EU, Japan start push for exemptions from Trump tariffs

[March 12, 2018]  By Philip Blenkinsop and Alissa de Carbonnel

BRUSSELS (Reuters) - The European Union and Japan urged the United States on Saturday to grant them exemptions from metal import tariffs, with Tokyo calling for "calm-headed behavior" in a dispute that threatens to spiral into a trade war.

U.S. President Donald Trump set import tariffs on Thursday of 25 percent on steel and 10 percent on aluminum, to come into force in 15 days. But he exempted Canada and Mexico and held out the possibility of excluding other allies.

After meetings with U.S. trade envoy Robert Lighthizer inBrussels, EU and Japanese trade officials said negotiations would need to continue.

Europe's trade chief Cecilia Malmstrom described talks with Lighthizer as "frank" and said they had not brought clarity on the exemption procedure. Talks would continue next week.

"As a close security and trade partner of the US, the EU must be excluded from the announced measures," she tweeted after bilateral and trilateral meetings.

Japanese Trade Minister Hiroshige Seko said he had expressed Japanese concern to Lighthizer and warned of major market disruption.

"We call for calm-headed behavior," he told reporters.

Seko did not go into what conditions might allow Japan to evade tariffs and, asked if Lighthizer had brought up the U.S. trade deficit with Japan, Seko said no.

"He only explained the schedule and the procedures," he said.

Any Japanese response, he said, would be in line with World Trade Organization rules: "If there is a violation, then we will seek consultations," Seko said. "We will look at the impact onJapanese businesses and make a final decision."

Japan's trade ministry issued a statement earlier on Sunday, saying that Seko told Lighthizer that exports of steel and aluminum from Japan, which is a close ally of the U.S., would not affect U.S. national security. Seko also said these exports had made key contributions to U.S. industries and jobs, the statement said without elaborating.

The European Union and Japan, the United States' top economic and military ally in Asia, also reiterated that their exports were not a threat to U.S. national security, rejecting Trump's justification for imposing the tariffs.

Lighthizer did not make any immediate comment after the meetings.

The three parties did agree on joint steps to tackle global steel over capacity and distorted market practices, including stronger rules on subsidies and more sharing of information about market abuse.

U.S. Trade Representative Robert Lighthizer (L) and Japan's Minister of Economy, Trade and Industry Hiroshige Seko take part in a meeting with European Trade Commissioner Cecilia Malmstrom to discuss steel overcapacity, in Brussels, Belgium March 10, 2018. REUTERS/Stephanie Lecocq/Pool

The visit had been planned for weeks as a follow-up discussion on over capacity, seen by observers as a swipe at China. However, it took on more urgency after Trump's tariff move.

Commission Vice President Jyrki Katainen warned Washington on Friday not to expect any concessions to win an exemption.

"This is not a trade negotiation," he said. "We are talking about unilateral action against international rules."

The European Commission, which coordinates trade policy for the 28-nation EU, the world's biggest trading bloc, has said it is ready to impose safeguards, tariffs or quotas to protect its own steel and aluminum industries from products diverted to Europe because of the U.S. measures.

It has already started monitoring incoming metal flows to see whether a surge occurs.

The EU is also maintaining a threat of counter-measures that would target U.S. imports ranging from maize to motorcycles, and may publish its list next week to allow industry and other interested parties to give their input. Under World Trade Organization rules, such counter-measures have to be in place within 90 days of the U.S. tariffs entering force.

European steel and aluminum associations have warned that the U.S. tariffs could cost their sectors thousands of jobs.

(Reporting by Philip Blenkinsop and Alissa de Carbonnel, writing by Alissa de Carbonnel, editing by Larry King and TobyChopra)

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