European Council President Charles Michel has stressed the importance of finding mutually beneficial solutions to resolve trade disputes between the European Union (EU) and the United States. As US President Joe Biden prepares to host European Commission chief Ursula von der Leyen and Michel for a White House meeting to demonstrate unity in the face of the Ukraine crisis, trade issues have cast a shadow over relations. Negotiators from both sides have been striving to address long-standing disagreements regarding tariffs and subsidies before the summit.
Among the key trade matters on the table is the goal to end trade tensions related to tariffs imposed during the Trump era and to alleviate the impact of US green subsidies. However, as of Thursday afternoon, negotiators had not achieved any major breakthroughs.
US Trade Representative Katherine Tai and European Commission Executive Vice President Valdis Dombrovskis held discussions on Thursday, with trade negotiators from both sides engaged in continuous talks.
Michel emphasized the critical need for the EU and the US to stand together on shared values and their commitment to democracy, particularly amid escalating tensions in the Middle East. He refrained from making predictions about whether trade issues could be resolved before the White House meeting, stating that negotiations were ongoing.
One major point of contention is related to import tariffs on EU steel and aluminum that were imposed by former President Donald Trump in 2018. The US has suspended these tariffs, contingent on both sides agreeing by the end of the month to address overcapacity in non-market economies like China and to promote eco-friendly steel production. Disagreements persist, with the US urging the EU to apply the metal tariffs to Chinese imports, a move that the EU says can only occur after a year-long investigation in compliance with World Trade Organization rules.
Bernd Lange, chair of the trade committee of the European Parliament, emphasized that measures to address excess steel capacity should be based on objective investigations rather than political considerations. The outcome remains uncertain and could either end the threat of US tariffs or extend the suspension.
Regarding sustainable steel production, the EU and US are working to reconcile their differing approaches. The US has proposed establishing a green steel club with minimal tariffs that would be open to other allies but with rules barring China from joining due to its state-owned enterprises. Negotiations on this issue are described as "fluid" and "hard," with no clear resolution in sight.
In addition to trade concerns, the EU hopes that Friday's summit will lead to an agreement to mitigate the impact of the US Inflation Reduction Act. The EU seeks a deal that would allow electric vehicles (EVs) using EU-sourced critical materials to qualify for partial tax breaks offered under the act. However, given the EU's own reliance on these materials for its green transition, the impact of such an agreement on the bloc may be limited.
The outcome of these negotiations will shape the future of EU-US trade relations and potentially have broader implications for global trade dynamics.
