Industryweek 23221 Steel G

Europe Said to be Close to Exemption on Trump Metal Tariffs

March 22, 2018
The EU has been scrambling for a waiver while warning that a failure to gain one would lead to a tit-for-tat response on imports of U.S. goods.

The European Union believes it’s on track to be exempted from imminent U.S. tariffs on foreign steel and aluminum, dialing down the risk of a trans-Atlantic trade war.

European Trade Commissioner Cecilia Malmstrom ended two days of talks in Washington with the hope of a U.S. pledge to exclude the EU from the import duties of 25% on steel and 10% on aluminum, four EU officials said Thursday on the condition of anonymity. The levies initially were set to take effect on Friday.

“Cecilia Malmstrom had a good, very fruitful visit to Washington,” commission Vice President Jyrki Katainen said in a Bloomberg Television interview on Thursday. “We have good opportunities now to solve the issue and stabilize, or calm down, the problem.”

The upbeat assessment came as the European Commission, the EU’s executive arm, briefed ambassadors from the bloc’s 28 national governments about the issue in Brussels. EU leaders are scheduled to discuss the results of Malmstrom’s visit to Washington at a gathering later Thursday in the Belgian capital.

President Donald Trump earlier this month announced the protectionist measures on national-security grounds, signaled Canada, Mexico and Australia would be excluded and gave his top trade negotiator, Robert Lighthizer, scope to work out exemptions for more countries by March 23.

Not exempt is China, which may also face an additional $50 billion of U.S. tariffs over intellectual-property violations, a person familiar with that matter said. The value of the tariffs was based on U.S. estimates of damage caused by intellectual-property theft, the person said.

The EU expects the Trump administration to make an announcement later Thursday about an exclusion for the bloc from the metal tariffs, two of the European officials said.

The EU has been scrambling for a waiver while warning that a failure to gain one would lead to a tit-for-tat response on 2.8 billion euros (US$3.5 billion) of imports of U.S. goods including Harley-Davidson Inc. motorcycles, Levi Strauss & Co. jeans and bourbon whiskey.

The EU also said that, without an exemption, it would file a complaint to the World Trade Organization against the Trump administration and introduce “safeguard” measures to prevent metal shipments from other parts of the world to America from being diverted to the European market and flooding it.

Lighthizer said on Wednesday that the government could delay imposing the metal tariffs on some countries while negotiations take place on a more permanent exclusion and that he’s aiming to have waiver deliberations wrapped up by the end of April.

In her last-ditch push to win a carve out for the EU, Malmstrom met U.S. Commerce Secretary Wilbur Ross and Lighthizer during her visit.

“There are prospects to start some sort of negotiating process,” Katainen said. “In trade wars there are no winners, only losers. And the losers are normal citizens who will lose their jobs.”

The Trump administration is linking a permanent exemption for Europe from the metal duties to the establishment of a high-level group on trade relations whose goal will be to reach a “quick and neat” deal on tariffs, including for goods such as cars, according to one of the EU officials.

Malmstrom was told in Washington that this idea doesn’t represent a revival of longstanding plans for a broad EU-U.S. market-opening accord that Trump shelved after taking office in January 2017, the official said.

Robert Zoellick, a former U.S. trade representative, said earlier this month that the Trump administration has shown little respect for the multilateral order underpinned by the WTO and views international commerce in terms of individual deals involving national muscle-flexing.

“These guys are playing hardball,” Zoellick told a Brussels conference on March 9. “It fits into the whole notion that they don’t really see the systemic aspects of this. They see it as transactional. They see it as case by case. Clearly that’s how President Trump operates.”

By Jonathan Stearns, Nikos Chrysoloras and Viktoria Dendrinou

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