Several US environmental groups sent a letter Dec. 5 to President Joe Biden and US Trade Representative Katherine Tai urging the US to expedite negotiations with the EU on the Global Arrangement on Sustainable Steel and Aluminum after the governments missed an October deadline.
“We strongly support the United States and the European Union coming to an agreement that would incentivize countries to lower the carbon intensity of steel and aluminum production,” the groups said in the letter. “We are deeply concerned by recent reports that talks on GASSA are stalled.”
“As groups committed to industrial decarbonization, we call on you to ensure that GASSA reflects strong climate objectives that tie market access to the carbon intensity of goods,” they added.
The letter was penned by nine groups including the liberal think tank the Center for American Progress and environmental groups the National Wildlife Federation, Natural Resources Defense Council and the Sierra Club. The groups proposed that a framework should be finalized by the end of the year with a timeline for implementation produced next year.
“A strong GASSA is necessary to reduce global emissions and ensure a level playing field where a commitment to climate does not result in a competitive disadvantage in the global market,” the environmental groups said. “An agreement to tie market access to the carbon intensity of goods should be attainable in 2023, as both non-market excess capacity and climate were included repeatedly in the political mandate from the highest levels, and Europe has already been leading on integration of trade and climate.”
The US and EU reached a deal in October 2021 in which the US would replace its steel and aluminum tariffs on imports from EU countries with a tariff-quota system, with the EU also removing retaliatory tariffs it imposed on other products.
As part of the deal, the two governments agreed to pursue a partnership addressing global overcapacity and emissions in the steel and aluminum industry with an expectation that a framework could be finalized by October 2023. The sides failed to reach an agreement at a recent summit meeting.
The import tariffs of 25% on steel and 10% on aluminum on most countries were introduced by former President Donald Trump in March 2018 using a national security justification under Section 232 of the Trade Expansion Act of 1962. Many countries have since been given exemptions or have had the tariffs replaced by tariff-quota arrangements.
Details of potential deal
A potential deal between the US and EU involving sustainable steel and aluminum could see the two governments impose tariffs or bans on metal imports into their respective nations based on the carbon intensity profile of the shipments. However, such an arrangement would also seek to protect the respective steel and aluminum industries of the US and EU.
“While more details are needed to assess the specific merits of these approaches, both would set a watershed precedent that market access in the 21st century should be conditioned on decarbonization — which could be replicated in other industries and with other trading partners as well,” the environmental groups said in the letter.
The groups also suggested that the US pursue similar deals with Canada, Australia and other countries while the talks progress with the EU.
Representatives for the White House and USTR’s office were not immediately available for comment Dec. 5.
Author Nick Lazzaro