The US and EU have agreed to work together in resolving a metals trade dispute, stemming from the former’s Section 232 steel and aluminum tariffs against European countries, by the end of the year, according to a joint statement released following the US-EU Summit June 15.
“We are determined to work together to resolve tensions arising from the US application of tariffs on imports from the EU under US Section 232 and will work towards allowing trade to recover from its 2020 lows and ending the WTO disputes,” the statement said.
“We commit to ensure the long-term viability of our steel and aluminum industries, and to address excess capacity.”
The commitment to temper the metal-focused trade dispute was announced in the statement along with a separate agreement between the two governments to end the longstanding feud regarding aircraft subsidies.
“We salute having reached an ‘Understanding on a Cooperative Framework for Large Civil Aircraft,’ reflecting a new trans-Atlantic relationship in this area,” the governments said. “We are committed to make this framework work to promote a level playing field, overcome long-standing differences, avoid future litigation and more effectively address the challenge posed by non-market economies.”
As per the agreement, the US and EU agreed to a five-year suspension of tariffs linked to the aircraft spat, which dates back to 2004 and involves state subsidies given to Boeing and Airbus.
A senior White House administration official said US and EU officials have had productive conversations regarding the future of the steel and aluminum tariffs against European countries, but any repeal of the protectionist policy or other resolution is not expected soon.
“[The negotiations have] been very constructive, but they will take some time, so I don’t anticipate that you’ll see an outcome this week on the 232 tariffs,” the official said in comments released by the White House June 15. The comments were made during a press briefing held ahead of the US-EU Summit.
“The direction of travel is positive, and we do believe that there is a way to resolve this that works for both the US and EU.”
China’s overcapacity remains priority
The official said the two sides would focus foremost on the issue of steel and aluminum overcapacity in China before reaching an agreement on the metal tariffs.
The EU agreed in May to not raise its retaliatory duties against the US, which are linked to the US steel and aluminum tariffs, so that the governments could cooperatively address the global overcapacity problem.
The American Iron and Steel Institute praised the commitment outlined in the US-EU statement to tackle China’s excess metal production capacity.
“We welcome the Biden administration’s renewed commitment to ensure the long-term viability of the American steel industry and address the problem of global excess steel capacity,” AISI CEO Kevin Dempsey said in a statement June 15.
“Addressing these challenges will require the implementation of new and effective measures to eliminate government subsidies and other market distorting policies in many countries that have contributed to the ongoing global steel overcapacity crisis.”
However, Dempsey said the Section 232 tariffs should remain in place despite the renewed cooperation between the US and EU.
“Recognizing that these changes in government policies around the world, including in the EU, will take time and will not be easy to achieve, it is essential that the US maintain strong and effective trade measures to prevent surges in steel imports from around the world that could quickly undermine the US industry and our national security.”
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