Background

The U.S. and Japan announced Feb. 7 a new agreement under which Japan can ship up to 1.25 million tons of steel to the U.S. each year without being subject to the 25 percent additional tariff the U.S. imposed in 2018 under Section 232. The agreement, which does not change the 10 percent Section 232 tariff on aluminum from Japan, will reportedly take effect April 1.

U.S. Trade Representative Katherine Tai said the agreement with Japan, “combined with last year’s resolution with the European Union, will help us work together with Japan to combat China’s anti-competitive, non-market trade actions in the steel sector.” The U.S.-EU agreement lifted Section 232 tariffs on a set volume of steel and aluminum products imported from the EU, which in turn suspended its related retaliatory tariffs on U.S. goods and halted plans to implement a further tariff increase.

The U.S. and the EU also said they intend to negotiate a global arrangement to (1) discourage trade in high-carbon steel and aluminum that contributes to global excess capacity from other countries and (2) ensure that domestic policies support lowering the carbon intensity of these industries. President Biden said this arrangement will “restrict access to our markets for dirty steel from countries like China, and counter countries that dump steel in our markets, hammering our workers and harming them badly along with the industry and our environment.”

Japan will not participate in that initiative at present but will talk about it with the U.S. In the meantime, a joint statement indicated, the two sides agreed to the following steps to address non-market excess capacity and carbon intensity with respect to steel.

- expand coordination involving both trade remedies and customs matters

- share public information and best practices on topics like how to approach detection of fraud/evasion and circumvention of duties as well as possible self-initiation of investigations

- Japan will implement antidumping, countervailing duty, and safeguard measures or other equivalent measures with a view to initiating formal processes for such measures within six months

- share steel and aluminum import data, including from third-country markets, and consult on surges

- confer on potential domestic measures and the situation in global steel and aluminum markets, including market trends and price differences between markets, domestic industry conditions, and analysis on import and export data, including as to third-country markets

- confer on methodologies for calculating steel and aluminum carbon intensity and share relevant data, including relating to emissions in these sectors

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