Trade Cases

USTR Tai: Deal with EU a “Strong Foundation,” But Much Work Remains 

Written by Tim Triplett

Speaking at a steel industry gathering just two days after unveiling the historic trade deal she helped negotiate with the European Union, U.S. Trade Representative Katherine Tai described the progress made in steel trade and the challenges that still lie ahead in curbing global steel overcapacity. Following are her remarks today at the General Meeting of the American Iron and Steel Institute and the Steel Manufacturers Association in Washington:

“Last month, I participated in a Global Forum on Steel Excess Capacity Ministerial meeting, along with other trade ministers and leaders from various G20 and OECD countries. I noted that many of the challenges facing the sector have been exacerbated by the pandemic. But there are also structural imbalances – specifically excess capacity issues – that existed before the pandemic – and will persist if left unaddressed. 

“Last year, the Global Forum on Steel Excess Capacity estimated the gap between global steelmaking capacity and global demand at nearly 600 million tons. That gap will continue to grow, as approximately 114 million tons of new capacity are under construction or planned over the next several years.

“China is the biggest driver of this global overcapacity, and it has poured billions of dollars into its steel industry – hurting the interests of workers in the U.S. and around the world. Its production capacity ballooned over the last two decades, and today, China produces over one billion metric tons annually – and accounts for nearly 60 percent of global steel production. 

“We all know this is not sustainable, and last month I laid out the administration’s vision for realigning our trade priorities with China to defend the interests of American workers and businesses and strengthen our middle class.

“We will directly engage with China on its industrial policies, but we will also take all steps necessary to protect ourselves against the waves of damage inflicted over the years through unfair competition. 

“We need to be prepared to deploy all tools and explore the development of new ones, including through collaboration with other economies and countries. 

“That is why in May, Commerce Secretary Raimondo, European Commission Executive Vice President Dombrovskis, and I announced the start of discussions to address global steel and aluminum excess capacity.

“And over the weekend, the United States and European Union announced that we had reached an agreement to allow the resumption of duty-free European steel and aluminum into the United States. This agreement – combined with our work this summer to resolve the long-standing large civil aircraft dispute with the EU – shows our commitment to strengthening this transatlantic partnership. It will ensure the long-term viability of the American and European steel and aluminum industries and strengthen the transatlantic relationship between the U.S. and EU.

“The agreement also addresses global overcapacity from China and toughens enforcement mechanisms to prevent leakage of Chinese steel and aluminum into the U.S. market.

“Going forward, the U.S. and the EU will analyze the volume of steel and aluminum imports from the EU each year, share information and best practices on trade remedies, and ensure that products from nonmarket economies do not benefit from the arrangement.

“Lastly, this deal is a significant win on one of President Biden’s top priorities – fighting climate change. President Biden has been clear that we must find new ways to tackle the growing crisis and create jobs.

“As part of the resolution, the U.S. and the EU have agreed to negotiate the first ever carbon-based arrangement on steel and aluminum trade and creates greater incentives for reducing carbon intensity across modes of production of steel and aluminum produced by American and European companies.

“I had an interesting conversation with a member of Congress the other day when talking about this agreement.  This Member said: “It seems like no one is worse off as a result of this arrangement and a whole lot of people are better off.” And I think that is an excellent way of looking at what we accomplished and how it aligns with the values of this administration.

“I’ve had many conversations with Executive Vice President Valdis Dombrovskis over the last several months. I have found him to be a thoughtful and honest partner, and I believe that between this agreement and the aircraft resolution, we’ve established a strong foundation that will allow us to work together on other global issues of shared importance in the future.

“I am grateful to both AISI and SMA for their supportive public statements on this deal over this weekend.  But as you know, enforcement is key and I am committed to working with all of you in the coming months as we implement this agreement in a way that helps our domestic sectors.

“Finally, I want to briefly highlight another top priority for the Biden-Harris Administration: passing the Bipartisan Infrastructure Deal. President Biden has said he wants the future to be made in America by all of America’s workers. That is why the Bipartisan Infrastructure Deal features strong Buy America provisions to ensure that all projects will be built with American iron and steel. 

“There are millions of miles of highways and hundreds of thousands of bridges across the United States in poor condition that could benefit from these repairs. Making these fixes with domestic construction material will help revitalize the sector and position it for success. And investing in our infrastructure helps us maintain our competitive edge in the global economy.  We know that other countries are making these investments and we need to keep up.

“I am optimistic that Congress will pass this bill – and the rest of our administration’s Build Back Better agenda – and send it to the president’s desk soon.”

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