The supposed solution to the trade dispute between the EU and the US brings with it the risk of new market imbalances. With the agreement on tariff quotas, which will replace the existing Section 232 tariffs on EU aluminum products of 10 percent from 2022, a new competition-distorting measure follows an existing one. "Quotas also contradict the idea of free trade. The competitiveness of the aluminum industry and its customers on both sides of the Atlantic suffers as a result," emphasizes Marius Baader, Managing Director of Aluminium Germany.
Aluminum imports from Europe have never posed a threat to US national security. On the contrary, the aluminum value chains in the US and Europe are closely intertwined. Both trading partners have always been allies. And many companies are active in both markets. It is also disappointing that the quota is based on volumes from 2018 and 2019 and not on a future-proof system that takes into account the growing demand for aluminum in the coming years.
Tariff quotas increase unfair competition anyway
The tariff quotas therefore continue to stand in the way of free and equal trade. The already unequal competitive conditions are being further disrupted. The subsidized Chinese overcapacities impair European production and lead to a distortion of global markets and aluminium prices. This threatens the competitiveness of the European aluminum industry and undermines its sustainability efforts. In addition, the EU recently suspended long overdue anti-dumping measures against dumped Chinese rolled aluminum products, thereby exacerbating the situation once again.
In principle, Aluminium Germany welcomes the decision to develop a global agreement on sustainable steel and aluminum in order to reduce CO2 emissions and counteract overcapacity in China. However, the two-year negotiation period for the agreement should also be used to permanently abolish the unjustified tariffs under Section 232 and the quota system. The German and European aluminium industry fears that the acceptance of tariff quotas by the EU will lead to a normalization of their application. This would further impede the free and fair trade of aluminum.
