The European Union is considering extending its current truce with the US concerning steel and aluminium trade. This move could circumvent ongoing stagnant talks and prevent the re-imposition of tariffs on approximately $10 billion worth of cross-Atlantic exports.
With the tariffs set to resume automatically at the end of the year, an extension would allow more time to negotiate a lasting agreement before the 2024 US presidential election, as per sources close to the EU’s strategy.
The discussions centre around the Global Arrangement on Sustainable Steel and Aluminum, an initiative to resolve a dispute initiated during the Trump administration.
The US imposed tariffs on metal imports from Europe, citing national security concerns, leading to reciprocal actions from the EU. A temporary ceasefire was established in 2021, but it is due to expire at the year’s end.
EU diplomats received updates on the negotiation process last week, including details on how to prolong the truce, shared by anonymous informants.
The US has previously expressed a mutual commitment with the EU to avoid reactivating the steel and aluminium tariffs, as reported by Bloomberg.
The interim deal, agreed upon two years ago, involved the US implementing tariff-rate quotas, with duties applied beyond a certain threshold, while the EU suspended its retaliatory measures. This has resulted in a scenario seemingly advantageous to the US, as stated by the EU’s trade chief.
The quota system, designed to reflect historical trading patterns, has proven inflexible, leading to substantial European steel still facing duties and increased bureaucratic hurdles for European exporters.
Addressing this imbalance is a key element of the current talks with the Biden administration, according to one of the sources.
Without a resolution to this disparity, the EU may have to choose between reinstating tariffs on US goods or maintaining the current conditions, effectively conceding to the US.
The Global Arrangement’s objectives include addressing the worldwide surplus of steel and aluminium and reducing carbon emissions from these industries. Some headway has been made regarding the former. The pact would also welcome participation from other like-minded nations.
However, discussions have seen limited progress following the failure to reach a political agreement at a recent summit in Washington, with time running short and significant differences remaining between the EU and the US.
The EU is urging the US to provide a definitive plan to eliminate the tariffs and quota system. A critical stumbling block in negotiations is the EU’s demand for the US to at least make these quotas more flexible, considering the strain they place on European firms.