February 27, 2018 / 4:22 PM / 4 months ago

EU to act if U.S. introduces steel tariffs, Germany warns

BERLIN (Reuters) - European Union trade ministers agreed at a meeting on Tuesday that they would respond with counter-measures if the United States brings in import tariffs on steel and aluminum, German deputy economy minister Matthias Machnig said.

FILE PHOTO - State Secretary at the German Ministry for Economic Affairs Matthias Machnig addresses a news conference during G20 digital ministers in Duesseldorf, Germany April 7, 2017. REUTERS/Wolfgang Rattay

He said the introduction of tariffs, which has been floated by U.S. President Donald Trump, was incompatible with World Trade Organization (WTO) rules and unjustifiable on national security grounds.

“I said we are preparing all options,” Machnig told reporters on a conference call, adding that there was unanimous agreement that the European Commission and member countries “need to take appropriate precautions”.

But he said they did not know yet whether Trump would really follow the suggestion of U.S. Commerce Secretary Wilbur Ross and impose customs or quotas on imports.

The U.S. Commerce Department has recommended that Trump impose steep curbs on steel and aluminum imports from China and other countries, ranging from global and country-specific tariffs to broad import quotas. Trump has until April to make a decision.

Trump said on Monday he wants to bring the steel industry back to America even if it means applying tariffs to imports from other countries, but the White House said he has not made a final decision on the issue.

Machnig said the Europeans thought the idea that such import restrictions could be justified by to risks to national security was “absurd”.

But he said there was no detailed discussion about how the Europeans would respond if Trump decides to restrict imports of steel and aluminum.

The European countries were not as unified on what to do to protect companies against foreign takeovers made via so-called third-country investors from the outside the EU.

Machnig said big European countries like Germany, France, Italy, Spain and several more backed the European Commission’s suggestions on that but there was a second group of countries that still needed to discuss this.

In September European Commission chief Jean-Claude Juncker proposed limiting China’s ability to buy up European companies in infrastructure, hi-tech manufacturing and energy.

Machnig said it was important that the EU countries did not compete with each other for foreign investors on this issue. He said the plan remained to decide on appropriate protective measures by 2018.

On Monday, after Chinese automaker Geely’s purchase of a stake in Daimler, German Economy Minister Brigitte Zypries was quoted as saying Germany must be careful that its economic openness is not exploited as a gateway for other countries’ interests.

Other issues discussed at the EU trade ministers’ meeting in Sofia were agreeing on a free trade agreement with the South American Mercosur countries as quickly as possible, as well as with Mexico, and strengthening the WTO.

Writing by Michelle Martin and Madeline ChambersEditing by Catherine Evans

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