EU, Britain seek clarity, exemptions on new US tariff regime

Vidya Ram London | Updated on March 09, 2018

European Commissioner Cecilia Malmstrom   -  REUTERS

UK urged to use ‘special relationship’ with US to exempt British steel industry

The British government is under pressure to exercise its supposed influence in Washington DC and gain an exemption for Britain’s steel industry from the tariffs on steel and aluminium, a proclamation on which was signed on Thursday.

The EU also has sought clarity on whether the exemptions accorded so far by the US extended to it too.

“The EU is a close ally of the US and we continue to be of the view that the EU should be excluded from these measures,” said EU Trade Commissioner Cecilia Malmstrom on Thursday evening, following the US announcement.

She is set to meet US Trade Representative Robert Lighthizer in Brussels at the weekend. Last week the European Commission warned that retaliatory action in the form of tariffs on US imports into the Europe, such as on Harley Davidson motor bikes and Levi’s Jeans could follow.

Britain’s International Trade Secretary Liam Fox described US President Donald Trump’s method for dealing with genuine problems facing the global steel industry by imposing the 25 per cent tariff on steel and 10 per cent on aluminium as “absurd.”

“We can deal multilaterally with overproduction…Protectionism and tariffs never really work,” he told the BBC’s Newsnight programme on Thursday, following the announcement. He is set to fly to Washington DC for talks on the matter next week.

British steel accounts for 1 per cent of US steel imports, but 5 per cent of UK steel exports by volume and 15 per cent of it by value, largely because the exports focus on high value products, including to the US military, some of which were currently not produced in the US, Fox said.

So far the US, which granted exemptions to Canada and Mexico, and has signalled a potential exemption for Australia, has made no mention of excluding Europe or Britain from the sweeping new tariff arrangements.

‘Special relationship’

In Britain this signalled to many that the “special relationship” that Britain had been pointing to when it came to US-UK relations post-Brexit, had negligible tangible significance.

“That the United Kingdom was missing from that list [of exemptions] shows how weak and isolated the Prime Minister has become and we risk becoming as a country,” said Stephen Kinnock, the Labour MP for Aberavon, where Tata Steel’s Port Talbot plant is located.

“She was quick to hold Trump’s hand in the White House last year, but she has shown that she hasn’t got what it takes to force his hand on steel tariffs or do what is required to protect and support the British steel industry.”

But UK efforts to push for a national exemption could also fall foul of the EU at a crucial time in negotiations in Brexit negotiations.

“Our assumption is that the EU is a whole body and that the US will respect that…otherwise that is questioning the whole EU as a project, which is quite dramatic,” Malmstrom told a business forum on Thursday, the website Politico reported.

Industry body UK Steel also expressed its concerns and called on the UK and EU to push for national exemptions.

“However, even if the EU is ultimately able to gain an exemption it is still essential that the EU Commission takes swift action to combat the indirect effects of these tariffs. We must ensure our market is not now destabilised by millions of tonnes of steel diverted away from the US to the EU. We trust and hope that the UK Government will support such measures in due course,” said its Director Gareth Stace.

Last week Tata Steel Europe, for which the US represents 10 per cent of its sales, welcomed the EU’s pledge of swift retaliatory action. “The EU must not allow the moderate recovery in our industry over the last year to be destroyed by the EU’s most important ally,” said a Tata Steel Europe spokesperson at the time.

The steel tariff announcement comes at a crucial time for European industry, which has been in the midst of a modest recovery, in demand and pricing, following several years of crisis that saw shutdowns, both temporary and permanent. In Britain concerns about the future of the industry are heightened by uncertainty about the shape of the trade defence regime the British government will put in place in the wake of Brexit.

Published on March 09, 2018

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