The European Union has referred the decision of the United States to impose higher customs duty on imports to the American market of European steel and aluminium with effect from 1 June to the World Trade Organisation (WTO), the European Commissioner for Competition, Cecilia Malmström, announced on Friday 1 June (see EUROPE 12031).
The reason given to justify these measures - a threat to national security - is “not relevant. This is pure protectionism”, Malmström told the press. “The US is playing a dangerous game here. It is extremely worrying”, she stressed.
For the EU, “not responding would be the same as accepting these tariffs, which we consider illegal under WTO rules”, the Commissioner added.
Malmström, who refrained from describing the situation brought about by the US decision as a trade war, nonetheless stressed the risk that the actions could undermine joint efforts to tackle the joint problem suffered by both Europe and the United States, that of industrial overcapacity in China.
The Commissioner also expressed regret at America’s rejection of the positive agenda proposed by the EU to improve the transatlantic trade environment, with the plan agreed by the European leaders including tariff talks on industrial products, including cars, the liberalisation of public procurement, voluntary regulatory cooperation and increased cooperation on energy (see EUROPE 12022) - subject to a permanent exemption from the US taxes on steel and aluminium.
The appeal to the WTO is the first action of the package of account-measures prepared by the European Commission in the last months, in coordination with the member states, in response to the application to European products of American customs duty of 25% on imports of steel and 10% on imports of aluminium, decreed in March by the American President, Donald Trump.
The second action prepared by the EU consists of 'rebalancing’ measures that are compatible with WTO rules, providing for customs duty to be applied to American exports for a total that may initially equate to €2.8 billion and then, if its complaint is upheld by the WTO, or after three years, €6.4 billion, or the equivalent of the value of the EU’s exports of steel and aluminium to the US in 2017.
The Commission has worked with the member states to prepare a list of 332 American agricultural, industrial and steel products on which the EU will impose customs duty of 25% from 20 June at the earliest, possibly rising to 50% from 23 March 2021. The Commission notified the list to the WTO on 18 May.
The products targeted include steel products, motorcycles, certain textile products, including jeans, and agri-food products such as bourbon, peanut butter and orange juice.
The EU may implement its first draft of rebalancing measures within a few weeks, according to the Commission, which must now prepare an implementing regulation and agree with the member states on the products to include and the rates of customs duty.
The final list of products will be discussed by the national experts in the framework of the Council of the EU’s trade policy committee (TPC). These discussions will start next week at an informal meeting of the TPC in Sofia on 4 and 5 June, then at a formal meeting on 8 June.
The third counter-measure consists of safeguard measures to protect the EU market from diverted goods due to these American restrictions.
On 26 March, the Commission opened a safeguard investigation into imports of steel, which may lead, within nine months, to measures compatible with WTO rules to protect the European market from redirected exports of steel from Brazil, China, Russia, South Korea, Taiwan or Turkey, which are no longer competitive in the United States.
A surveillance system for imports of aluminium has also been set in place. (Original version in French by Emmanuel Hagry)