World trade: European economy disappointed by EU-USA summit

Top European business representatives have expressed dissatisfaction with the results of the EU-US summit in Washington.

World trade: European economy disappointed by EU-USA summit

Top European business representatives have expressed dissatisfaction with the results of the EU-US summit in Washington. It is disappointing that no lasting solutions have been found to problems with the trade of important minerals, steel and aluminum, said the President of the BusinessEurope trade association, Fredrik Persson, on Saturday. The President of the German Steel Association, Bernhard Osburg, made a similar statement. "We regret that a great opportunity was missed."

The German auto industry association VDA spoke of a wrong signal in uncertain times. "It is more important than ever to build on common strength - including in economic policy - in order to overcome global challenges. We expect a return to the negotiating table as quickly as possible," criticized VDA President Hildegard Müller.

At the summit on Friday evening, a settlement of serious trade conflicts was not announced as hoped. US President Joe Biden, EU Commission President Ursula von der Leyen and EU Council President Charles Michel only agreed to continue the negotiations.

Just vague wording

With regard to a planned trade facilitation agreement for minerals used in the production of vehicle batteries, the final declaration vaguely states that progress has been made and that it looks forward to moving forward in the coming weeks. The wording on the dispute over US special tariffs on steel and aluminum imports is just as vague. There should be “further progress” on this topic in the next two months.

An agreement in both areas is particularly important for companies in the EU. The planned agreement on trade facilitation for minerals is intended to ensure that EU companies are not excluded from automotive supply chains because of a new US subsidy program.

This danger arises because new tax breaks for clean vehicles in the USA stipulate that the subsidies can only be fully used under certain conditions. One is that the vehicles' batteries were produced with minerals from North America or that they come from a country with which the US has a free trade agreement or a major minerals agreement.

Tariffs on whiskey and jeans?

The other dispute concerns special tariffs on steel and aluminum imports introduced by then US President Donald Trump in 2018. Their impact was severely limited in 2021 by a preliminary deal between Brussels and Washington. However, this also stipulates that a long-term solution should be found by 2024.

If this does not succeed, special tariffs could be due again on all European steel and aluminum exports to the USA in 2024. The EU is then likely to reintroduce its special tariffs on US products such as bourbon whiskey, Harley-Davidson motorcycles and jeans. These were enacted in retaliation for tariffs imposed by Trump.

Inadequate accommodation from the USA was cited in Brussels as the reason for the failure of negotiations at the summit on Friday. For the dispute over special tariffs, the USA only wanted to accept solutions that were not in line with the rules of the World Trade Organization (WTO). In the negotiations on the agreement on important minerals, Washington is said to have insisted, among other things, that initially only a comparatively small number of raw materials be included.

Joint statement by the USA and the EU

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