Europe’s arsenal against Trump’s trade offensive

Brussels – The EU has prepared a series of counter-measures to respond to Washington’s imposition of punishing import tariffs on steel and aluminium, as fears grow of an all-out global trade war.

But despite fighting words from Brussels, so far only a complaint to the World Trade Organization (WTO) is ready for action.

The EU’s 28 member states will only finalise retaliatory duties against US products in the coming weeks. And protective measures for the European steel industry could take months to implement and risk angering other partners.

Here is an overview of the firepower the Europeans say they will have at their disposal:

 

– Complaint to the WTO –

 

The EU has lodged a complaint against Trump’s punitive tariffs with the WTO, the Geneva-based arbitrator of international trade spats.

But the procedure can take a long time. A previous steel dispute with the US in 2002 took one and a half years with the EU in the end found in the right.

Then US President George W. Bush abided by the decision and lifted the duties.

However, Trump has poured scorn on the WTO process and is blocking the appointment of new appeal judges to the organisation’s dispute settlement body, risking the system’s collapse.

 

The EU Commission drew up a list of US goods worth 2.8 billion euros weeks ago, which in turn could be subject to punitive tariffs.

They include steel products, bourbon whiskey, peanut butter, motorcycles and jeans.

The EU officially notified these possible counter duties to the WTO in mid-May as a precautionary measure. According to the commission, they could come into force on June 20 at the earliest.

But whatever the case, the commission must first present EU member states an updated and detailed proposal setting a duty rate for each individual product.

Matching the US steel tariffs eye-for eye, this could be a maximum of 25 percent.

Member states will be free to choose whether to impose the proposed duties as a whole, in part or not at all.

 

– ‘Safeguard measures’ –

 

According to WTO rules, safeguard measures are possible if a sudden flood of imports “seriously” disrupt or threaten to disrupt a domestic industry.

WTO members can “temporarily restrict imports of a product”. This would be done through import quotas or higher import duties.

The Commission already started a mandatory market investigation for steel at the end of March in expectation that the US tariffs would boost imports into Europe.

The commission has nine months to decide on the protective measures, but they risk most hurting non-US countries that export steel.

This is because the EU fears “secondary effects” from the US import restrictions. Steel producers from Brazil, China, Russia, South Korea, Taiwan or Turkey will try to redirect their products that are no longer competitive in the US to the European market.

By Martin Trauth