EU And US Reach Deal On Steel And Aluminum Tariffs
European Commission President von der Leyen and United States President Biden agreed to start discussions on a Global Arrangement on Sustainable Steel and Aluminum. This marks a new milestone in the transatlantic relationship, and in EU-US efforts to achieve the decarbonization of the global steel and aluminum industries in the fight against climate change, according to the European Commission.
The two Presidents also agreed to pause the bilateral World Trade Organization disputes on steel and aluminum. This builds on recent successes in rebooting the transatlantic trade relationship, such as the launch of the EU-US Trade and Technology Council and the suspension of tariffs in the Boeing-Airbus disputes.
In June 2018, the US Trump administration introduced tariffs on €6.4 billion of European steel and aluminum exports, and further tariffs in January 2020 that affected around €40 million of EU exports of certain derivative steel and aluminum products. The EU introduced rebalancing measures in June 2018 on US exports to the EU in a value of €2.8 billion (a similar EU response followed the second set of US tariffs in 2020). The remaining rebalancing measures, affecting exports valued up to €3.6 billion, were scheduled to enter into force on 1 June 2021. The EU suspended these measures until December 1, 2021 in order to give space for the parties to work together on a longer-term solution. Following today’s announcement by the US, these measures will not be introduced.
Steel and aluminum manufacturing is one of the highest carbon emission sources globally. For steel and aluminum production and trade to be sustainable, we must address the carbon intensity of the industry, together with problems related to overcapacity. The Global Arrangement will seek to ensure the long-term viability of our industries, encourage low-carbon intensity steel and aluminum production and trade, and restore market-oriented conditions. The arrangement will be open to all like-minded partners to join.
Furthermore, following the United States’ announcement that they will remove Section 232 tariffs on EU steel and aluminum exports up to past trade volumes, the European Union will take the steps to suspend its rebalancing measures against the United States. The two sides have also agreed to pause their respective WTO disputes on this issue.
European Commission President Ursula von der Leyen said, “The global arrangement will add a powerful new tool in our quest for sustainability, achieving climate neutrality, and ensuring a level playing field for our steel and aluminum industries. Defusing yet another source of tension in the transatlantic trade partnership will help industries on both sides. This is an important milestone for our renewed, forward-looking agenda with the US.”
Executive Vice-President and Commissioner for Trade Valdis Dombrovskis said, “We have today agreed to hit the pause button on our steel and aluminum trade dispute, while hitting the start button on cooperating on a new Global Arrangement on Sustainable Steel and Aluminum. This is another significant step in the wider reset of transatlantic relations. The US decision to restore past trading volumes of EU steel and aluminum exports means we can move on from a major irritant with the US. It gives us breathing space to work on a comprehensive solution to tackle global overcapacity. The EU will therefore reciprocate this de-escalation by suspending our own rebalancing measures. We can now focus on a more forward-looking transatlantic trade agenda, while also working on a final, lasting outcome to this issue.”