Tensions from the Trump era will cool after an agreement between the US and the EU

“Today’s announcement represents President Biden’s vision to turn the pages of past conflicts and begin a new chapter in enhanced transatlantic relations,” U.S. Trade Representative Katherine Tai told reporters on Saturday.

European Commissioner for Trade Valdis Dombrovskis suggested in a tweet Saturday that the deal will not be permanent, and the latest developments are described as a “break” in the dispute. Biden and European Commission President Ursula von der Leyen will announce more details on Sunday, he warned.

The trading partners also agreed to develop a long-term plan to oppose China over excess steel production and put pressure on carbon-intensive steel exporters. U.S. officials have labeled this as the first deal of its kind. U.S. officials described the deal as the first of its kind, but made no specific commitments, saying they would negotiate them later with contributions from other major steel-producing economies.

“Today’s agreement not only eliminates one of the biggest bilateral irritants in US-EU relations, but actually turns it into joint progress on two key challenges,” National Security Adviser Jake Sullivan told reporters at the meeting.

But although both sides share these priorities, they have not always agreed on an approach.

The Biden administration has urged Brussels to take a tougher stance on Beijing on trade and other issues, but some European leaders say they are more inclined to work with China than to oppose it. While the EU is working to tax steel and other carbon-marginal products, such proposals are more difficult to implement in the US for political and practical reasons.

Trump has angered trade partners around the world when he announced tariffs on steel and aluminum imports in 2018, arguing that cheap foreign imports unfairly undermine U.S. producers and thus threaten national security. His administration intervened in alternative trade measures with Canada, Mexico and other allies, but maintained EU tariffs.

An industry official told POLITICA that the new arrangement would include a quota allowing the import of 3.3 million metric tonnes of steel from the EU duty-free and that imports in excess of that amount would be subject to the existing 25% duty.

An additional 1 million tonnes of steel, previously exempted from the applicable tariffs, will not be subject to duty for at least another two years under the new regime.

The deal also contains a “molten and infused” standard that, as the name suggests, requires duty-free metals to melt and flow in Europe, another senior administration official said. U.S. steelmakers have lobbied for the inclusion of these rules to prevent steel from China and other countries from being released as an EU product.

“China has been directing its cheap steel to the US through Europe and other markets for far too long, which has lowered prices and essentially prevented competition from the US steel and aluminum industry. And, of course, it harms the industry, it harms our workers, “said Trade Minister Gina Raimondo.

Raimondo admitted to reporters that the negotiations were “difficult” and “complicated”. The Biden administration is facing strong pressure from the steel industry and its influential unions to maintain tariffs or replace them with similar safeguards. These groups praised the agreement reached on Saturday.

“Proper implementation and enforcement [limits] will be critical to ensuring that the new measures are effective in achieving these critical goals, “said Kevin Dempsey, president and executive director of the American Iron and Steel Institute.” We hope that by concluding this agreement, the US and the EU will now work on a joint action plan to challenge non-market industrial policies and other government interventions that promote steel overcapacity.

Tom Conway, president of United Steelworkers International, praised the deal for continuing to support U.S. producers by restricting duty-free imports and combating the pushing of cheap foreign steel through Europe. “The business creates certainty for both domestic steelmakers and users who cannot find domestic stock,” Conway said in a statement.

At the same time, U.S. companies in need of metals for production have complained that steel costs have skyrocketed and their orders are being delayed. Raimondo said on Saturday that increasing duty-free imports from the EU would help relieve both issues.

Various U.S. exports, such as orange juice, whiskey and Harley-Davidson motorcycles, were also affected by 25% EU refunds, which are expected to double in June before both sides begin negotiations. The fines turned many U.S. industries, including food and industrial products, into collateral damage and increased pressure on Biden to close the deal.

Tai said the EU had agreed to eliminate these drawback duties as part of the deal, adding that both sides would also withdraw their trade complaints to the World Trade Organization.

Senate Finance Minister Ron Wyden (D-Ore.) Said the deal “is taking important steps” to resolve the tariff dispute and “start a new phase of large-scale cooperation” on common issues such as climate. “Further strengthening of US-EU relations is essential to combat China’s efforts to take over the entire industry and let American workers down,” he said in a statement.

But some trade groups argue that the new conditions do not go far enough. Jake Colvin, president of the National Council on Foreign Trade, said the deal “is not the optimal outcome” because it introduces “an undesirable form of guided trade that will continue to cause uncertainty for workers and businesses on both sides of the Atlantic.” “

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