EU prepares steel quotas to end trade war with Biden – POLITICO

Europe is moving towards an agreement in the coming days to end the transatlantic trade war, but the ceasefire now seems to mean that Brussels must accept quotas for how much steel can be sent to the United States without paying higher tariffs.

Former US President Donald Trump triggered a trade war with Europe in 2018 by imposing tariffs on steel and aluminum imports, which he classified as a threat to national security. European diplomats had originally hoped that Washington would remove these duties under US President Joe Biden, but he has not been willing to do so without winning concessions to major steelmaking circles in America.

The contours of an agreement now appear to be forming around Europe accepting tariff quotas. This would ensure an immediate removal of Trump-era tariffs, but would mean that high tariffs on European metal would come into force again if EU exports exceeded a certain level. EU officials had viewed such measures as blackmail under Trump, but now accept that there may be no other way out of the standoff.

In a meeting with trade diplomats on Thursday, the European Commission was optimistic that an agreement could be reached, two people said at the meeting. But diplomats did not receive further details on any future settlement, as the Commission does not want to undermine the negotiations with Washington. It is also not clear yet whether it will be a long-term solution, the two people said.

The clock is ticking because Brussels and Washington have set a self-imposed deadline on November 1 to put their dispute to bed. EU retaliation on US products, including countermeasures against Harley-Davidson motorcycles and bourbon whiskey, will double from 1 December, and the European Commission needs about a month to back this escalation once an agreement is reached.

Karl Tachelet, director of international relations and external affairs at EU steel industry lobby Eurofer, said the future bilateral agreement would involve tariff quotas. He said: “Both partners are seeking to find an agreement on tariff quotas that will replace the current import duty of 25 percent.”

Tachelet said the details were crucial for Eurofer to evaluate the outcome of the negotiations. These elements will include the size of the EU quota, subdivisions per product and separate quotas for different EU countries.

Both sides said earlier that a future agreement should lead to cooperation to address the overall global steel capacity. U.S. Trade Representative Katherine Tai told reporters in Brussels last week that the talks were about more than just tariffs. “I do not want you to think that this is basically an exercise in a Turkish bazaar where we are negotiating the price of a rug,” she said.

The steel industry is optimistic that an agreement will be reached. “I would be very surprised that this would totally derail,” Tachelet said. He added that there is much more at stake than steel.

“The Biden administration is committed to renewing more friendly relations and looking to common interests more than the confrontational approach of Trump and [former U.S. Trade Representative Robert] The Lighthizer administration, “he said.” So it’s a context that really should create a lot of interest and energy in relation to a deal. “

The European aluminum lobby is opposed to a solution involving tariff quotas and simply called for a total withdrawal of the Trump-era national security tariffs. “Any other proposed outcome will only continue to penalize the aluminum producing and using sectors on both sides of the Atlantic,” said Gerd Götz, Director-General of European Aluminum.

The European Commission also insists that there was no legal basis for these obligations.

“As a trusted American ally, the EU cannot be considered a security threat to the United States,” a Commission spokesman said Thursday. “These Trump tariffs are going away.”

This article is part of POLITICS‘s premium policy service Pro Trade. From transatlantic trade wars to Britain’s future trade relations with the EU and the rest of the world, Pro Trade gives you the insight you need to plan your next move. Email [email protected] for a free trial.

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