EU, Japan seek exemptions from metal import tariffs

Sheetal Sukhija - Sunday 11th March, 2018

WASHINGTON, U.S. - After U.S. President Donald Trump signed an order imposing import tariffs of 25 percent on steel and 10 percent on aluminum, which is set to come into effect in 15 days - American allies are getting agitated and have now demanded exemptions.

On Thursday, stunning American allies and some within his own party, Trump signed the order, imposing sweeping new tariffs on imported steel and aluminum, but with a more flexible plan.

However, Trump agreed to exempt Canada and Mexico, America’s closest allies from the tariffs.

He dangled the possibility of excluding other allies sometime later, singling out Australia and citing the trade surplus that the U.S. maintains with Australia, which imports more from America than it exports to the country.

The order signed by Trump is set to hit South Korea, China, Japan, Germany, Turkey and Brazil.

On Saturday, after meetings with U.S. trade envoy Robert Lighthizer in Brussels, the European Union and Japan, which is America’s top economic and military ally in Asia, urged the U.S. to grant them exemptions too.

EU and Japanese trade officials said negotiations would need to continue so that the dispute doesn’t spiral into a trade war.

Post the initial level talks, that will continue into the next week, Europe’s trade chief Cecilia Malmstrom said initial talks with Lighthizer were “frank.”

Malmstrom, however, pointed out that they had not brought clarity on the exemption procedure so far.

After bilateral and trilateral meetings, she tweeted, “As a close security and trade partner of the U.S., the EU must be excluded from the announced measures.”

Meanwhile, the Japanese Trade Minister Hiroshige Seko said he had expressed Japanese concern to Lighthizer and had warned of major market disruption.

He told reporters, “We call for calm-headed behavior.”

According to Seko, Lighthizer had not brought up the U.S. trade deficit with Japan but “only explained the schedule and the procedures.”

However, the three parties have agreed on joint steps to tackle global steel overcapacity and distorted market practices.

They have agreed to work on stronger rules on subsidies and an enhanced information sharing on market abuse. 

He said any Japanese response would be in line with World Trade Organization rules.

Adding, “If there is a violation, then we will seek consultations. We will look at the impact on Japanese businesses and make a final decision.”

Both the EU and Japan have rejected Trump’s justification for imposing the tariffs and have reiterated that their exports were not a threat to U.S. national security.

The meeting comes a day after Jyrki Katainen, who is the Vice President of the European Commission, which coordinates trade policy for the world’s biggest trading bloc - the 28-nation EU, warned Washington not to expect any concessions to win an exemption. 

He said, “This is not a trade negotiation. We are talking about unilateral action against international rules.”

Adding that the European Commission is ready to impose safeguards, tariffs or quotas to protect its own steel and aluminum industries from products diverted to Europe because of the U.S. measures.

Meanwhile, the EU is also reportedly maintaining a threat of counter-measures that would target U.S. imports ranging from maize to motorcycles.

It has indicated that it may publish its list next week to allow industry and other interested parties to give their input. 

The European steel and aluminum associations have also warned that the U.S. tariffs could cost thousands of jobs.

Meanwhile, the German chancellor Angela Merkel has indicated that she would leave negotiations over an exemption with Washington to the EU.

However, she said that Germany viewed the tariffs “with concern.”

Merkel said she backed an EU plan for strong counter measures but said that the “preference should lie with talks.”

In his statement after signing the order imposing the tariffs, Trump said on Thursday, “The actions we are taking today are not a matter of choice, they are a matter of necessity for our security. We’ve been treated so badly over the years by other countries.”

He added that the measures were taken to address “a growing crisis in our steel and aluminum production that threatens the security of our nation and also is bad for us economically and with jobs.”