WASHINGTON, Nov. 2 (Reuters) – U.S. steel industry executives on Tuesday said they were in favor of a carbon border adjustment mechanism that would raise the U.S. price of “dirty” steel produced in China and other countries with high carbon emissions.
American steel producers claim to have the lowest carbon emissions in the world and told a press conference that a trade deal to be negotiated between the United States and the European Union to restrict access to the high carbon steel market would provide them with a comparative advantage.
Plans for the future arrangement were announced over the weekend as part of a deal to end a long-running transatlantic trade dispute.
“We are considering, subject to negotiations between governments, some kind of trade measure that takes into account the differential carbon intensity and which will be beneficial for us”, Kevin Dempsey, president of the American Iron and Steel Institute, one of the two major trade groups in the industry.
Dempsey said he believes carbon-based trade measures could provide the US and the EU with leverage to push China to reduce its chronic excess capacity, but it’s unclear how bad that can be. effective.
“The Chinese industry benefits not only from lower environmental standards, but also from government subsidies or government ownership. There are a whole host of ways in which the Chinese government is giving unfair competitive advantages to the Chinese steel industry,” a- he declared.
More than 70% of American steel is produced in electric arc furnaces (EAF), which mainly smelt scrap metal rather than smelting iron ore in coal-fired blast furnaces, the popular method in China.
Lourenco Gonçalves, managing director of Cleveland-Cliffs Inc, now America’s largest blast furnace steel maker, said the United States would have a carbon advantage over China and European competitors.
“Europe has constantly tried to deflect the environmental message, and they are not even close to what we have achieved here in the United States in the FAEs and the blast furnaces.” he said.
Although the Commerce Department has said it is currently consulting with Japan and Britain on Section 232 tariffs on steel and aluminum, the head of the Steel Manufacturers Association has urged caution before further open up duty-free access to the US steel market.
“I think first of all that it is important to make sure that this agreement has been correctly implemented and applied correctly, and to see how it will unfold over the next two years,” said the president of the SMA , Philip Bell, to reporters.
He added that while the industry is happy with the annual US tariff rate quota of 3.3 million tonnes for molten and cast steel in the European Union, he said there were concerns about the 1 , 1 million additional tonnes associated with tariff exclusions which will be extended for another two years. He added that the process for renewing exclusions should be reviewed.
Reporting by David Lawder Editing by Marguerita Choy
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