Think Tank Researchers Think No Green Steel Deal Will Emerge This Month
An academic and a think tank scholar agreed that, despite the upcoming visit between the EU president and the U.S. president, they don't expect the global arrangement on steel and aluminum negotiations to conclude by their Oct. 31 deadline.
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However, Emily Benson, the director of the Center for Strategic and International Studies' project on trade and technology, doesn't expect Section 232 tariffs to return on EU steel exports and EU retaliatory tariffs to return on U.S. exports. (During the negotiations, EU metal is subject to tariff rate quotas).
She said it's unlikely that would happen. "Both parties have a very vested interest in avoiding the worst-case scenario," she said last week on a CSIS webinar on developments in climate and trade policy.
"I haven’t talked to anyone that anyone is 100% confident" that a deal on confronting steel overcapacity and preferencing trade in greener metals will be announced by Nov. 1, she said.
Sagatom Saha, an adjunct research scholar at Columbia University's Center on Global Energy Policy, said he thinks the two sides will come up with a way to address overcapacity, but say nothing about how tariffs will be different for green steel.
Saha said it's amazing that "measurement of embedded carbon is going to become a geopolitical issue."
He said he's assuming the two sides agree to table the issue.
Benson said that's risky, because it's possible Donald Trump will return to office, or the EU will turn rightward. But she said even if Biden and EU President Ursula von der Leyen were re-elected, this issue might "fall off the radar" if not solved by this deadline.
"Dates and deadlines are really helpful," she said. She said that in trade negotiations, "the last two weeks is where all the work happens."
Webinar moderator Joseph Majkut, director of CSIS's Energy Security and Climate Change Program, said he doesn't understand what the U.S. is asking for in the global arrangement on steel.
Benson said the U.S. is offering to reduce tariffs on EU products in exchange for relief from the Carbon Border Adjustment Mechanism. The CBAM will not start collecting duties for several years, and the U.S. does not export much that will be subject to its tariffs, but it is expected to expand to areas where the U.S. does export to Europe, such as chemicals.
Benson said that is statutorily impossible, as the CBAM is tied only to other countries' price on carbon, not the carbon intensity of their exports.
Sagatom said that's the irony -- the U.S. is asking for something that is against the CBAM law, and the EU is asking for something that is against the Inflation Reduction Act law. The EU would like electric vehicles manufactured in Germany to be eligible for the same consumer tax credits as those in the U.S.
The Treasury Department did find a way to do that for leased vehicles, but not for sold vehicles.
Sagatom said that at the very least, the world needs an interoperative system on applying carbon tariffs.
"The longer we go down this road the more politically fraught it might get," he said.
Benson said a good outcome from the global arrangement talks would be reaching "a mutual definition of what’s a green commodity." For instance, she said, establish the amount of green electricity you have to procure to call it green aluminum. If these standards were clear, it would open the doors for Norway, Japan and the United Kingdom to join a "climate club" of trading, she said.