Documents considered by the Committee on 18 July 2018 Contents

7EU countermeasures to US tariffs on steel and aluminium

Committee’s assessment

Legally and politically important

Committee’s decision

(a) Cleared from scrutiny; further information requested

(b) Cleared from scrutiny; further information requested

Document details

(a) OTNYR — Commission Implementing Regulation (EU) …/… of XXX on certain commercial policy measures concerning certain products originating

in the United States of America pursuant to Article 4(1) of Regulation (EU) No 654/2014;

(b) OTNYR — Commission Implementing Regulation (EU) …/… of XXX on certain commercial policy measures concerning certain products originating

in the United States of America and amending Implementing Regulation (EU) 2018/724

Legal base

Regulation (EU) No 654/2014

Department

International Trade

Document Numbers

(a) (39698), —; (b) (39923), —

Summary and Committee’s conclusions

7.1On 8 March 2018, the US announced its intention to impose additional 25% tariffs on steel imports and 10% duties on aluminium imports to protect US national security. It granted the EU a time-limited exemption from these tariffs, initially until 1 May 2018 and subsequently extended to 1 June 2018. The EU pressed the US for a permanent exemption, but on 1 June 2018 the US applied the extra steel and aluminium duties on EU imports.

7.2While the US argues that the tariffs fall outside the remit of the World Trade Organisation (WTO), on the basis that they have been imposed in the interests of US national security, the EU is treating them as safeguard measures that are intended to protect US industry from foreign competition for commercial reasons. The WTO Agreement on Safeguards allows for the imposition of countermeasures to the equivalent value of the damage caused by safeguards. The Commission estimates that the US tariffs would have affected at least €6.41 billion (£5.62 billion)107 worth of EU imports into the US in 2017.

7.3Two different Commission Implementing Regulations are required for the EU to apply countermeasures to US tariffs on steel and aluminium:

7.4In its consideration of the first Commission Implementing Regulation at its meeting on 6 June 2018, the Committee:

7.5On 12 June 2018, the then Minister responded in part (as set out below under ‘Our Conclusions’) to the list of questions raised by the Committee110 on 6 June 2018.

7.6On 20 June 2018, the then Minister provided an Explanatory Memorandum on the second Commission Implementing Regulation (the day that these measures were adopted by the Commission, as noted above). He notes that there are no substantial differences between the first and second Commission Implementing Regulations regarding the US products affected or the additional customs duties. The second Implementing Regulation does, however, allow the Commission to amend the countermeasures to reflect any exemptions that the US may apply (further to any successful US importers’ applications to the US Department for Commerce for specific products to be excluded from the tariffs). He states that the Government supports the proposal, as it considers the countermeasures are “measured and proportionate”, work “within the boundaries of the rules-based international trading system” and may act as a potential deterrent against similar future actions.

7.7We note that the proposed countermeasures were adopted by the Commission on 20 June 2018 (following unanimous support for their implementation by all Member States, including the UK, at the Trade Barriers Committee meeting of 14 June 2018)111the date that the Government issued its Explanatory Memorandum on the second Commission Implementing Regulation. While the Scrutiny Reserve Resolution does not apply to Commission Implementing Acts, we remind the Minister of the benefit of sharing information with the Committee in a timely manner, given its clear political importance.

7.8Further to the then Minister’s responses to the Committee’s questions of 6 June 2018 on whether these countermeasures will continue after UK exit on 29 March 2019 (as set out in his letter of 12 June 2018 and reiterated in his Explanatory Memorandum of 20 June 2018), we draw the House’s attention to the following:

7.9We now clear these documents from scrutiny, but ask the Minister of State for Trade Policy (George Hollingbery) to respond to the following outstanding questions (which were not addressed by your predecessor):

7.10Furthermore, following publication of the Government’s White Paper The future relationship between the United Kingdom and the European Union, we ask the Government for its assessment on how the UK’s proposed facilitated customs arrangement with the EU (if it were to be agreed by the EU) would impact the UK’s continued application of the first set of countermeasures or implementation of the second set of countermeasures post-transition period. We also ask the Minister to outline the UK decision-making process for imposing such countermeasures in the event of a no-deal scenario or post-transition period.112

7.11We also take this opportunity to remind the Minister that we expect deposit of, and timely updates on, any related documents dealing with the EU’s response to US steel and aluminium tariffs (for example, on steel safeguard measures) and in relation to potential US tariffs in other areas (for example, on EU cars and car parts further to the US S232 investigation of 23 May 2018).

7.12We draw the documents and our conclusions to the attention of the International Trade Committee.

Full details of the documents

(a) OTNYR — Commission Implementing Regulation (EU) …/… of XXX on certain commercial policy measures concerning certain products originating in the United States of America pursuant to Article 4(1) of Regulation (EU) No 654/2014: (39698), —; (b) OTNYR — Commission Implementing Regulation (EU) …/… of XXX on certain commercial policy measures concerning certain products originating in the United States of America and amending Implementing Regulation (EU) 2018/724: (39923), —.

Background

7.13The details of the first Commission Implementing Regulation and the Government’s position on it can be found in the Committee’s Report chapter listed at the end of this chapter.

7.14The imposition of countermeasures is one part of the EU’s three-pronged response to US steel and aluminium tariffs. The second is possible safeguard measures to protect EU producers from excessive steel imports due to trade diverted from the US (a safeguard investigation into the EU’s imports of 26 steel products was launched on 26 March 2018). The third is a WTO dispute case against the US, which was launched on 1 June 2018. The Minister provides a short update on the progress of these investigations in his EU Trade Policy update to the Committee of 4 July 2018. He states that provisional safeguards may be imposed in July 2018.

7.15On 23 May 2018, the US launched a Section 232 investigation into automobiles and automotive parts. The Commission has coordinated the EU’s response to the investigation’s call for public comment.

Previous Committee Reports

Thirtieth Report HC 301–xxix (2017–2019), chapter 12 (6 June 2017).


107 €1 = £0.88605 or £1 = €1.12860 as at 29 June 2018.

108 The then Minister of State for Trade Policy (Greg Hands) shared an “official text not yet received” version of the proposed countermeasures with the Committee in his Explanatory Memorandum of 8 May 2018.

109 The first set of countermeasures on US products valued up to €2.8 billion came into force on 22 June 2018. The second set of extra duties valued at €3.6 billion will take place a later stage — in three years’ time or after a positive finding in WTO dispute settlement, if arrived at sooner.

112 In a letter to Lord Boswell of Aynho (Chairman of the Lords’ European Union Committee) of 11 June 2018, the then Minister states that the “Trade Remedies Authority, which will be an independent, arms-length body, will not be responsible for deciding whether to impose these countermeasures.”




Published: 24 July 2018