TRQ for UK Covers EU-Made Products From UK Steel, Lifts All Tariffs on Derivative Products
The tariff rate quota arrangement that the U.S. offered the U.K. covers a higher volume of steel than the U.K. exported to the U.S. in 2018 and 2019, though those quotas also cover steel with EU country of origin that was melted and poured in the U.K.
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Beginning July 1, 500,000 metric tons of steel under 54 product categories will be allowed in under a TRQ that is distributed on a quarterly basis. A breakdown of the categories will be published before June 1, and the mechanism to track the EU products that were processed from U.K. steel also will be developed by then.
Up to 900 metric tons of unwrought aluminum in two categories, and 11,400 metric tons of wrought aluminum under 12 categories will be allowed in under TRQs and avoid the 10% tariff on aluminum. The TRQ for aluminum foil will be allocated according to last year's volumes, while the other aluminum categories are pegged to 2018/2019 volumes. The Section 232 tariffs went into effect in February 2018.
As with the EU TRQ arrangement, unused quotas can partially roll over to future quarters, and if aggregate domestic steel demand increases or decreases by at least 6%, the TRQ will move with it, but not in unison. For instance, if aggregate demand was 12% higher, the quota would increase by 6%, but if aggregate demand was 5% higher, the quota would not increase, and if it were 10% higher, it would only increase by 3%.
"The United States and the UK agree to review the operation of this arrangement, and ongoing cooperation, on an annual basis, including in light of changes in the global steel and aluminum markets, U.S. demand, and imports," their joint statement said. There also will be consultations if the U.K. believes the TRQs are being underutilized.
British steel mills that are owned by a Chinese parent company will be required to submit to a third-party audit to be sure that no subsidization is benefiting them; if the audit finds that there is a market-distorting practice, their goods will not be allowed under the TRQs.
Commerce Secretary Gina Raimondo said after the deal was announced March 22: "By allowing for a flow of duty-free steel and aluminum from the U.K., we further ease the gap between supply and demand for these products in the United States. And by removing the U.K.’s retaliatory tariffs, we reopen the British market to beloved American products."
The U.K. and the U.S. will talk about how to develop different trade treatments for carbon-intensive non-market excess capacity in the steel and aluminum industries.
The joint statement also said: "Both sides agree to expand U.S./UK coordination involving customs matters. The United States and the UK will also share publicly available information and best practices, as appropriate, on topics including how detection of fraud, evasion and circumvention of duties is approached. Officials may also coordinate industry engagement with relevant sectors to hear their views and share observations and concerns. Customs cooperation may take the form of mutual administrative assistance in accordance with the U.S.-UK Agreement on customs cooperation and mutual assistance in customs matters."
The U.K., in its own statement, noted that the TRQ system is only a partial removal of Section 232 tariffs on steel and aluminum, though it does fully remove the tariffs on derivative products. "While this is a step in the right direction, the UK continues to consider these tariffs incompatible with World Trade Organization rules," the government said. It also said that it will suspend retaliatory tariffs on U.S. exports, but reserves the right to reimpose them "in light of new developments, for instance developments that could deteriorate the situation for UK exports subject to the U.S. Section 232 steel and aluminium measures."