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EU trade chief says US steel deal may fall short of removing all barriers

EU trade updates

A resolution to the EU’s Trump-era dispute with the US over steel and aluminium tariffs may fall short of removing all the barriers sheltering the industries, according to the bloc’s trade enforcer.

Valdis Dombrovskis, the EU executive vice-president in charge of trade policy, said that while the “ideal solution” would be the mutual suspension of tariffs, as agreed by the two sides this year in the Boeing-Airbus dispute, he was ready to look at “other possible solutions”.

“We understand the willingness of the US to protect its steel industry, but certainly there are ways to do it in a way which is less disruptive for EU producers,” Dombrovskis said in an interview with the Financial Times.

The EU in May shelved plans to increase tariffs on a range of US products, in a gesture aimed at resolving a stand-off with Washington dating back to 2018, when Donald Trump imposed hefty duties on imports of steel and aluminium from Europe and other economies.

The measures imposed by the then-US president were controversially based on national security grounds taken from section 232 of the US Trade Expansion Act of 1962 — a justification from such a close strategic ally that rankled in Europe.

The EU retaliated with its own tariffs. But the arrival of Joe Biden in the White House this year prompted a renewed effort to improve transatlantic trade relations. In June the two sides reached a major breakthrough with the resolution of the separate 17-year spat over aircraft subsidies.

Removing the section 232 tariffs will be politically painful for the US president, because they are popular within the politically powerful steel industry and in mill states, including Indiana, Ohio and Pennsylvania that will be heavily contested in the next elections.

Valdis Dombrovskis said any solution to the dispute would have to be less disruptive to EU producers and respect historical volumes of trade © Bloomberg

Dombrovskis is expected to visit Washington this autumn to hold talks with counterparts including US trade representative Katherine Tai across a range of trade topics.

He said talks with the US over the section 232 tariffs were on a “constructive track”. The ideal solution would be the “complete withdrawal” of the section 232 measures with nothing else imposed instead. But he said the EU was “ready to look [at] other solutions, understanding the fact that the US also is interested in protecting its steel industry”.

These would need to be less disruptive to EU producers and respect historical volumes of trade, he said. “It’s true that steel sectors are highly protected in the US and EU,” he said, including the use of anti-dumping and anti-subsidy measures.

Dombrovskis did not reveal what such alternative solutions might look like. However, one possibility might be some kind of licensing or monitoring arrangement allowing EU exporters controlled access to the US market.

The US could also propose some form of export quota, though the EU has already ruled that out. Or it could opt for converting the section 232 tariffs into “safeguards” designed to deal with a sudden flood of imports, though those would be hard to square with World Trade Organization rules.

The two sides have now given themselves until the beginning of December to find a settlement, which is also meant to address the oversupply of steel resulting from production in countries including China — something that will not be easy to achieve.

The discussions over the section 232 tariffs are part of a broader effort by the US and EU to strengthen transatlantic ties following the bitterness of the Trump years.

One of the outcomes of the EU-US summit in Brussels last month was the creation of a new Trade and Technology Council that will aim to boost co-operation in key technologies.

Dombrovskis said the two sides were aiming to set up 10 working groups across a range of areas, and were deciding what topics to prioritise.

Among the crucial issues, he said, were 5G telecoms, artificial intelligence, the internet of things, additive manufacturing and robotics, as well as investment screening and the regulation of internet platforms.

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