Tai, Dombrovskis Talk Critical Minerals, Steel and Aluminum

U.S. Trade Representative Katherine Tai and her counterpart from the EU, Valdis Dombrovskis, said their discussions on a critical minerals agreement and a deal to privilege green steel and aluminum trade were productive. It was the fourth time this year that Tai and the EU's top trade official met.

"We took stock of our negotiations in the world's first carbon-based sectoral arrangement, to address carbon intensity and overcapacity in the steel and aluminum sectors," Tai said of their meeting that took place just before a press conference April 13.

China is responsible for non-economic overcapacity, steel industry players say, but it is not the only culprit. The U.S. had imposed 25% tariffs on European steel and 10% tariffs on European aluminum under its Section 232 action to protect domestic steel and aluminum producers from overcapacity that drove down prices. Tai moved from tariffs to tariff rate quotas in late 2021 (see 2111010039), and the EU lifted its retaliatory tariffs on American exports, but the EU wants unfettered trade to return in the sector.

The global arrangement on steel and aluminum, which has a self-imposed deadline of October, is also designed to impose barriers in their markets for metals from countries contributing to overcapacity. "This agreement will help us achieve our sustainability goals, by reducing emissions, and defending key industries and jobs," Tai said.

Dombrovskis said that he hopes the carbon reduction element of the agreement will "incentivize other sectors to follow suit."

Dombrovskis said, as he had at the American Enterprise Institute the day before (see 2304120061), that he wants the EU-U.S. Trade and Technology Council to arrive at trade advances by May. Trade facilitation and conformity assessments are at the top of his priority list. On trade facilitation, through the use of digital tools, he said officials will hold a stakeholders event to hear what would be useful.

Japan has already inked a critical minerals agreement so that its materials can count toward friendshoring thresholds in the electric vehicle tax credits, and the EU is hoping for a similar accord. Neither official talked about when it might come together, but when asked about a timeline, Dombrovskis said, "We are willing to move forward as fast as possible."

Tai got a question about whether the U.S. would offer the EU special market access for its green technology goods. Tai didn't answer directly, but said, "The questions we are asking today on clean technology goods go to not just whether they contribute to cleaner environment, cleaner energy incentives, but also we are asking questions around how those goods themselves are being produced. Who they're being produced by? Are they being produced fairly? And, whether or not in the production themselves, clean goods are being produced themselves, cleanly."

The EU and the U.S., as they did with the steel Section 232 tariffs, reached a temporary detente in the Airbus-Boeing dispute, dropping rebalancing tariffs on both sides that the World Trade Organization authorized due to each economy's subsidies to manufacturers.

Dombrovskis said, in response to a question from International Trade Today, that they did not discuss how to reach a permanent solution in civil aviation, because there is a longer timeline before that deal expires in 2026. But he said, 'It's clearly on our agenda. Experts continue their work and engagement. Indeed, from the EU side we are confident we will be able to reach a permanent agreement."