Biden faces climate change conundrum in EU steel tariff negotiations

0

The Biden administration could face a carbon emissions conundrum as it seeks to resolve an outstanding dispute with the European Union over tariffs for steel and aluminum inherited from the former President Donald Trump.

US and EU officials will work to resolve “existing differences” over steel and aluminum tariffs instituted under the previous US administration before the end of the year, according to a June 15 statement. However, the Biden administration faces pressure from steel producers and the workforce to keep measures in place to stem excess global steel capacity and resolve alleged market inequalities. .

The steel industry’s stated goal of reducing production overcapacity will conflict with President Joe Biden’s ambition to tackle global carbon emissions that are warming the planet, according to Thomas Koch Blank, senior chief technology officer within the Rocky Mountain Institute think tank. While steel producers lament the lack of government incentives to transition existing assets, they are trying to innovate and build new assets that produce low-carbon or zero-carbon steel.

Therefore, as it stands, the industry’s trend toward green technology will stumble over any expressed desire by US steel producers to prevent new capacity from coming online overseas, said. Blank.

“You have a political priority to resolve overcapacity. When you start to decarbonize the industry, it will become more and more important. You’re going to end up with more overcapacity than you’re going to handle. It’s going to go from important to crucial, ”Blank said in an interview. “Managing overcapacity is something that capitalism has been doing for hundreds of years. “

“You know, companies go bankrupt. This is obviously not what the steel industry is pushing for, ”added Blank.

The Trump administration has applied a 25% tariff on steel imports and a 10% tariff on aluminum imports as a national security rationale. Resolving the steel tariff dispute by the end of 2021 will be a “big order,” said Kevin Dempsey, president and CEO of the American Iron and Steel Institute. The trade group is “skeptical” that a different trade measure that sufficiently addresses overcapacity could be drafted before this deadline.

“Most reporters reported from last week… the EU’s demands as fact,” Dempsey said. “There is going to be a real effort on the part of the US administration to find something with the EU [but] I just want to warn that this is not an easy thing to accomplish.

SNL Image

Carbon color tariffs

Steel producers, fabricators and steelworkers urged the Biden administration to maintain tariffs and argued the measures had succeeded in dealing with alleged global excess production capacity driven by competing markets such as China. . This coalition could benefit from Biden’s blue-collar political brand, which has included relocating jobs overseas and supporting the industry-rich US Midwest.

Steel tariffs in particular have also fulfilled another priority for Biden, which is to deal with carbon dioxide emissions that are warming the planet. Steel production in China is more carbon intensive than US production. Left-wing academics, including a member of Biden’s transition team, have said the administration should replace Trump tariffs with policies that favor domestic steel while grappling with potentially dirtier steel markets.

“Ironically, this has made American steel more competitive and American steel has a smaller CO2 footprint than China,” Blank said.

Some observers are optimistic about the chances of a resolution of the trade negotiations by the end of the year. Washington-based trade lawyer Daniel Cannistra said in an interview that the administration’s approach to trade negotiations with Europe has given the impression that they will likely come to a positive conclusion in 2021. Such a resolution could include replacing tariffs with new measures specifically targeting steel. from China.

“To the extent that they are worried about a future [import] push, that’s when a quota could be put in place. And it worked effectively, ”Cannistra said. “What does Biden say he wants?” He wants an exit strategy. He wants the smoothest and least controversial exit strategy he can come up with. “
Source: Platts

Share.

About Author

Comments are closed.