U.S. hopeful of reaching deal with EU on metals tariffs by end-October -source

U.S. Trade Representative Katherine Tai testifies before the Senate Finance Committee on Capitol Hill in Washington, United States, on May 12, 2021. Susan Walsh / Pool via REUTERS // File Photo

WASHINGTON, Oct. 13 (Reuters) – The United States is hoping to resolve its trade dispute with the European Union over tariffs on steel and aluminum before the end of October, a source familiar with the discussions said Wednesday.

US Trade Representative Katherine Tai met on Tuesday with EU trade chief Valdis Dombrovskis, who told a Washington think tank last month that he was “moderately optimistic” that an agreement could be reached.

“We hope to reach an agreement by the end of the month,” the source, who spoke on condition of anonymity, told Reuters.

USTR and EU spokesmen declined to comment on the talks. The US Department of Commerce, which administers Section 232 tariffs of 25% on steel and 10% on aluminum, did not immediately respond to a request for comment.

On Tuesday, USTR said that Tai and Dombrovskis were discussing “ongoing efforts to address global overcapacity in the steel and aluminum sectors and the common challenges posed by non-market economies.”

Tai and Dombrovskis agreed in May not to escalate the steel and aluminum tariff dispute for six months in order to negotiate a ceasefire agreement that would expire at the end of November.

In June, they brokered an agreement that ended a 17-year-old trade dispute over aircraft subsidies with a similar argument: The greater threat to Europe and the United States comes from China’s efforts to develop its own commercial aircraft industry.

In the metal dispute, US and European officials have long agreed that Chinese overproduction has weakened world prices.

Former US President Donald Trump imposed tariffs on steel and aluminum imports, including imports from the EU, as part of a Cold War-era trade law for reasons of national security.

A steel industry source said Tai and the EU are approaching a likely deal that would replace Section 232 tariffs with a Tariff Quota Agreement (TRQ) that would allow duty-free access to a certain amount of EU steel with tariffs on higher volumes applied.

This person said the talks “went well” but was reluctant to say that an agreement would be reached by October 31st.

Dombrovskis has expressed openness to a quota arrangement similar to those Canada and Mexico have with the United States, but said an agreement would be needed by early November.

Other EU officials have told Reuters that a lot depends on the amount of steel that is allowed to enter US ports duty-free.

The industry source said EU negotiators want to base the quota on US import volumes before the 232 tariffs were imposed in 2018, while US negotiators want to base the quotas on lower amounts after the tariffs are in place.

Reporting by Andrea Shalal; Editing by Leslie Adler

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