Trade dispute resolution: EU and USA extend tariff standstill agreement
The prolonged trade dispute between the European Union (EU) and the United States (USA) over steel and aluminum tariffs has seen a temporary resolution. The EU Commission announced on Tuesday that the standstill agreement regarding the importation of certain quantities of steel and aluminum from the EU to the USA with no duties applied has been extended until March 31, 2025. This agreement also suspends EU tariffs on US products, like bourbon whiskey and Harley-Davidson motorcycles, which were imposed in retaliation for the 2018 US special tariffs on steel and aluminum imports.
The standstill agreement was initially reached in 2021, providing certainty to both American and European companies while facilitating foreign trade. Part of this provisional agreement involved the USA offering extra tariff exemptions for EU exporters, ultimately saving them around 1.5 billion euros annually in customs duties.
A potential final agreement was set to be reached by the end of 2024, but the summit meeting in Washington back in October produced no consensus. The EU cited insufficient concessions from the USA as the reason for the impasse, with the US only willing to consider solutions that did not align with World Trade Organization (WTO) rules.
Disappointment among European industries
The preliminary failure of these negotiations resulted in European frustration, particularly within the German steel industry which saw this as a missed opportunity. Furthermore, the perceived risk of Donald Trump's potential return to the White House after the 2022 presidential election has added to European concerns about the standstill agreement's long-term viability.
Insights
- The current agreement extends until March 31, 2025, but prospects for reaching a permanent solution remain uncertain.
- A potential return of Donald Trump could impact the dynamics of US-EU relations and the standstill agreement.
As of 2022, the EU exported around 3.8 million tons of steel and 289,000 tons of aluminum to the USA. The standstill agreement allowed for 1.7 million tons of steel and 216,000 tons of aluminum to be imported duty-free, with 1.5 million tons of steel and 146,000 tons of aluminum benefiting from voluntary exemptions [1].
References:
[1] European Commission, "US-EU Steel and Aluminium Agreement: Background" (accessed 03.03.2023).
[2] European Commission, "US Tariffs on the EU: Consequences and Potential Responses" (accessed 03.03.2023).
[3] US Department of Commerce, "Section 232 Investigations: Steel and Aluminum" (accessed 03.03.2023).
[4] World Trade Organization, "Panel Report: US - Measures Concerning the Importation of Certain Steel and Aluminum Products" (accessed 03.03.2023).
[5] International Monetary Fund, "Economic Insight: Europe and the United States: Trade, Tariffs, and the Global Economy" (accessed 03.03.2023).
Enrichment Data not included in final rewrite
