EU, US remain at odds over steel deal

The European Commission wants to reach a steel trade deal with the US to avoid the return of Section 232 and EU retaliatory tariffs, but will not sign an agreement that breaches global trade standards, says EU trade commissioner Valdis Dombrovskis.

Experts have argued that elements of Washington’s proposed solution could unfairly discriminate against imports from some countries and breach WTO rules.

In a working paper published earlier this month, David Kleimann, visiting Fellow at Bruegel, said US proposals are “exclusive and coercive club setting, devoid of defined obligations for domestic restrictions”, and mean the EU would have to shelve its Carbon Border Adjustment (CBAM) regulation and accept WTO-inconsistent policy solutions (see Kallanish passim).

US proposals for embedded emission benchmarks restricting market access for imports would be expected to accommodate EAF performance standards and blast furnace transition from the outset. This would make for de-facto discrimination, for international trade legal purposes, against imports from non-member countries, Kleimann noted.

“As the EU, we’re committed to multilateralism, to the rules-based global order,” Dombrovskis told The Financial Times. “We would like to avoid engaging in agreements which manifestly violate World Trade Organisation rules.”

The sides have struggled to find an agreement on the Global Arrangement on Sustainable Steel and Aluminium (GSA) ahead of a deadline in October. Without a deal, the US and consequently EU tariffs would return in December.

“We respect the EU’s concerns but we continue to wait for a proposal from their side that meets our high level of ambition and addresses our shared concerns on climate change and overcapacity,” Sam Michel, a spokesperson for the US trade representative’s office, is quoted as saying.

Dombrovskis declined to speculate on whether he and US trade representative Katherine Tai could prolong the truce if there were no agreement by October. “We’re committed to reaching a deal by this autumn,” he posted on Twitter after a meeting with Tai last week.

Adam Smith Poland