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European Nato members lobby against Trump steel crackdown

European Nato members lobby against Trump steel crackdown

European Nato members lobby against Trump steel crackdown
June 19
14:00 2017

European members of Nato have mounted a lobbying campaign against an expected crackdown on steel imports to the US on grounds of national security, arguing it will hit American allies rather than China, its intended target.

Military officials from Germany and the Netherlands have in the last two weeks taken their case to the Pentagon and to US defence secretary James Mattis, disputing how imports from longstanding Nato allies could pose a threat to US national security. US officials say Mr Mattis has been passing on the European concerns.

Such tactics are highly unusual, since US defence officials do not normally get involved in trade disputes. But Washington’s Nato partners are keen to rebut the national security arguments on which the planned US measures are based, and warn of further strains to the transatlantic alliance. The US could try to impose punitive tariffs or a quota system on imports.

Germany in particular is worried about the impact of a Trump administration move on steel on next month’s G20 summit in Hamburg. European officials warn that US crackdown would feed anti-American sentiment in Europe and add to existing friction over proposed new US sanctions on Russia, Washington’s withdrawal from the Paris climate accord and his sceptical attitude towards Nato. 

President Donald Trump has in recent weeks repeatedly said he will follow through on campaign promises to do more to protect the US steel industry from what he sees as unfair international competition.

Wilbur Ross, the US commerce secretary, is expected to announce within days the findings of a hurried special investigation into the impact of steel imports on US national security. US steel manufacturers argue that dumping by China and other countries has hurt its ability to supply the US military.

The steel investigation has also set off another heated trade debate within the Trump administration. Trade hawks are pushing for the president to impose a broad tariff on imports while business-friendly voices such Gary Cohn, the head of Mr Trump’s National Economic Council, have argued for restraint.

A Pentagon spokesman declined to comment. But according to administration officials and others close to the process Mr Mattis has joined Mr Cohn and others in lobbying against any rash action. 

Mr Trump wields broad powers under the 1962 law used to instigate the national security investigation, making the steel issue a gauge of how protectionist the president is willing to become. 

“It’s the first real decision with live ammunition where you have the trade hawks lined up against the trade doves,” said Tim Keeler, a senior trade official in the George W Bush administration and now at law firm Mayer Brown. 

The debate hinges on whether to impose a broad 25 per cent tariff on all imports of steel into the US or to establish a more nuanced quota system that could be less unpalatable to other countries. 

The pushback by European allies is a sign of how concerned US trading partners are about the impending move. Many fear will inflame an already testy global debate about steel and Chinese over-capacity. 

EU officials have already begun discussing how to retaliate, warning in private that US agricultural exports could be targeted. They also say they would likely take Washington to the World Trade Organisation where such a case would test a national security exemption in global trading rules that has never faced a major challenge before. 

“The notion that imports from Europe are [considered] a national security threat [by the US] is really worrying to us,” said a European official. “The mood is to retaliate.” 

Officials from Canada and Mexico have also been seeking an exemption from any new tariffs, arguing that a rash move by the Trump administration could jeopardise upcoming negotiations to update the North American Free Trade Agreement. 

The US is the world’s largest importer of steel. A series of targeted anti-dumping moves has reduced imports from China to a trickle in recent years with Canada, Brazil and South Korea becoming the top three sources of steel imports. Germany is the largest European source. 

But US officials argue that Chinese steel has been coming in via other countries and that the anti-dumping system has not been effective in stopping the damage to the US steel industry. 

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