WASHINGTON, Nov 1 — US President Joe Biden and European Commission head Ursula von der Leyen on Sunday saluted what they called a "new era” in the transatlantic relationship with an agreement reached in Rome to lift steel and aluminum tariffs.

US officials said the agreements would not only avert punishing tariffs put in place by former president Donald Trump but lead to "cleaner” steel, lower inflation and badly needed improvements in snarled global supply chains.

"The United States and the European Union are ushering in a new era of transatlantic cooperation that’s going to benefit all of our people, both now and I believe in the years to come,” Biden said in a press conference with von der Leyen at the G20 summit.

Washington and the European Union reached the tariff-lifting agreement Saturday, resolving a conflict that had poisoned trade links between Washington and Brussels since they were declared by the Trump administration.

"This marks a milestone in a renewed EU-US partnership,” von der Leyen said Sunday. "We have restored trust and communication.”

‘Stronger position’

The two big economies committed to work together "to achieve the decarbonisation of the global steel and aluminum industries in the fight against climate change,” the European Commission said in a statement, noting that steel and aluminum manufacturing are among the biggest carbon emitters globally. 

A White House statement said the two Western economies "resolved to negotiate future arrangements for trade in the steel and aluminum sectors that take account of both global non-market excess capacity as well as the carbon intensity of these industries.”

"With this dispute behind us,” US Trade Representative Katherine Tai said in a statement, "we are in a stronger position to address global overcapacity from China with an enhanced enforcement mechanism to prevent leakage of Chinese steel and aluminum into the US market.”

She called the deal "a significant win” for a top Biden priority: fighting climate change.

In June 2018 Trump imposed tariffs of 25 per cent on steel and 10 per cent on aluminum from several economies, including the European Union. He said he was acting on national security grounds, a claim rejected by critics.

The Europeans hit back quickly, threatening their own suite of tariffs against iconic US products like Harley-Davidson motorcycles, Levi’s jeans and Kentucky bourbon, but also tobacco, rice, corn and orange juice.

Tariffs on Harley-Davidson motorcycles, for example, would have jumped from six per cent to 31 per cent, adding US$2,200 to the cost of one bike. 

The deal announced Saturday will allow limited quantities of European steel and aluminum products to be imported by the United States without tariffs.

In exchange, the EU is lifting its threatened retaliatory steps, set to take effect December 1. 

In June, when the sides resolved a dispute over subsidies to Europe’s Airbus consortium and US aviation giant Boeing, Washington and Brussels set a December 1 deadline to resolve the steel question. 

‘Cleaner’ steel

The new accord, announced on the G20 summit’s opening day, does not specify the volume of European steel and aluminum that will be allowed in the United States duty-free.

It does specify that all steel imported from Europe to the US must be manufactured entirely in Europe, Raimondo said Saturday.

US officials on Sunday emphasized the effect the deal could have on climate, with Biden traveling from Rome to Glasgow for what has been billed as a make-or-break COP26 climate summit.

"The first ever carbon-based arrangement on steel and aluminum trade contemplated by the agreements would create greater incentives for reducing carbon intensity across modes of production of steel and aluminum made by American and European companies,” said Tai.

That means US and EU steel and aluminum will be "cleaner” than that produced in China, Raimondo explained.

"China’s lack of environmental standards is part of what drives down their costs, and it’s a major contributor to climate change.”

‘Learn from experience’

Italian Prime Minister Mario Draghi, the G20 host, said the accord "confirms the strengthening of already close transatlantic relations and the gradual passing of protectionism in recent years.”

The US Chamber of Commerce reacted with relief. Even under Trump it had complained about the tariff battle.

"When these tariffs were imposed in 2018, the Chamber warned they ‘would directly harm American manufacturers, provoke widespread retaliation from our trading partners, and leave virtually untouched the true problem of Chinese steel and aluminum overcapacity,’" the chamber said.

"All of that came to pass. These tariffs hurt 50 American workers for every one they helped. We should learn from this experience,” it added. — AFP