Tai Pushing for Steel Deal to Arrive on Schedule

U.S. Trade Representative Katherine Tai, speaking by video link at an Atlantic Council/Atlantik-Brücke program in Berlin Sept. 22, said she remains "very hopeful that we will have something to show the rest of the world in the next six-week period" as EU and U.S. negotiators continue to try to harmonize both trade defenses and approaches to privileging trade in green steel and aluminum.

The Global Arrangement on Steel, as it's known in shorthand, aims to both curtail access to the EU and the U.S. markets for metals produced through non-market overcapacity and to put up barriers to steel and aluminum that is dirtier than that produced in the U.S. or EU.

She said, "Our vision is, once the U.S. and EU can agree, then we bring in other like-minded parties."

When moderator Stephanie Flanders, senior executive editor for economics at Bloomberg News, asked Tai how she responded to "a sort of disquiet in Europe with a U.S. policy that seems to undermine the idea of a rules-based order," Tai said she appreciated the chance to get out the American side of the story.

"I really bristle at this narrative that the U.S. would put forward a proposal that is WTO-inconsistent," she said, and said while many talk about the WTO, "not a lot of people have been to the WTO, participated at the WTO or represented their governments at the WTO." Tai, earlier in her career, was a career staffer at USTR who litigated cases in Geneva.

"The fact of the matter is, there is no WTO rabbi who sits and pronounces whether or not a measure that is being advanced by a WTO member is kosher or not," she said.

She said that even though the EU is very confident that its carbon border adjustment mechanism is WTO-legal, there are countries at the WTO preparing to challenge it.

She said the proposals the U.S. has made to the EU for the global arrangement on steel "are ones that we also feel we have designed to withstand WTO scrutiny."

However, she said, that doesn't mean the U.S. is insisting that its approach is the solution.

"In our negotiations, it became very clear that our levels of tolerance, or our comfort level, with different types of defenses are different on a Washington and Brussels basis," she said. "We have adapted in the negotiations, as you must in negotiations, to try to come toward Europe in terms of its WTO argumentation and defense comfort. That is something that we do not get credit for. We don’t just sit at the table, and pound the table, and say: You must do this."

Tai concluded, "We do intend to land this negotiation on a Washington-Brussels basis, and soon."

Flanders asked Tai when the review of Section 301 tariffs would be complete, and Tai acknowledged that people are ribbing her, asking if the four-year review means the review itself will take four years.

Tai had told members of Congress earlier in the year that the review would be done in the fall; an extension of exclusions until the end of December suggested that timeline was slipping, and in Berlin, she made that explicit.

"We are making sure to take our time to be very deliberate and to be extremely thoughtful on how we can rebalance the trading relationship," she said, and trying to defend U.S. economic interests effectively when trading with the second-largest economy that is based on very different principles is not easy.

"Our goal is to wrap this up, hopefully, by the end of this year," she said.

Flanders asked Tai to talk about what she thought when she heard the EU is starting a trade remedy investigation on electric vehicles manufactured in China, and asked her about what the fallout might be if tariffs result. She noted that Germany, which is quite reliant on trade with China, is anxious.

Tai said it seems to her that the trajectory of EV manufacturing in China is similar to other industries, where the government invested heavily to expand production, and low-priced products exported to the EU, the U.S. and other countries nearly wiped out their own industries. She gave solar panels as an example.

Tai said the ideal of free trade is still the right one, but that countries have to "defend our interests and defend the space to have fair and free trade. The countervailing duty investigation and potentially countervailing duty actions are allowed expressly under WTO rules." If China were to retaliate without waiting for a dispute panel, that retaliation would be illegal.

"There may be economic harm inflicted … but not the way it’s supposed to work," she said. She added that the fact that folks are concerned about China's economic response shows "how far our reality has deviated from the way that we tried to design the [global trading] system."