Unable to reach a deal that could have resulted in additional tariffs on Chinese metals products, the U.S. and EU at their top-level discussion in Washington agreed to take a balanced approach towards Beijing seeking “constructive and stable relations”. In the run-up to the transatlantic summit at the White House on October 20, a steel and aluminum agreement was seen as the cornerstone for U.S. President Joe Biden in his meeting with European Council President Charles Michel and Commission President Ursula von der Leyen. The key European demand was permanent removal of all Trump-era tariffs on EU exports. In exchange, the U.S. wanted the EU to investigate and place tariffs on “the sources of non-market excess capacity” – broadly read as shorthand for China, the world’s largest exporter of both products.
However, amid European concerns over complying with World Trade Organization (WTO) rules and after the U.S. proposed a snapback clause that would allow tariffs to be reimposed, talks finished without a deal. Both sides agreed that China was distorting the global steel market, but they did not agree on how to tackle it in a legal manner. The joint statement pledged to continue discussions, ahead of a year-end deadline that would see the automatic renewal of tariffs frozen in a stopgap deal two years ago.
“The U.S. cannot have it both ways: either we stick to a rules-based international trade order, then those rules must also apply to the U.S.; or the U.S. want to reserve the right to do to allies whatever they please, then they should drop the propaganda line about the rules-based order,” said Reinhard Buetikofer, Spokesman of the Green group in the European Parliament. Nor could the sides see eye to eye on a deal that would have given European exporters access to American green subsidies as part of its Inflation Reduction Act. The U.S. insisted on a clause that would have required rigorous inspection of labor and environmental conditions at mines and mineral processing sites in Europe. It has a similar “rapid inspection system” in other deals, but the EU balked at requirements that would have required full member-state approval. Beijing’s additional export restrictions on graphite were not discussed.
EU Ambassadors ended up signing off on a joint statement in Brussels, with the section on China said to be a “compromise” between the Group of 7 text at Hiroshima in May and the European Council’s conclusions on China from June. In the document released after the meeting in Washington, the U.S. and the EU called for a balanced approach to China, advocating “constructive and stable relations” while expressing concerns over human rights and maritime tensions. The leaders emphasized a need for direct engagement with China, especially on global issues like climate change and pandemic preparedness. They also urged China to help address debt sustainability for vulnerable nations.
On the economic front, the statement declared no intention of “decoupling or turning inwards”, while pushing for a level playing field for Western businesses. The leaders stressed the importance of reducing supply-chain dependencies and protecting sensitive technologies, without stifling trade. Maritime issues were also spotlighted, with the U.S. and EU voicing strong opposition to unilateral changes by force in the East and South China seas. The statement reaffirmed a commitment to the one-China policy, but called for peace and stability across the Taiwan Strait, the South China Morning Post reports.
