In a bid to smoothen the rough edges of trade relationships, high-ranking European Union (EU) officials have made their way to Washington. The core agenda is to resolve the lingering trade issues, particularly focusing on the aluminium sector, which has been a bone of contention between the two economic giants.
The delegation, led by European Commission Chief, Ursula von der Leyen, and European Council President, Charles Michel, is set to engage with U.S. President Joe Biden this Friday. While unity concerning Ukraine is on the table, the spotlight is largely on the aluminium trade snags that have soured ties.
“The United States has suspended import tariffs on EU steel and aluminium imposed by former U.S. President Donald Trump in 2018, but on condition that both sides agree by the end of this month on measures to address overcapacity in non-market economies, such as China, and promote greener steel.”
The heart of the matter is the U.S. insistence on the EU applying metal tariffs on Chinese imports, a proposition Brussels says requires a year-long World Trade Organization compliant investigation. This back and forth has left the tariff suspension hanging by a thread, contingent on the outcomes of the ongoing talks.
Bernd Lange, the Chair of the European Parliament’s trade committee, stressed that any measures to address excess capacity should be “based on objective investigations and not on political considerations.”
The sustainable steel discussion is also on the agenda, with both sides exploring common grounds to marry the EU’s carbon border tariff system with the U.S.’s green subsidy approach. There’s a proposition from the U.S. side to create a largely tariff-free green steel club, open to allies, but with regulations that sideline China.
One EU official summed up the discussions as “fluid” while another termed them as “hard.”
There’s also hope that the summit will birth a deal cushioning the impact of the U.S. Inflation Reduction Act on the EU. The Act offers tax incentives for consumers purchasing electric vehicles (EVs) assembled in North America. The ongoing negotiations aim to extend partial tax breaks to EVs fitted with EU-sourced critical materials like cobalt, graphite, lithium, manganese, and nickel, although the EU’s own green transition demands for these materials might limit the benefits from such a deal.