EC VP Talks Continuing Global Steel Agreement Negotiations, Potential New Tariffs and Trump
After October's deadline passed without an agreement between the U.S. and the EU on a global trade deal for steel and aluminum (see 2404040034), talks are still ongoing, the European Commission’s top trade official said during a news conference April 18.
President Joe Biden’s call on April 17 to triple Section 301 Chinese steel and aluminum tariffs is currently a subject of those talks, he said.
During the news conference, Valdis Dombrovskis discussed the impact of recent developments on the global steel agreement and on a U.S.-Ukraine critical minerals deal currently in negotiations (see 2307210058). He also expressed hope that the EU-U.S. Trade and Technology Council (TTC) would survive the upcoming EC election (see 2402200082), and he touched on concerns about Donald Trump's potential return to the presidency in the upcoming U.S. presidential election.
The struggle in the global steel and aluminum deal negotiations continues to be over U.S. refusals to drop its Section 232 tariffs on imports from the EU, Dombrovskis said.
Some decisions have been reached, he said. The U.S. has extended suspension of then-President Donald Trump’s tariffs on EU steel, he said, and the EU has stopped their own countermeasures. But the situation “continues to remain unbalanced” because about 20% of EU imports into the U.S. are subject to Section 232 tariffs, something he said the EC was “obviously” not happy about.
However, the parties have continued talks in two “workstreams”: one on steel overcapacity and the other on greening the industry, he said.
The EC will be consulting with its U.S. counterparts to understand the potential new Section 301 tariff measures on China, he said. Then it will assess the impact those measures could have on EU-U.S. trade, as well as on the EU market itself, he said. He noted that China is the main source of the current overcapacity in the steel market and that most of the EU’s current trade defense measures are against steel imports.
Overall, regarding the global steel agreement, “the situation remains challenging,” he said. He concluded that he didn’t “have any news to announce right now” as to whether EC will appeal to the World Trade Organization.
Dombrovskis also said that a bill that passed the House Ways and Means Committee on April 17 (see 2404160029) probably won't have much impact on negotiations of a U.S.-EU critical minerals deal.
If passed, that bill would stop the U.S. from defining any new critical minerals deal as a free trade agreement unless the deal is made with an existing critical minerals FTA partner. However, Dombrovskis said that it remains to be seen whether the bill will become law and that, “substance-wise,” the deal is almost complete anyway. But he added that EC will be taking the bill into consideration.
Asked if EC is worried about a potential Trump reelection, Dombrovskis said that he had “to show some restraint.” EC is not supposed to comment on party politics in other countries, he said. But he added that they “certainly have some concerns” about the former president based on their experience with him and statements Trump has made regarding possible trade policy measures and the situation in Ukraine.
And Dombrovskis expressed support for TTC, which he said recently held its last meeting of this election cycle in Belgium. However, 10 working groups will keep running, he said. He said the current EC hopes the program will continue after the new elections, and “there is a feeling on both sides of the Atlantic that this is an important forum which needs to continue.”
As for what he thinks is the biggest issue facing the global economy, Dombrovskis said he is most worried about trade fragmentation.
The effects of fragmentation already have been seen in trade flows and, especially, in investment flows, he said. And he said the International Monetary Fund estimates that if trade continues to become more concentrated into geopolitical blocs, the total global GDP could drop by 7% -- the equivalent of the economies of both Germany and France.
“We see the rise of protectionism, we see localization of trade, the number of trade barriers is increasing in the world in recent years, so those are all worrying tendencies,” he said. “So there is a lot at stake to preserve a rules-based international trading system.”