EU seeking to resolve trade irritants with US at summit

EU seeking to resolve trade irritants with US at summit

By Philip Blenkinsop

BRUSSELS (Reuters) – Top EU officials have headed to Washington in the hope of sealing agreements with the United States to end Trump-era tariffs and ease the impact of U.S. green subsidies, though talks appear set to go down to the wire.

U.S. President Joe Biden will host European Commission chief Ursula von der Leyen and European Council President Charles Michel on Friday to show unity towards Ukraine, but with trade irritants souring ties.

The United States has suspended import tariffs on EU steel and aluminium imposed by former U.S. President Donald Trump in 2018, but on condition that both sides agree by the end of this month on measures to address overcapacity in non-market economies, such as China, and promote greener steel.

The transatlantic partners are struggling, with Washington keen that the EU apply the metal tariffs to imports from China and Brussels replying it could not do so before a year-long investigation to comply with World Trade Organization rules.

Bernd Lange, chair of the trade committee of the European Parliament, which may need to approve an agreement, said potential measures to tackle excess capacity should be “based on objective investigations and not on political considerations”.

It is still to be seen if this will end the U.S. tariffs threat or just see an extended suspension.

On sustainable steel, the two sides are trying to reconcile the EU’s carbon border tariff system with a U.S. approach so far to promote a greening of its economy through subsidies.

The United States has proposed forming a largely tariff-free green steel club that would also be open to other allies but with rules on state-owned enterprises that would make it impossible for China to join.

One EU official said the discussions were “fluid”. Another described them as “hard”.

The European Union is also hoping Friday’s summit will result in a deal to lessen the hit from the U.S. Inflation Reduction Act, which offers consumers tax breaks to buy electric vehicles (EVs) assembled in North America.

The two sides are negotiating an agreement that would allow EVs with EU-sourced critical materials – cobalt, graphite, lithium, manganese and nickel – to qualify for partial tax breaks. Given the EU needs such materials itself for its green transition, the positive impact for the bloc may be limited.

(Reporting by Philip Blenkinsop; Editing by Alexandra Hudson)