The EU’s Trade Commissioner Cecilia Malmström warned at a press conference on Friday (1 June) that “the US is playing a dangerous game” and announced measures the EU will launch in “a matter of weeks” against US trade restrictions on steel and aluminium. But she admitted it was a “very difficult, dangerous situation”.
“As of 6 am this morning, European steel and aluminium exports to the US are subject to tariffs of 10% and 25%. The exemption is over,” Malmström announced. The US measures affect EU exports worth €6.4 billion in 2017, according to Commission figures.
The EU officially launched a dispute settlement case at the WTO, as it considers that US measures “clearly go against agreed international rules”. The Commission will also trigger “within weeks” a set of balancing measures that Brussels already notified to the WTO in May, worth €2.8 billion.
The actions target a list of US products – including orange juice, peanut butter or whiskey – on which the EU will apply extra import duties. The measure aims to compensate “in an equivalent manner” for the impact of the US extra tariffs on steel and aluminium.
Another set of measures applying to a second list of products is ready to be put in place. This could happen either after the settlement procedure, if it confirms that US measure goes against WTO rules, or in any case, three years after the duties are in place.
The list, Commission sources underlined, has been established after a consultation with stakeholders to ensure that it wouldn’t have a negative impact on the European economy. Moreover, the Commission will be in contact with member states in the next few days.
A few weeks ago, Brussels launched an investigation on safeguard measures on imports of a number of steel products into the EU, which may result in the imposition of quotas.
Although the investigation could last up to nine months, Commission sources stressed that “if the evidence shows that there is a basis to take provisional safeguards, they will be put in place.”
The EU, together with other countries such as Mexico or Canada, are in contact to coordinate actions, although the content might be different. Malmström encouraged all countries affected by the tariffs to take their cases to the WTO.
The Trump administration has justified the measures on national security grounds. The Commissioner said they were “pure protectionism”. Thus, Malmström warned, this decision further weakens transatlantic relations. On overcapacity in the steel and aluminium sectors, Europe is not the problem, she stressed.
The EU remained open to working on a positive trade agenda “as friends and allies”, including a voluntary regulatory cooperation, working towards a WTO reform or a deal on tariffs on industrial goods. But the US was not ready to negotiate, the Commissioner said.
Malmström has accused US counterparts of forcing the EU “to make concessions” without even clarifying if the exemption on tariffs in place until now will be permanently implemented for European products. “This is not the way the EU negotiates,” she stressed.
The Commissioner told reporters that actions against US trade measures are a “very proportional response” and insisted that Europe does not intend to escalate the situation but to respond to the US decision, seen as illegal by the EU. “We are not in a trade war but we are in a very difficult, dangerous situation,” Malmström admitted.
“We are taking rebalancing measures because not taking them would send the signal that the EU does not react when an important partner violates WTO rules and imposes tariffs on our industry that we consider illegal and motivated on the wrong reasons,” Malmström underlined.
The only way to put an end to this situation is for the US to withdraw the tariffs, she said. “Our offer was that you take this gun away from us, we sit together as friends and equals and we discuss and this could eventually have lead to a negotiation,” the Commissioner said,.
“We never got this and now, for the moment, the door is closed.”
Furthermore, the EU remains vigilant on the investigation targeting car imports. Malmström admitted Brussels was following the developments “with a lot of anxiety” and remains ready to cooperate with US counterparts.
Concerning the internal tensions among member states on how to respond to US measures, Malmström quoted German Foreign Minister Heiko Maas: “When they say America first, we say Europe united.”
Brussels open a case against China
Malmström also announced on Friday that the EU will also bring China to the WTO as Chinese legislation undermines intellectual propriety rights of European companies.
European companies coming to China are forced to grant ownership or usage rights of their technology to domestic Chinese entities. “We cannot let any country force our companies to simply give away this knowledge when they enter a border,” she said.
“If the world players don’t stick to the rulebook, the system might collapse and that is why we are challenging today both China and the US at the WTO,” the Commissioner said. “We stand for a multilateral rule-based trade,” she stressed.