Posted on 28 Jan 2022
US trade representatives should not seek to replicate the terms of a recent steel tariff rate quota agreement with the EU as they commence discussions with the UK and Japan to negotiate alternative schemes to existing steel tariffs, Steel Manufacturers Association President Philip Bell said Jan. 27.
"We need to realize that the negotiated agreement with the EU should not serve as a template for negotiations with Japan and the UK," Bell said during a press conference at the SMA's winter meeting. "We cannot treat these countries the same way because their situations aren't the same."
Bell said Japan's steel industry has been a significant contributor to global excess capacity with its production continually eclipsing domestic consumption.
"Instead of adjusting its capacity down like we do in the US, Japan just opts to export its excess capacity," he added.
Japan's steel industry also does not have the same sustainability profile as the US and the EU, so a new agreement on steel tariffs must take that into account, Bell said.
"They do not have a large [electric arc furnace] footprint in Japan, and I think they would have trouble anyways meeting the climate objectives and the framework that the US and the EU have put together as a result of their deal."
The US implemented a 25% steel tariff on imports from most countries in 2018. In October 2021, the Biden administration reached a deal that would modify the tariff and allow a certain volume of steel imports from the EU to enter the US duty-free under a quota.
As a part of the new arrangement, the US and the EU also vowed to collaborate on measures that would decarbonize their respective steel industries and combat unfairly traded excess capacity from non-market economies.
Trade officials from the UK and Japan are now looking to work with the US to achieve similar deals.
Bell said negotiations with the UK, like Japan, should also be a cause for concern.
"With the UK, that too is an export-oriented steel market, and a lot of the steel production in the UK is owned by Chinese and Indian companies," he said. "If we are not careful, a poorly negotiated deal could have unintended consequences of giving benefit to steel producers that really aren't committed to free and fair trade and aren't committed to the US's sustainability goals."
US steel imports in 2021 reached 26.98 million mt through November, according to data from the US Census Bureau. Shipments from the UK and Japan represented 0.93% and 3.4% of the import total, respectively, over this period.
Source:Platts
