United States, European Union Agree To Address Metals Industrial Overcapacity

On May 17, U.S. Trade Representative (USTR) Katherine Tai, U.S. Secretary of Commerce Gina Raimondo, and European Commission Executive Vice President Valdis Dombrovskis announced that the United States and European Union (EU) will begin discussions to address global steel and aluminum overcapacity.

In a statement, the Office of the USTR said, “The distortions that result from this excess capacity pose a serious threat to the market-oriented EU and U.S. steel and aluminum industries and the workers in those industries.”

The United States and EU pledged to:

• Partner to promote high standards, address shared concerns, and hold accountable countries like China that support trade-distorting policies;
• Resolve concerns about steel and aluminum excess capacity and deploy effective solutions, including appropriate trade measures, to preserve our critical industries;
• Avoid changes that negatively affect bilateral trade; and
• Expeditiously find solutions before the end of the year that will demonstrate how the United States and EU can address excess capacity, ensure the long-term viability of steel and aluminum industries, and strengthen their democratic alliance.

Shortly after the announcement, the European Commission’s Valdis Dombrovskis announced that the EU will temporarily suspend the increase of its rebalancing measures that it had proposed in response to the U.S. Section 232 steel and aluminum tariffs. Those penalties, previously scheduled to go into effect on June 1, 2021, would have increased duties on U.S. products including whiskey, motorcycles, and power boats.

Read more here.

As a reminder, MSCI consistently has argued that global overcapacity and other unfair trading practices, particularly by China, have harmed the U.S. steel and aluminum markets. To address this circumvention, in 2017 MSCI advised federal officials to provide relief for producers up and down the supply chain and to consider the consequences of any new trade policy, including: the economic impact of global overcapacity on the entire domestic metals supply chain; transition times and implementation rules to any new policy; availability of domestic metals to meet U.S. national security needs, as well as general industrial and consumer demand; and trade flows under current free trade agreements, including the United States Mexico Canada Agreement (USMCA). MSCI also asked that Canada and Mexico be excluded from any trade penalties.

Click here to review all of MSCI’s advocacy on Section 232 tariffs. In related news:

• As Steel Times International reported, the American Iron and Steel Institute, United Steelworkers, and other organizations recently wrote to President Biden asking that he keep the metals tariffs in place.
• The U.S. Department of Commerce has published the finalized regulation for a new Aluminum Import Monitoring (AIM) program. The system will go live on June 28.