TARIFFS FROM TRUMP TO BIDEN
US floats new steel, aluminum tariffs based on carbon emissionsReuters | December 7, 2022 |
Pouring molten metal into a metallurgical electric arc furnace. Credit: Adobe Stock
US officials are proposing to levy tariffs on steel and aluminum based on how much carbon the producing country’s industries emit, in a bid to fight climate change and “dirty” metals made in China and elsewhere, two people familiar with the plan said on Wednesday.
The proposal from the US Trade Representative’s office to be negotiated with the European Union would create a “club” of countries seeking to reduce carbon emissions. The plan would set pollution standards in the production of steel and aluminum.
Countries with emissions exceeding the standards would pay higher tariffs when exporting metals to countries with lower emissions, the sources briefed on the plans said. Countries with steel and aluminum plant emissions at or below the standards would pay lower tariffs, the sources said.
The proposal, which is now being shared with industry and EU officials, has grown out of US-EU discussions on “green” steel production over the past year after Washington agreed to eliminate tariffs on EU-produced steel and aluminum in exchange for a quota system.
US steelmakers claim to have the world’s lowest carbon emissions levels, in part because 70% of American steel is made from scrap iron in electric-arc furnaces rather than coal-fired blast furnaces. Steelmakers elsewhere, including in Europe, rely more heavily on coal, and the plan would be advantageous to US producers.
The US-EU talks on low-carbon steel have been aimed in large part at China, which relies on coal for most of its steel output as well as low-grade iron ore that contributes to high carbon emissions.
If implemented, the plan would provide new grounds for excluding Chinese steel from Western markets. Most US tariffs are currently based on anti-dumping laws to combat pricing below production costs, laws aimed at combating unfair government subsidies or laws aimed at safeguarding strategic industries.
“There would be an advantage of being in the club, as it would provide a lower level of carbon tariffs, while countries outside the club would pay higher tariffs,” one of the sources said, adding that the proposal aimed to incentivize investments to reduce emissions.
“This is all very conceptual and there’s a lot of work ahead on this. The details are going to be very important.”
A spokesperson for USTR did not immediately respond to a request for comment on the plan.
By David Lawder; Editing by Cynthia Osterman
Pouring molten metal into a metallurgical electric arc furnace. Credit: Adobe Stock
US officials are proposing to levy tariffs on steel and aluminum based on how much carbon the producing country’s industries emit, in a bid to fight climate change and “dirty” metals made in China and elsewhere, two people familiar with the plan said on Wednesday.
The proposal from the US Trade Representative’s office to be negotiated with the European Union would create a “club” of countries seeking to reduce carbon emissions. The plan would set pollution standards in the production of steel and aluminum.
Countries with emissions exceeding the standards would pay higher tariffs when exporting metals to countries with lower emissions, the sources briefed on the plans said. Countries with steel and aluminum plant emissions at or below the standards would pay lower tariffs, the sources said.
The proposal, which is now being shared with industry and EU officials, has grown out of US-EU discussions on “green” steel production over the past year after Washington agreed to eliminate tariffs on EU-produced steel and aluminum in exchange for a quota system.
US steelmakers claim to have the world’s lowest carbon emissions levels, in part because 70% of American steel is made from scrap iron in electric-arc furnaces rather than coal-fired blast furnaces. Steelmakers elsewhere, including in Europe, rely more heavily on coal, and the plan would be advantageous to US producers.
The US-EU talks on low-carbon steel have been aimed in large part at China, which relies on coal for most of its steel output as well as low-grade iron ore that contributes to high carbon emissions.
If implemented, the plan would provide new grounds for excluding Chinese steel from Western markets. Most US tariffs are currently based on anti-dumping laws to combat pricing below production costs, laws aimed at combating unfair government subsidies or laws aimed at safeguarding strategic industries.
“There would be an advantage of being in the club, as it would provide a lower level of carbon tariffs, while countries outside the club would pay higher tariffs,” one of the sources said, adding that the proposal aimed to incentivize investments to reduce emissions.
“This is all very conceptual and there’s a lot of work ahead on this. The details are going to be very important.”
