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EU trade head favors alternative steel tariff deal with US

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Valdis Dombrovskis said that the EU is ready to consider "other possible solutions" to the tariff dispute between the EU and the United States in the context of a thaw in relations after Biden was elected president.

EU trade head favors alternative steel tariff deal with US

According to the European Union Trade Representative Valdis Dombrovskis, the resolution of the dispute between the EU and the US over steel and aluminum tariffs, which arose during the Trump era, may not lead to the removal of all barriers protecting the industry.

The EU's executive vice president in charge of trade policy said that while the "ideal solution" would be a mutual tariff suspension, as agreed by both parties this year in a dispute between Boeing and Airbus, he was willing to consider "other possible solutions ".

“We understand the US willingness to protect its steel industry, but there are certainly ways to do it in a way that is less damaging to EU producers,” Dombrovskis said in interview Financial Times.

In May, the EU postponed plans to raise tariffs on a number of US goods as a sign of resolution to the conflict with Washington that arose in 2018 when Donald Trump imposed high tariffs on steel and aluminum imports from Europe and other countries.

The measures imposed by the then US president were based on national security considerations taken from section 232 of the US Trade Expansion Act of 1962 - a highly controversial justification from such a close strategic ally that angered Europe. The EU has responded with its own tariffs.

Joe Biden's victory in the US presidential election this year sparked a wave of efforts to improve transatlantic trade relations. In June, both sides achieved a major breakthrough by resolving a 17-year dispute over European aircraft subsidies.

Removing Section 232 tariffs will be politically painful for the President of the United States because they are popular in the politically powerful steel industry and industrial states including Indiana, Ohio and Pennsylvania.

Dombrovskis is expected to visit Washington this fall to hold talks with his counterparts, including US Trade Representative Catherine Tai, on a range of trade topics.

He said that negotiations with the United States on tariffs under section 232 are going "in a constructive way." The ideal solution would be to “completely abolish” the measures provided for in Article 232, without any additional restrictions. But he said the EU "is willing to consider other solutions, realizing the fact that the US is also interested in protecting its steel industry."

According to him, they should be less destructive for EU producers and respect historical trade volumes. Dombrovskis did not disclose how such alternative solutions might look. However, one possibility could be some kind of licensing or monitoring agreement that allows EU exporters controlled access to the US market.

The US may also offer some form of export quotas, although the EU has already ruled out this. Or he could choose to convert section 232 tariffs into “safeguards” designed to deal with the sudden flow of imports, although this would be difficult to reconcile with World Trade Organization rules.

Discussions on Section 232 tariffs are part of a broader US-EU effort to strengthen transatlantic ties after Trump's tumultuous years.

One of the outcomes of the EU-US summit in Brussels last month was the creation of a new Trade and Technology Council, which aims to enhance cooperation on key technologies.

Dombrovskis said that both sides intend to create 10 working groups in a number of areas and decide which topics to prioritize. Key issues, he said, were 5G telecommunications, artificial intelligence, the Internet of Things, additive manufacturing and robotics, as well as investment validation and regulation of Internet platforms.

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