Andrea Shalal, David Shepardson

WASHINGTON, (Reuters) – The United States announced Friday that it would open negotiations with Japan to reduce tariffs on aluminum and steel imports. This has been a persistent problem in bilateral trade relations.

According to the U.S. Commerce Department, the United States Trade Representatives Office stated that the talks are aimed at “global Steel and Aluminum Excess Capacity”, and restore market-oriented conditions while preserving important industries.

Japan’s discussions follow an agreement made by the United States, Europe Union and Japan to settle a dispute regarding steel and aluminium tariffs. They also agreed to a global arrangement that would combat overproduction and excessive capacity.

China will be a target in the future deal, which is also open to other nations. China produces more than half the world’s steel, and the EU and the USA accuse it of creating excess capacity that hurts their industries.

Global Forum on Steel Excess Capacity last year estimated that there was an excess of 600 million tonnes between the global steelmaking capacities and the global demand. The amount will increase as new capacity is added or withdrawn.

Japan requested the United States last week to repeal the Section 232 tariffs, which were placed by an ex-U.S. President Donald Trump administration in 2018.

Friday’s announcement came before separate visits by Gina Raimondo (Commerce Secretary) and Katherine Tai (U.S. trade Representative) to Japan, which will begin next week.

United States stated that the bilateral talks will address the concerns raised by Section 232 tariffs, “and the sufficiency and effectiveness of actions that address excessive steel and aluminium capacity in order to achieve market-oriented conditions,”

Myron Brilliant (head of international affairs, U.S. Chamber of Commerce) said “It is about time.” The UK and Japan must be involved in the tariff exclusion process. Any indications that the administration may be pursuing this goal are a strong encouragement.

Tai will also be visiting South Korea in the month of March, although sources indicated that they didn’t expect to see a similar announcement.

The U.S.-EU agreement ended the long-running dispute about Trump’s steel and aluminum tariffs. It also prevented a rise in EU retaliatory taxes.

Section 232 tariffs are unchanged at 25% for steel and 10% for aluminum. The deal allows limited quantities of EU-produced metals in the United States to enter duty-free.

To qualify for duty-free status, it requires that EU steel and aluminium must be completely produced within the bloc. This is known as melting and pouring. This provision was made to prevent metals imported from China or other non-EU nations from being minimally processed before they are exported to the United States.

According to Raimondo, the agreement would see Europe agreeing to reduce retaliatory U.S. tariffs. This move Raimondo claimed would help lower steel-consuming U.S. producers’ costs.

Eiji Haimoto, the chairman of Japan Iron and Steel Federation said that Japan is worried about the U.S./EU agreement resulting in an extensive relaxation of measures for specific countries and areas.