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The failure to reach an agreement on steel trade this week between the European Union and the United States is primarily attributed to the US’s reluctance to provide a clear timeline for the removal of punitive trade measures against the EU, according to Valdis Dombrovskis, an executive vice president at the European Commission. The trade dispute dates back to the Trump era when the US imposed Section 232 tariffs that impacted over $6 billion worth of EU steel and aluminium exports in 2018, along with tariff-rate quotas introduced later as part of a temporary truce.
Dombrovskis expressed disappointment in the absence of a clear commitment and engagement from the US side regarding removing these tariffs and tariff-rate quotas. The talks aimed at reaching a Global Arrangement on Sustainable Steel and Aluminum (GSA) were closely watched, with the potential for tariffs to be reintroduced on billions of dollars of exports between the EU and the US if no agreement is reached by year-end.
The GSA negotiations sought to resolve the ongoing dispute stemming from former President Donald Trump’s imposition of tariffs on metal imports from Europe, citing national security concerns. The GSA aims to address issues related to global excess capacity and carbon emissions from the production of metals while remaining open to like-minded countries.
Although there is openness to launching investigations into non-market practices, particularly by China, the EU and US have been unable to bridge differences regarding the removal of tariffs and tariff-rate quotas. While the EU seeks to shelve these measures, the US wants to retain the option of using them in the future to ensure the EU’s compliance with any accord.
Other outstanding issues include the compatibility of the agreements with international trade rules and concerns that they may be perceived as a way for the EU and the US to align against China. Additionally, discussions revolve around the scope of the agreements and which markets, beyond China, they would impact.
A US official noted that the recent summit was primarily focused on the conflict in Israel, with the intention to consider rolling over tariffs if more time for negotiations is required. Dombrovskis emphasized that both sides are committed to addressing the asymmetry in tariffs, as the EU has removed all tariffs on the US, while significant American tariffs on EU steel remain.
The resolution of these issues requires the unanimous support of all EU member states. Dombrovskis expressed the willingness of both sides to continue working intensively on these topics and eventually finding a resolution.
