Europe’s #response to #U.S. import #tariffs

The European Commission called for industry views on Friday on a list of U.S. products it will subject to import tariffs, the first step towards measures to counter planned U.S. taxes on European steel and aluminium.

The Commission, which oversees trade policy for the 28-nation EU, has said it would respond in three ways.

WTO CHALLENGE

The European Commission would launch a legal challenge at the World Trade Organization and has been discussing doing so jointly with other trading partners.

However, it could take about three years for a ruling and there is no guarantee of victory. Trump has invoked national security as the justification for tariffs, which may make it impossible for them to be challenged at the WTO.

The case may also face further delay because of massive congestion in the WTO’s dispute settlement system, largely caused by Washington blocking appointments to the WTO’s appeals body. It will be down to just three members in September and just one by December 2019. A case needs three members to adjudicate.

SAFEGUARDS

The European Union would consider setting its own duties or quotas on imports of steel and aluminium to prevent metal shipments that might otherwise have gone to the United States being diverted to Europe.

The EU would need to show the measures were necessary because of a sharp spike in imports. They could be in place within about two to three months. Safeguards for steel could come in sooner because the EU has been monitoring steel imports since 2016.

The tariffs or quotas would have to apply to all countries, meaning leading exporters China, India, Russia, South Korea and Turkey would be hit. U.S. steel makes up less than 1 percent of EU steel imports.

COUNTER-MEASURES

The European Commission say the U.S. tariffs are not to protect national security, the official U.S. justification, but are safeguard measures, which should only apply if imports have risen.

For certain steel grades, the EU says, they have not and that EU exports of these grades to the United States amount to 2.8 billion euros ($3.4 billion). Under World Trade Organization rules, it says, it can apply similar 25 percent duties on imports from the United States to “rebalance” the situation.

The European Commission has drawn up a list of products, divided into three categories – steel, agricultural products, other industrial and consumer products.

They include sweetcorn, orange juice, cranberries, bourbon, motorcyles, make-up, clothing and stainless steel sinks as well as various steel bars and tubes used in construction and industry.

A second list has further products, including handkerchiefs and hosepipes, tableware, dishwashers and certain trucks.

These could incur duties if the WTO declared the U.S. tariffs illegal or after a period of three years.

The first and second lists total 6.4 billion euros.

The Commission has given industry until March 26 to provide input and will then draw up a proposal for approval by the 28 EU countries.

If it did go ahead with the first set of counter-measures, these would have to come into force within 90 days of the U.S. tariffs being imposed – which Trump has set for March 23.

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