EU suggests use of quotas to persuade US to exempt European steel, aluminium from Section 232 tariffs [CORRECTED]
The European Union is suggesting the US impose tariff-rate quotas on steel and aluminium imports in a bid to reach an agreement with the US on exempting the EU from its Section 232 measures, sources told Fastmarkets on Tuesday September 7.
The US and EU are widely expected to reach an agreement by November 1 on an exemption from Section 232 for European steel and aluminium.
The then-president Donald Trump announced the imposition of tariffs on steel and aluminium imports on national security grounds in March 2018.
The tariff-rate quota is not the only considerations and sources said the EU or the US might offer other solutions during negotiations.
European sources also said that information available in the market regarding a tariff-rate quota against the EU products would need further crucial information before a proper evaluation of the potential impact on the market could be made.
Notably, which period would be taken into consideration when calculating the quotas and what duties would be applied if the assigned quotas were exceeded.
Sources said the years before the Section 232 tariffs were introduced should be used to set a quota for the EU as they reflect true situation in the free market.
Earlier this quarter, market sources said that an exemption for the EU against Section 232 could boost flat-steel export sales to the US and, consequently, reduce the availability of supplies in Europe, thereby triggering price rises in the domestic market.
Apart from the safeguard measures that the EU introduced to tackle the issue or steel being redirected from the US to the EU after the introduction of Section 232, the European Commission (EC) opened safeguard case against steel imports in March 2018 and, in June this year, the EU officially confirmed the continuation those measures until June 30, 2024.
But because US steel exports to the EU have been negligible, the EU also adopted rebalancing measures on a list of goods traditionally exported from the US in reaction to Section 232 tariffs on steel and aluminium.
Market participants said the European authorities had decided to soften the rebalancing measures as part of the EU-US negotiations.
(Fastmarkets originally suggested the EU would apply tariffs to exports to the US, when the EU is, in fact, suggesting the US imposes tariff-rate quotas on imports of EU goods).