Former High-Level USTR Appointee: Global Arrangement on Steel Could Conclude in Late 2024
The gaps in trade policies between the U.S. and Europe, despite their agreement on the problems, and the difficulty of improving trade relations with major developing countries were grappled with this week by a panel of experts from the U.S. and Europe.
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The American German Institute and a German think tank, Konrad Adenauer Stiftung, sponsored the webinar June 20. Heather Hurlburt, an associate fellow at Chatham House, and, until recently, the U.S. trade representative's chief of staff, said that although reaching agreement between the EU and the U.S. in trade matters is "devilishly difficult," and more difficult than USTR staffers thought it would be, she's "very optimistic" that the EU and the U.S. can resolve their differences to reach a Global Arrangement on Sustainable Steel and Aluminum. That agreement is designed to favor trade in metals produced at lower carbon intensities and also erect barriers to importing steel and aluminum made in countries where there is non-market overcapacity.
Fellow panelist Michael Kilpper, deputy head of division for North America at the German Ministry for Economic Affairs and Climate Action, had said Germany was hopeful GASSA could come together after the presidential election in November.
Hurlburt said: "We have both the political will and the ingenuity to get to a steel agreement next year. What’s needed is the creativity and the political space when both sides feel they have the ability to explore to do something different than what we’ve done in the past." She said the political will is there because there's high support from both industry and labor unions in the U.S. and Europe to get it done -- and she said that other countries are very enthusiastic about joining the GASSA, once it's done.
She acknowledged that the U.S. has "political constraints" that prevent it from negotiating tariff liberalizing free trade agreements, and, since developing countries want preferential access for their exports, to spur development, that's a mismatch in goals. "If we are unable to offer the significant market access the global south wants," particularly in the industries they want to grow in, she said, "we need to not promise things we can’t deliver."
Luisa Santos, deputy director-general of BusinessEurope, said companies in Europe don't want to head down the protectionist path that the U.S. is going down. "And we still want the EU to do trade agreements," she said. "We did manage to conclude an agreement in Kenya."
Santos said she recognizes that the prevailing trends are heading toward protectionism. She said that even when the EU doesn't think it's being protectionist -- as with its new deforestation regulation -- it needs to have more dialogue with the countries that will be harmed by the regulation, and offer "much more capacity building" for those who will need to document where their commodities were grown.
Claudia Schmucker, head of the Center for Geopolitics, Geoeconomics, and Technology at the German Council on Foreign Relations, agreed capacity building is needed for deforestation and for the carbon border adjustment mechanism, which concerns developing country exporters.
Schmucker said, although the panel was talking about how to expand trade with developing countries, everything's headed in the direction of trade fragmentation, regionalizing supply chains, and, sometimes friendshoring, to mitigate the risk of interdependence on countries that might weaponize those economic ties.
The EU has a major free trade agreement it concluded with Mercosur countries in South America, including Brazil, but it hasn't been ratified.
Santos said the hurdle to ratification that's talked about in Brussels -- better environmental standards -- is not the real reason it's stalled.
"We are basically not able to approve the agreement because a sector [is threatened by the] competitiveness of Mercosur exporters of beef. And if we are not able to resolve it, we will not be able to conclude."
Schmucker said the EU needs to make Mercosur a reality, because it would show the EU is still able to negotiate market access, and because the EU needs materials from South America for the green transition. She said her organization hopes that the European cattle industry won't be "the one that ruins the entire agreement."