EU and USA urged to find common pathway

The USA and the European Union are far from reaching an agreement to advance climate protection, says EUROFER, following yesterday’s EU Trade Council meeting where it became evident that the trade bloc and North America were also a long way from consensus on fighting global trade distortions and their long-running trade dispute. The plan had been to resolve these matters before the end of 2023.

EUROFER described the absence of a global arrangement on sustainable steel and aluminium as a ‘missed opportunity’ for ensuring fair trade and advancing climate protection before the start of COP 28.

“With COP28 starting in a few days, an EU-U.S. agreement for an effective Global Arrangement to tackle the twin challenge of overcapacity and carbon intensity in the steel industry would have set the right scene for advanced efforts to decarbonise the industry globally by 2050.,” said Axel Eggert, director-general of the European Steel Association (EUROFER).

According to Eggert, a global arrangement is ‘a unique opportunity’ to protect the climate and solve the EU-US trade dispute. He said that, without a carbon-neutral industry at a global scale, it will be impossible to achieve the 1.5 nor the two degrees Celsius objective in 2050.

“With COP28 starting in a few days, an EU-U.S. agreement for an effective Global Arrangement to tackle the twin challenge of overcapacity and carbon intensity in the steel industry would have set the right scene for advanced efforts to decarbonise the industry globally by 2050.”
Axel Eggert, director-general, European Steel Association (EUROFER)

“An ambitious international binding agreement tackling the existential challenges the steel industry is facing worldwide should not become the collateral damage of different views across the Atlantic on the approach to solve the US Section 232 issue while we share the same values,” said Eggert, adding that a global arrangement will (naturally) include a long-lasting and solid solution to unilateral, distortive US tariffs on EU steel under Section 232.

“We urge the EU and the US to find a common path forward, positively conclude the negotiations, and avoid postponing solutions for global challenges.”
Axel Eggert, director-general, European Steel Association (EUROFER)

EUROFER quotes OECD figures, stating that current non-market excess capacity in the global steel industry has reached 600Mt – and a further 150Mt are underway in the next three years. While China is always the ‘overcapacity villain’, other sources of excess steelmaking is being laid at the feet of ASEAN nations, South Asia, the Middle East and North Africa.

“This new conventional, carbon-intensive capacity will lock-in CO2 emissions for decades to come, resulting in more CO2 emissions than the entire EU steel industry combined and wiping out all EU steel industry emission reduction efforts up to 2050 in just three years,” said Eggert. “The absence of a global arrangement on sustainable steel risks jeopardising the European steel industry’s decarbonisation efforts and shows the limits of EU global climate and trade diplomacy.”

According to EUROFER, if green steel and other clean technologies are to be ‘made in Europe, as Commission President von del Leyen said, the global arrangement should co-ordinate market access conditions using the policy space available under WTO rules to address sustainability challenges.

These challenges, asserts EUROFER, are not unique to the steel sector but increasingly impact other industries. EUROFER believes that agreeing on the initial outlines of a global arrangement would be an important milestone that could serve as a basis for further developing a comprehensive agreement. ‘Intensive work should be carried out on new instruments and approaches to tackle global overcapacity and emissions,’ EUROFER believes, while at the same time, the EU steel safeguards need to be continued, and the EU's traditional trade defence instruments must be applied consistently.

“We urge the EU and the US to find a common path forward, positively conclude the negotiations, and avoid postponing solutions for global challenges”, concluded Mr. Eggert.