A spokesperson for USTR did not immediately respond to a request for comment on the plan.
By David Lawder; Editing by Cynthia Osterman
WTO says Trump’s metals tariffs broke rules as US rejects findings
RULES DO NOT APPLY TO U$
Bloomberg News | December 9, 2022 |
Donald Trump (Photo by Michael Vadon, Wikimedia Commons)
The US violated international trade rules when it imposed steel and aluminum tariffs under former President Donald Trump, the World Trade Organization said, a decision Washington rejected and stated won’t lead to a removal of the duties.
The 25% tariffs on global steel imports and 10% import taxes on global aluminum, which Trump imposed on national-security grounds, violated basic WTO rules, a dispute-settlement panel said in a series of rulings published Friday.
The WTO panel said US national-security claims “are not justified” because they were not “taken in time of war or other emergency in international relations.”
The US “strongly rejected the flawed interpretation and conclusions” in the report and will not remove its duties as a result of the rulings, Adam Hodge, a spokesman for the US Trade Representative, said in a statement.
Bloomberg News | December 9, 2022 |
Donald Trump (Photo by Michael Vadon, Wikimedia Commons)
The US violated international trade rules when it imposed steel and aluminum tariffs under former President Donald Trump, the World Trade Organization said, a decision Washington rejected and stated won’t lead to a removal of the duties.
The 25% tariffs on global steel imports and 10% import taxes on global aluminum, which Trump imposed on national-security grounds, violated basic WTO rules, a dispute-settlement panel said in a series of rulings published Friday.
The WTO panel said US national-security claims “are not justified” because they were not “taken in time of war or other emergency in international relations.”
The US “strongly rejected the flawed interpretation and conclusions” in the report and will not remove its duties as a result of the rulings, Adam Hodge, a spokesman for the US Trade Representative, said in a statement.
Policy rebuke
The panel of three trade experts sided with China, Norway, Switzerland, and Turkey and encouraged the US to bring its measures in line with its WTO obligations. It was a rebuke of a policy that fell under the banner of Trump’s “America First” political slogan.
The ruling is unlikely to have much impact on American metal producers because the US can effectively veto it by lodging an appeal at any point in the next 60 days. WTO appeals cannot currently be heard, because the US paralyzed the appellate body in 2019.
“The WTO has proven ineffective at stopping severe and persistent non-market excess capacity from the PRC and others that is an existential threat to market-oriented steel and aluminum sectors and a threat to US national security,” Hodge said, referring to the People’s Republic of China.
“The WTO now suggests that the United States too must stand idly by. The United States will not cede decision-making over its essential security to WTO panels,” he said. “We do not intend to remove the Section 232 duties as a result of these disputes.”
In separate statements, United Steelworkers and the American Iron and Steel Institute both said the WTO overstepped its mandate and called on the Biden administration to maintain the tariffs.
Trump-era tariffs
The Trump-era tariffs date back to 2018 when China, the European Union, Turkey and a half-dozen nations — Canada, India, Mexico, Norway, Russia, and Switzerland — lodged concurrent disputes at the WTO that argued the measures violated their basic WTO rights. Two related disputes launched by Russia and India remain pending.
The EU and a handful of other nations initially retaliated with tariffs against US exports worth billions of dollars but Brussels Canada and Mexico have since withdrawn their tariffs and suspended their WTO disputes following bilateral negotiations with the US.
National-security case
The WTO ruling is noteworthy because it dismissed the US argument that the WTO could not mediate trade measures that are necessary to protect America’s sovereign security interests.
The US said its measures were exempt from WTO oversight due to an exception to the WTO rulebook that allows governments to take “any action which it considers necessary for the protection of its essential security interests.”
The WTO has long sought to avoid litigating matters of national security out of respect for countries’ sovereign decisions, and western trade policy has shifted since the case arose.
The US and European Union are said to be considering new tariffs on Chinese steel and aluminum as part of a broader bid to fight carbon emissions. That’s a change from the Trump administration’s reliance on the WTO’s national-security loophole in favor of another WTO exception for trade restrictions imposed in the name of protecting the environment.
(By Bryce Baschuk)
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