Newsletter

Where do transatlantic negotiations on US Section 232 steel and aluminium tariffs stand?

Publishing date
17 July 2023
Authors
David Kleimann
Picture of a stack of newspapers
Picture of the title of the 13/07/2023 newsletter with David Kleimann

Using the permanent removal of Trump’s national security tariffs on steel and aluminium imports as a leverage, the Biden administration has engaged in negotiations with the European Union on ‘global steel and aluminium arrangements to restore market-oriented conditions and address carbon intensity’. Negotiators are now running up to an October 31 deadline. If no agreement can be reached, US tariffs and EU retaliatory measures will be reinstalled automatically. 

 

If implemented, the US negotiation proposal in these talks would establish an international arrangement labelled ‘climate club’ that externalises market access restrictions afforded by US Section 232 tariffs to the customs borders of club members. The declared objective is to incentivise non-members to adopt low-carbon steel and aluminium production methods. 

 

But the US proposal suffers from design flaws including the lack of credible domestic abatement commitments, inefficient incentives, WTO inconsistency and incompatibility with the EU CBAM. These flaws are a function of the policy objectives USTR pursues with this scheme, including protectionism and US competition with China. 

EU negotiators, on the other hand, are using the talks as a vehicle to advance WTO compatible solutions for the decarbonisation of steel and aluminium industries at home and abroad and to address overcapacity challenges. Given the sharply diverging negotiation positions and associated respective domestic political constraints on both sides, however, policymakers should engage stakeholders to manage expectations towards a low-ambition negotiation result.

 

The Why Axis is a weekly newsletter distributed by Bruegel, bringing you the latest research on European economic policy. 

About the authors

  • David Kleimann

    David Kleimann (PhD) is a former Visiting fellow at Bruegel. He is a trade expert with 15 years of experience in law, policy, and institutions governing EU and international trade. His current work focuses on the climate and trade policy nexus as well as legal and diplomatic challenges arising from transatlantic and international climate and trade cooperation. His research has appeared in various internationally renowned journals and a monograph published by Cambridge University Press (CUP). His comments on trade law and policy issues have featured, amongst others, in the New York Times, Economist, Financial Times, Handelsblatt, Telegraph, Politico Magazine, The Hill, and Caijing Magazine. In the past, David has provided consultancy to the World Bank's international trade department, the European Commission, and the PRC's Ministry of Commerce. Moreover, he has been a trade policy advisor to the Chairman of the European Parliament's international trade committee, Bernd Lange.

    David earned his PhD in Law from the European University Institute (EUI) in Florence, Italy, where he defended his thesis on ‘The Transformation of EU External Economic Governance’. He conducted postdoctoral research at Johns Hopkins' School for Advanced International Studies (SAIS) and Georgetown University's Institute for International Economic Law. He holds a 1st of class Masters degree in International Law and Economics (MILE) from the World Trade Institute (WTI) in Berne, Switzerland, an LL.M in International Law (with distinction) from Kent Law School in Brussels, Belgium, and a BA in Staatswissenschaften (Public Administration) from Erfurt University. In the early days of his professional career, David completed traineeships at the European Commission's Directorate General for External Trade and the World Trade Organization's Agriculture Division.

Theme
Global economy and trade
Keyword
WhyAxis newsletter transatlantic relations trade policy decarbonisation
Language
English

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