US and Europe sign deal to limit 'dirty steel.' China excluded?

President Joe Biden said Sunday a new U.S. and European Union trade agreement would crack down on “dirty steel” that produces carbon emissions that are blamed for climate change and also patch up a trans-Atlantic rift over Trump-era steel and aluminum tariffs.

Biden and European Commission President Ursula von der Leyen said at a joint appearance during the Group of 20 summit that the agreement represented a renewed partnership on economic and environmental matters. The deal resolving the trade dispute would address the excess capacity that can distort the steel market and create a framework for reducing the carbon-intensity of steel and aluminum production that contributes to the warming of the earth.

The U.S. president said “dirty steel” made in China would be restricted from accessing their markets, though all like-minded economies could participate in the agreement.

“By harnessing our diplomatic and economic power, we can reject the false idea that we can’t grow our economy and support American workers while tackling the climate crisis,” Biden said, who has been pushing the U.S. to aggressively address the threat posed by climate change. Biden is also scheduled to attend a major U.N. climate conference this week in Glasgow, Scotland.

Von der Leyen kept smiling at Biden and calling him “dear Joe” as they discussed the deal, an apparent sign that the U.S. president had made progress in repairing relations with Europe after the partnership suffered during the Trump years.

“It will be a major step forward in achieving climate neutrality and it will ensure a level playing field,” she said, adding that the agreement was part of a renewed, forward-looking agenda with the U.S.

The agreement was first announced Saturday in Rome by U.S. national security adviser Jake Sullivan, U.S. Trade Representative Katherine Tai and U.S. Commerce Secretary Gina Raimondo. They said the Article 232 tariffs, as they are known, would not be removed entirely but that some quantity of European steel and aluminum will be allowed to enter the U.S. tariff-free.

In return for Europe dropping its retaliatory tariffs, the U.S. would also ensure “that all steel entering the U.S. via Europe is produced entirely in Europe,” Raimondo said.

The easing of the tariffs is a key step in unwinding one of Donald Trump’s legacies as president as Biden has tried to reset U.S. relations with Europe.

The Trump administration had placed taxes on EU steel and aluminum in 2018, claiming the foreign products made by American allies were a threat to U.S. national security.

Europeans and other allies were outraged by Trump’s use of the Article 232 section of U.S. trade law to justify the tariffs, leading many to impose counter-tariffs on U.S.-made motorcycles, bourbon, peanut butter and jeans and hundreds of other items.

The back-and-forth hurt European producers and raised steel costs for American companies. The tariffs also did not achieve Trump’s stated goal of creating jobs at steel mills. The Bureau of Labor Statistics shows that jobs in the manufacturing of primary metals did rise slightly, to as much as 389,100 in 2019. But mills shed workers during the pandemic, and employment in the sector is roughly half of what it was in 1990.

The European Union took steps in May to improve relations. On some retaliatory tariffs, the EU temporarily suspended planned increases. This meant that American whiskey faced a 25% tax in Europe, instead of a planned 50% tax. The two sides faced a December deadline to avoid the higher tax rate.

The summit’s host, Italian Premier Mario Draghi, in a statement Saturday night expressed “great satisfaction “ for the tariff accord. The decision “confirms the further reinforcement underway of the already close trans-Atlantic relations and the progressive overcoming of the protectionism of the last years,” he said.

The announcement also was welcomed by Chris Swonger, president and CEO of Distilled Spirits Council of the United States, after what he called “three very difficult years of sagging American whiskey exports.”

“Lifting this tariff burden on American whiskeys not only boosts U.S. distillers and farmers, it also supports the recovery of EU restaurants, bars and distilleries hit hard by the pandemic,” Swonger said.