Aluminum Association urges US, EU to finalize 'dormant' metals trade deal

The US-based Aluminum Association renewed its lobbying June 28 for the US and EU to continue work on a "dormant" metals trade agreement proposal that would see the two governments cooperate on the sustainable production and trade of steel and aluminum.

A similar call to action was recently issued by European metals industry groups.

"The Aluminum Association supports ongoing efforts to finalize the global arrangement with an emphasis on addressing carbon emissions and also non-market behavior in the metals' industry," the association said in its weekly newsletter June 28.

The proposed deal, known as the Global Arrangement on Sustainable Steel and Aluminum, or GASSA, has been under negotiation between the US and EU since 2021, when the two sides reached a truce in a tariff dispute. It seeks to promote low-carbon metals production and trade while also addressing global non-market excess metal production capacity from countries such as China. This could involve the two governments implementing respective and complementary import tariffs for metals shipments based on their carbon footprints.

At the time when GASSA was first introduced, the US had scaled back its Section 232 tariffs on steel and aluminum imports from the EU with a quota system that allowed certain volumes to be shipped into the US duty-free. The 25% duty on steel and 10% duty on aluminum have been in effect on most other countries since 2018.

In response, the EU removed its retaliatory import tariffs on US products such as bourbon and motorcycles.

The tariff truce was to last until a GASSA deal was officially reached with a target date by end of 2023. However, a GASSA deal was not reached by the 2023 deadline, and both governments subsequently agreed to extend negotiations and tariff exemptions until 2025(opens in a new tab), the year following the 2024 US presidential elections.

Though the US elections may stall meaningful progress on the GASSA negotiations, the proposed agreement continues to be mentioned during meetings between US Trade Representative Katherine Tai and foreign trade counterparts. GASSA was recently referenced in the USTR's June 3 statement that outlined discussion points addressed in a meeting between Tai and Spain's Minister of Economy and Trade Carlos Cuerpo Caballero.

Tai also discussed global non-market excess capacity in the steel and aluminum sectors with Bahrain's Minister of Industry and Commerce Abdulla bin Adel Fakhro during a June 24 meeting held in connection with the US-Bahrain Free Trade Committee, according to a separate statement.

Similar calls from Europe

The Aluminum Association's comments expand upon a joint statement issued earlier in June by European Aluminium and the European Steel Association, or Eurofer, that emphasized the need for continued GASSA negotiations and described non-market excess capacity as an "existential threat."

"Since the start of the negotiations in October 2021, non-market excess capacity has persisted, and even increased," the groups said. "Beyond the massive market distortions in China, which represent a concern of utmost importance for both the aluminum and steel industries, new dynamics are creating additional non-market excess capacity in third countries."

The European trade associations said excess Chinese production could be flowing into other regions such as the Middle East, Africa and Southeast Asia. In turn, "new, independent excess capacities are arising" in these regions, depressing prices and undermining the global steel and aluminum sectors.

"As the gravity of this situation is increasing day by day, timing is crucial to effectively address non-market excess capacity as the first priority of [GASSA] by developing new trade tools, such as a common [tariff] regime, and establishing an appropriate import monitoring system including downstream value chains to avoid circumvention," they added.

One issue that has stalled GASSA negotiations is the divergent approaches taken in the US and EU when calculating the carbon emission profile of produced steel and aluminum. The US government is currently conducting a survey among domestic metals producers to better understand the implications of varying production processes and associated emissions.

"Despite the divergent approaches adopted in the two regions, establishing common ground and levelling the playing field regarding production costs is pivotal to alleviating pressure on both sectors while reducing CO2 emissions from steel and aluminum at a global scale," EA and Eurofer added.