On October 31, 2021, the U.S. and the EU announced steps to, among other things, reestablish historical transatlantic trade flows in steel and aluminum and address shared challenges in the steel and aluminum sector.
Among the concrete steps to be taken are the following:
1. Replacement of Section 232 tariffs with tariff-rate quotas (TRQ). Effective January 1, 2022, the United States will replace the existing tariffs on EU steel and aluminum products under Section 232 with TRQs. Under the TRQ arrangement, historically-based volumes of EU steel and aluminum products would enter the U.S. market without the application of Section 232 tariffs to meet the demands of downstream users. Details of this action announced by the U.S. Department of Commerce can be accessed at: Announcement of Actions on EU Imports Under Section 232. A recap of significant highlights follows:
a. Steel –
i. The aggregate annual TRQ is set at 3.3 MMT under 54 product categories and allocated on an EU member state basis in line with the 2015-2017 historical period. A breakdown of the 54 product categories is set forth in Annex 1 of the DOC notice.
ii. The Section 232 exclusion process for EU steel products will continue but excluded steel products from the EU will not count against the TRQ. The U.S. will continue to apply EU steel product exclusions granted and utilized in U.S. fiscal year 2021 for a period of two calendar years without the need to reapply (i.e., until December 31, 2023). These exclusions will be available for the U.S. exclusion holder and corresponding EU exporter(s).
iii. Specific provisions are provided for the administration, adjustment and review of the above protocol.
i. The aggregate annual TRQ is set at 18 thousand metric tons (TMT) for unwrought aluminum under two product categories, and 366 TMT for semi-finished (wrought) aluminum under 14 product categories. The import volumes will be allocated on an EU member state basis in line with the 2018-19 historical period, with the exception of foil (7607), where 2021 annualized data will be utilized. A breakdown of the product categories is set forth in Annex 2 of the DOC notice.
ii. Importers will be required to provide a Certificate of Analysis for each aluminum product entered into the United States, as required by current U.S. law.
iii. The U.S. will maintain its exclusion process for EU aluminum products.
iv. Additional provisions are provided with respect to the administration of the above protocol.
c. Steel and Aluminum
i. Imports of derivative articles of EU steel and aluminum will not be subject to Section 232 duties.
ii. Non-excluded covered products outside of the TRQ will continue to be subject to a Section 232 duty of 25% (in the case of steel) or 10% (in the case of aluminum).
2. Agreement to cooperate in trade remedies and customs matters and development of additional actions. The parties agreed to expand coordination involving both trade remedies and customs matters, and to meet regularly to consult and develop additional actions.
3. Negotiation of global steel and aluminum arrangements that restore market-oriented conditions and address carbon intensity. The parties agreed to negotiate future arrangements for trade in the steel and aluminum sectors that take account of both global non-market excess capacity as well as the carbon intensity of these industries (with like-minded economies to be invited to participate).
4. Lifting of the EU’s retaliatory tariffs and suspension of disputes before panels of the World Trade Organization. The EU will suspend its retaliatory duties imposed on U.S. goods in response to the 232 action. Such tariffs cover a range of products from Harley Davidson motorcycles to Kentucky bourbon (which were reportedly set to rise to 50% on some products on December 1, 2021).
Should you have any questions regarding developments with respect to Section 232 tariffs or other trade remedies in effect, please contact Arthur Bodek or any other GDLSK attorney.