U.S., EU resolve dispute over Trump’s steel and aluminum duties

“Today’s announcement is in line with President Biden’s vision of turning over past disputes and starting a new chapter in improved transatlantic relations,” US Trade Representative Katherine Tai told reporters on Saturday.

EU Trade Commissioner Valdis Dombrovskis suggested in a tweet Saturday that the deal will not be permanent calls recent developments a “break” in the dispute. Biden and EU Commission President Ursula von der Leyen will announce further details on Sunday, he noted.

The trading partners also agreed to develop a long-term plan that will both face China over its surplus steel production and put pressure on exporters of high-carbon steel. US officials called it the first deal of its kind.

“Today’s deal not only removes one of the greatest bilateral irritations in US-EU relations, but also turns it into joint progress on two key challenges,” National Security Advisor Jake Sullivan told reporters at the briefing call.

The White House has yet to release the full details of the deal, but it is not expected to include any specific commitments to address China or climate issues. Instead, a senior administration official said the two sides plan to negotiate an agreement and invite other large steel-producing economies to join.

But while both sides share these priorities, they have not always agreed on an approach.

The Biden government has made Brussels take a tougher stance on Beijing on trade and other issues, but some European leaders say they are more inclined to deal with China than against China. And while the EU is aiming for a carbon border tax on steel and other products, such proposals are more difficult to implement in the US for political and practical reasons.

An industry representative told POLITICO that the new agreement will include a quota that will allow 3.3 million tons of steel to be imported from the EU without tariffs, and that imports above this amount will be subject to the existing 25 percent levy.

A further 1 million t of steel, which were previously exempt from the existing tariffs, will not be subject to customs duties for at least another two years as part of the new regulation.

The deal also includes a “melted and cast” standard which, as the name suggests, requires duty-free metals to be melted and cast in Europe, another senior administrative official said. US steelmakers campaigned for these rules to be included to prevent steel from China and other countries from being passed on as an EU product.

“China has been channeling its cheap steel into the US via Europe and other markets for far too long, which has pushed prices down and made it virtually impossible for the US steel and aluminum industry to compete. And of course that harms the industry, harms our workers, ”said Minister of Commerce Gina Raimondo.

Raimondo admitted to reporters that the negotiations had been “arduous” and “complicated”. The Biden government has faced heavy pressure from the steel industry and its influential unions to maintain tariffs or replace them with similar protective measures. These groups praised the deal struck on Saturday.

“The proper implementation and enforcement of the [limites] will be critical to ensuring that the new measures effectively meet these critical goals, “said Kevin Dempsey, President and CEO of the American Iron and Steel Institute, in a statement. “We hope that after this deal, the United States and the EU will work on a joint action plan to challenge non-market industrial policies and other government interventions that fuel overcapacity in the steel sector.

At the same time, US companies that use metals to manufacture have complained that steel prices have skyrocketed and their orders are being delayed. Raimondo said on Saturday that increasing duty-free imports from the EU will help resolve both of these issues.

Various US exports such as orange juice, whiskey and Harley-Davidson motorcycles were also burdened with 25 percent retaliatory tariffs from the EU, which were due to be doubled in June before both sides start negotiations. The penalties turned a variety of U.S. industries, including food and manufactured goods, into collateral damage and increased pressure on Biden to close a deal.

Tai said the EU agreed to abolish these retaliatory tariffs as part of the deal, adding that both sides will also withdraw their trade complaints to the World Trade Organization.

Finance Senate Chairman Ron Wyden (D-Ore.) Said the agreement “is taking significant steps” to resolve the tariff dispute and “usher in a new phase of substantial cooperation” on common issues such as climate. “Further strengthening US-EU relations is essential to combat China’s efforts to take over entire industries and abandon American workers,” he said in a statement.

However, some trade groups argue that the new terms don’t go far enough. Jake Colvin, president of the National Foreign Trade Council, said the deal was “not an optimal outcome” as it introduces “an undesirable form of managed trade” that will continue to create uncertainty for workers and businesses on both sides of the Atlantic. “

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