EU trade chief expects U.S. steel import caps

BY  | FROM  | 2018-05-31 10:42

The European Union (EU) trade commissioner Cecilia Malmstrom said on Tuesday that she expected the United States to apply import caps on European steel and aluminum products following the deadline of June 1 for a temporary exemption.

The EU Trade Commissioner indicated to the members of European Parliament (MEPs), gathered in Strasbourg for its plenary session, that despite the European Commission's campaign to receive a "full, permanent and unconditional exemption from the tariffs," she expected trade restrictions.

"Realistically, if the U.S. decides to refrain from applying duties, I expect them nonetheless to want to impose some sort of cap on EU exports," Malmstrom told MEPs.

"The question is whether that would be a hard cap -- meaning volume limits above which no further EU exports would be possible -- or a soft cap, under which further exports would be possible but under duties."

Malmstrom said that a soft U.S. cap "would be less damaging", but she considered it "unrealistic" to expect Washington to waive tariffs and forgo imposing quotas.

In a last ditch attempt, the EU Trade Commissioner will travel to Paris on Wednesday to meet with U.S. Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert Lighthizer, hoping to avoid the implementation of steel and aluminum tariffs before the Friday deadline when a temporary waiver for the EU will expire.

The import duties, 25 percent for steel and 10 percent for aluminum, were announced on March 1 by U.S. President Donald Trump as a measure to take for reasons of national security. Since the announcement, the U.S. has been criticized by its trading partners for taking protectionist measures, and starting what has been referred to as a trade war.

"Our future course of action will depend on the nature and the severity of measures imposed on our exports by the United States and the injury it does to our industry," Malmstrom said, repeating promises to respond "immediately" with counter measures, including import duties of 2.8 billion euros on American goods as soon as June 20. The EU would also launch legal measures through the World Trade Organization (WTO).

Observers have also expected the EU and the U.S. will agree on trade restraints. "This is convenient for EU producers (they can increase prices) and for the U.S. (can claim a 'win')," Daniel Gros, Director of the European think tank Center for European Policy Studies (CEPS) said.

"Both sides don't want to have a tariff war with each other," said Fredrik Erixon, Director of the European Centre for International Political Economy, a Brussels-based think tank.

Erixon said the U.S. is using the threat of steel tariffs to get the EU to become more accepting of other U.S. wishes, like reducing tariffs in the auto sector.

U.S. Commerce Secretary Wilbur Ross has initiated a Section 232 investigation into the national security implications of automobile imports, according to the U.S. Commerce Department.

The latest move has provoked widespread opposition from U.S. lawmakers, business groups and major trading partners, as they think the unilateral move threatens to disrupt global supply chains and kill American jobs.

European Commission Vice-President Jyrki Katainen said "it's very difficult to understand" the U.S. investigation into vehicle imports under the Section 232.

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