Top EU Trade Official Says Political Different Sensitivities Make Steel Deal Tricky

The EU's top trade official, Valdis Dombrovskis, said EU and U.S. negotiators haven't given up on their Oct. 31 deadline to address both non-market overcapacity in steel and aluminum and ways to privilege trade in cleaner metals.

"We are making progress. We are not quite there yet, but I think that the gaps that we need to bridge. Obviously, I’m optimistic we will be able to bridge those gaps and be able to arrive at an agreement," he told Charles Lichfield in an interview in Marrakesh, Morocco, on the sidelines of World Bank meetings. Lichfield, the deputy director of geoeconomics for the Atlantic Council, broadcast the interview on Oct. 13.

"We agree on the policy goals that we want to achieve, there’s no contradiction there, but we operate within very different legal systems with different political sensitivities, so we need to find an approach which allows both of us to reach those policy aims in a sense, leaving some flexibility how exactly each side is achieving those," said Dombrovskis, executive vice president of the European Commission.

Lichfield also asked Dombrovskis about the U.S.-EU Trade and Technology Council, and Dombrovskis acknowledged more has been accomplished on the technology side than in trade.

"We should see what we can do better on the trade facilitation side," he said. He said he wants the working group on the trans-Atlantic initiative on sustainable trade to tackle more issues, as well (see 2211220012 and 2305310060). "I believe we are both better off addressing climate change if we work together on this," he said.

Dombrovskis said as the EU moves away from fossil fuels -- for which it was once dangerously dependent on Russia -- its officials want to "make sure we are not ending up in new strategic dependencies. We need diversified and resilient supply chains, and we cannot be reliant on a single supplier for certain critical inputs."

Lichfield noted that Dombrovskis visited China shortly after the EU announced a probe on electric vehicles. Dombrovskis said the EU needed to start the investigation because there is "prima facie evidence of countervailable subsidies," and because the exponential growth of Chinese-branded EV sales in the EU could injure EU industries. He noted that in less than three years, the market share for Chinese-branded EVs (as opposed to made-in-China Teslas) went from less than 1% to 8%.

When Chinese officials asked about the probe, Dombrovskis said he told them it was a fact-finding investigation that follows World Trade Organization rules on antidumping and countervailing duties. He told them it's "important that Chinese companies cooperate with this so we can have a fact-based and proportionate response."

Lichfield also asked Dombrovskis about free trade negotiations and agreements that have been concluded but not yet signed. The EU officials said concerns about deforestation in the Amazon have prevented the EU from signing the Mercosur free trade agreement, so the EU proposed an instrument to address those concerns.

"Recently we have received Mercosur's response -- our teams are currently engaging, trying to find a landing zone," he said.

He noted the EU recently concluded FTAs with New Zealand and Chile, is working on finalizing one with Australia, and is progressing in negotiations with Indonesia and India. He said FTAs are a critical part of the strategy to derisk trade with China -- since derisking is about diversifying sources.