The European Union is discussing the possibility of temporarily prolonging a truce with the US related to steel and aluminum trade, a prospect that would bypass stalled negotiations and avoid the return of tariffs on as much as $10 billion of transatlantic exports.
Since the tariffs return automatically at the end of the year, an extension would provide more time to reach a permanent settlement before the US presidential election in 2024, according to people familiar with the bloc’s thinking.
Talks on the so-called Global Arrangement on Sustainable Steel and Aluminum are aimed at settling a Trump-era dispute, when the US slapped tariffs on metals imports from Europe, citing risks to national security, to which the EU responded with retaliatory measures. The two sides reached a temporary truce in 2021, which expires at year-end.
EU diplomats were briefed on the status of negotiations last week, including on the procedure needed to prolong the truce, said the people, who spoke on condition of anonymity. The US has previously said that the two sides are both committed to avoiding a return of the tariffs, Bloomberg previously reported.
As part of the temporary arrangements agreed two years ago, the US introduced a set of tariff-rate quotas above which duties on the metals are applied, while the EU froze all of its restrictive measures. That has created an unbalanced situation that has favored the US, the bloc’s trade chief has previously said.
The tariff-rate quotas are meant to be based on historical trade flows but their rigidity has meant that a significant level of European steel continues to be subject to duties and the continent’s exporters are burdened with red tape.
Addressing that imbalance now is part of ongoing discussions with the Biden administration, one of the people said.
Failure to fix the asymmetry would see the EU faced with the choice of re-introducing tariffs on US goods or sticking to the status quo, and by doing so gift a concession to the Biden administration.
The aim of the GSA is to tackle global excess capacity and carbon emissions of dirty metals. Some progress had been made on the first of those two goals. The agreements would also be open to like-minded countries. Talks haven’t progressed much after the EU and US failed to conclude a political agreement at a summit in Washington last month and time is short given how far apart the two sides are, the people said.
The EU has been pushing the US to provide a clear path to remove the tariffs and tariff-rate quotas, and that remains a key roadblock to a deal. The bloc wants the Biden administration to at least make the TRQs less rigid given the burden they place on European companies, the people said.
