EU obtains temporary exemption from US tariffs on steel and aluminum

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EU obtains temporary exemption from US tariffs on steel and aluminum

Global Trade News Alert – 07-2018

Temporary exemption applicable for duties on steel and aluminum products imported from the EU into the US

27 March 2018

On 23 March 2018, tariffs of 25% on imports of steel and 10% on imports of aluminum became effective in the US. Shipments of steel and aluminum from the EU into the US have been temporarily exempted from such measures through 30 April 2018, and EU leaders are engaged in negotiations to obtain a permanent exemption.

The EU, Australia, Argentina, Brazil, Canada, Korea (ROK) and Mexico are among the US trade partners to benefit from an initial blanket exemption, and all currently are engaged in broader trade negotiations with the US. For example, Canada and Mexico’s requests to be exempted from the scope of the additional tariffs are intertwined with ongoing renegotiations of certain aspects of the North American Free Trade Agreement. The extension of exemptions beyond 30 April likely will depend on whether the US achieves an outcome to broader negotiations that it deems satisfactory.

EU negotiations for a permanent exemption

Obtaining a permanent exemption for EU steel and aluminum imports into the US is high on the agenda of European leaders. The EU member states are among the countries most affected by the US tariff measures, with 10 countries directly affected by the measures, and indirect consequences for all member states.

Negotiations between the European Commissioner for Trade, Cecilia Malmström, and the US Department of Commerce Secretary, Wilbur Ross, that took place on 20 March 2018 focused on a permanent tariff exemption for the EU. European Commission Vice President, Jyrki Katainen, affirmed being “more optimistic than before” about the EU’s ability to secure a permanent exemption from the tariffs. However, if the negotiations do not result in a positive outcome for the EU trade community, other options are being considered by political EU decision makers.

US issues procedures for product exclusion

In addition to blanket exemptions, procedures have been issued by the US Department of Commerce detailing the conditions to obtain specific product exclusions. All exclusion requests must be submitted by individuals or organizations that use articles covered by the tariffs in business activities, provided basic requirements are met. Exclusions are subject to review and to objections. Approved exclusions generally will apply for one year.

EU envisages other actions

EU Commissioner Malmström addressed the European Parliament in Strasbourg last week by considering action at the WTO level, stating that the US measure “is a safeguard in disguise,” and questioning the misuse of the WTO security exception relied upon by the US. The EU has reached out to its allies regarding a joint case before the Dispute Settlement Body in Geneva.

EU trade countermeasures also are envisaged to retaliate against US measures, which could include EU restrictions on imports of certain alcoholic beverages, motorcycles and clothing originating in the US. As a response, the White House mentioned that it may consider increased tariffs on automobile imports from the EU.

Trade diversion is also a major concern in Brussels. The US measure is expected to reduce imports by 13 million tonnes. The excess steel and aluminum that will result on the global market may potentially be dumped into the EU market. In this respect, EU trade authorities are contemplating the possibility of a safeguard on steel to preserve the stability of the EU market, but its compatibility with WTO rules is being questioned.

More information on Duties on steel and aluminum products on imports to the US?

Do you want to know more on steel and aluminum tariffs of the US? Please contact Klaas Winters at +31882882125

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