon emissions in dirty metals. Negotiators did make progress on the first of those two issues. On excess capacity, the EU is open to launching 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 additional 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.
But negotiators were unable to bridge differences on whether the US would keep suspending the tariffs or provide a clear path for their removal along with the tariff-rate quotas that temporarily replaced them, the people said. The EU has been pushing to shelve the measures, while the US wants to retain the option of using them in the future to ensure the bloc adequately implements any accord.
Other unresolved issues include the compatibility of the arrangements with international trade rules, particularly amid concerns it looks like a way for the EU and Washington to gang up on Beijing, as well as the scope of the accords and which markets other than China they’d hit, according to the people.
The 2021 truce, which expires on Dec. 31, sets a US import tariff-rate quota limit on 3.3 million metric tons of EU steel and 384,000 tons of EU aluminum. Last year, aggregate annual EU exports of covered steel products to the US were 3.97 million tons and covered aluminum products were 285,000 tons. That means 670,000 tons of EU steel exports were subject to a 25% tariff and zero EU aluminum exports were subject to the 10% tariff.
Ultimately the GSA intends to be structured as an international agreement open to like-minded countries.
(Updates with steelmaker shares in fourth paragraph.)
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