EU and US miss unique opportunity to resolve trade dispute

The outcome of the EU Trade Council meeting shows that the EU and US are still far from reaching an agreement on climate protection, combating trade imbalances in global industry and resolving the EU-US trade dispute by the end of 2023, as originally agreed by Commission President Ursula von der Leyen and US President Joe Biden in 2021. The absence of a Global Agreement on Sustainable Steel and Aluminum is a missed opportunity to both ensure fair trade and promote climate protection just ahead of COP28, warns the European Steel Association.

“With COP28 starting in a few days, an agreement between the EU and the US on an effective global agreement to address the twin challenges of overcapacity and carbon intensity in the steel industry could provide the right framework for further efforts to decarbonise the industry globally by 2050. The global agreement is a unique opportunity to protect the climate and resolve the trade dispute between the EU and the US. Without a carbon-neutral industry globally, it will be impossible to achieve the 1.5 or 2 degrees Celsius target in 2050. views across the Atlantic on the US approach to addressing Section 232, although we share the same values. On the contrary, an ambitious Global Agreement will naturally include a long-term and lasting solution to the unilateral distortionary US tariffs on EU steel under Section 232,” said Axel Eggert, Director General of the European Steel Association (EUROFER).

According to the OECD, current non-market excess capacity in the global steel industry has reached 600 million tonnes, with a further 150 million coming on stream over the next three years. In addition to China, new sources of excess capacity are growing in ASEAN, South Asia, and the Middle East and North Africa.

“This new conventional, carbon-intensive capacity will lock in CO2 emissions for decades to come, resulting in more CO2 emissions than the entire EU steel industry combined, and will undo all EU efforts to reduce steel industry emissions by 2050 in just three years. The absence of a Global Agreement on Sustainable Steel risks jeopardizing the European steel industry's decarbonization efforts and shows the limits of global climate and EU trade diplomacy,” emphasized Mr Eggert.

If green steel and other clean technologies are to be “made in Europe”, as Commission President von del Leyen has said, the Global Agreement must coordinate market access conditions, using the policy space available under WTO rules to effectively address sustainable development issues . These problems are not unique to the steel sector, but are increasingly affecting other industries. Agreeing on the initial outlines of a Global Agreement would be an important milestone that could serve as a basis for the further development of a comprehensive agreement. Intensive work is needed on new tools and approaches to address global excess capacity and emissions. At the same time, the EU's steel guarantees must be maintained and traditional EU trade protection instruments must be applied consistently.

“We call on the EU and US to find a common path forward, conclude negotiations positively and avoid delaying global challenges,” concluded Mr Eggert.