The United States and the European Union made progress in restoring good relations this week through renewed cooperation on key trade and technology issues, but this fragile peace could be shattered again if the parties fail to resolve the dispute over US steel and aluminum tariffs.
The dispute has plagued transatlantic trade relations for more than three years, but was not on the agenda for the inaugural meeting of the EU-U.S. Trade and Technology Council (TTC) which ends on Thursday.
But the metal tariffs nonetheless cast a shadow over the enthusiastic expressions of officials in Brussels and Washington about their renewed collaboration after the difficult years under Republican President Donald Trump, which upended relations with friends and enemies.
Europeans are hoping for a gesture from President Joe Biden’s administration that will clearly signal a change in Trump, at least in trade policy.
EU Trade Commissioner Valdis Dombrovskis said earlier this week that talks to settle the dispute were at “advanced stages”.
But after a meeting with US Secretary of Commerce Gina Raimondo and more informal discussions, a European official admitted that finding a solution “will not be easy”.
âWe need to explore all possible options,â including whether the option of setting import quotes would be âfavorable,â the official told reporters on the sidelines of the TTC meeting.
Trump in June 2018 imposed tariffs of 25% on steel and 10% on aluminum from several economies, including the European Union.
Europeans retaliated by imposing taxes on iconic American products like Harley-Davidson motorcycles, Levi’s jeans and bourbon.
Beyond the economic impact, the US action shocked Brussels as Trump cited national security concerns to justify the tariffs.
– ‘Win-win’ –
“We do not see ourselves as a threat to national security in the United States,” the European official said. But the “sticking point” is finding a permanent solution.
But governments on both sides of the Atlantic are facing pressure from industry interest groups, and Biden has also made promises on the protection of American workers, while U.S. Trade Representative Katherine Tai pointed out. need to control surplus world production.
Asked about the possibility of accepting export quotas, the EU official said it would depend on the offer, because “it has to be a win-win situation”.
Dombrovskis warned that time is running out to find a solution.
In June, the parties opened talks on the dispute, setting a deadline of December 1 to reach a deal, and the EU delayed a planned tariff increase that was due to go into effect on June 1.
Dombrovskis said officials had to reach a deal by early November “because we need more or less a month for the EU’s internal procedures to ensure that its automatic increase in retaliatory tariffs does not ‘does not take place “.
– Beaten bourbon –
U.S. bourbon distillers watch the debate with concern as they face the prospect that tariffs on their goods will double to 50% on December 1, further hurting exports to the EU which have fallen 37% in the three last years.
In a letter this week to Tai and Raimondo, 50 federations representing the U.S. alcohol industry urged negotiators to quickly defuse the conflict.
But “the positions are very distant,” admitted the European official.
However, there is a “common understanding” that it must be resolved.
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