Meeting between Lula and Biden could reduce tariffs on Brazilian steel in the United States.
Tariffs were imposed by Donald Trump in 2018 and have not yet been reviewed.
SAO PAULO (Reuters) - Brazilian steel producers are eagerly awaiting President Luiz Inácio Lula da Silva's visit to his American counterpart Joe Biden in early February as a more concrete first step toward reviewing tariffs that have limited Brazilian steel exports since 2018.
Three Brazilian missions to the US have already attempted to convince the Americans to withdraw or ease the trade protection measures on steel imposed by the Donald Trump administration under the pretext of guaranteeing national security, as stipulated in the so-called "Section 232" of US legislation.
A fourth mission should have already taken place, but negotiations faced several obstacles, including the pandemic, a change in the US government, and now, a new government in Brazil.
"The expectation is that with President Lula's closer relationship with Biden, there will be greater receptiveness to our requests," stated Marco Polo de Mello Lopes, CEO of Aço Brasil, an organization that brings together the country's steel companies.
The day before, the Ministry of Foreign Affairs reported that the US had decided to end the anti-dumping tariff imposed in 1993 on thick carbon steel plates produced in Brazil, the only country excluded from the surcharge, according to the ministry.
The measure came after the repeal of restrictive measures against hot-rolled steel in October and cold-rolled steel in July.
According to the president of Aço Brasil, the removal of restrictions on rolled products and thick plates – considered finished products for use in applications such as vehicles and large infrastructure projects – is a positive sign that brings a "more favorable outlook" for a possible change in the restrictions of Section 232.
With this mechanism, the US imposed fixed export quotas for steel on Brazil, its main trading partner in the sector. In the case of finished products – rolled products and thick plates – the quota was based on an average of exports made between 2015 and 2017, reduced by 30%.
Since the products were already subject to antitrust lawsuits that had reduced Brazilian exports to the US, the average calculated for the quota ended up being based on a very low figure, said Lopes, adding that in the case of thick steel plates, the average quota is only 10 tons per year.
"(The end of anti-dumping actions) is a good measure in that it removes a restriction, but it does not favor Brazilian exports because we continue to have the impediment of 232, with the aggravating factor of low average prices," said Lopes.
Since the imposition of US national security safeguard measures (Section 232), the national steel industry has been attempting to revise the quotas and is continuing its demands now with Lula's visit to Biden.
The national sector is requesting the end of quotas for semi-finished steel products, arguing that the raw material is used as raw material by the North American industry to produce other goods such as rolled products. "If that's not possible, let's work towards a significant increase in the quota," said Lopes, referring to the limit of 3,5 million tons. In the case of finished products, the request is for the removal of the 30% reduction applied to the average calculated in 2018.
The president of Aço Brasil stated that the organization had a meeting with the Minister of Foreign Affairs, Mauro Vieira, last week, when they discussed the matter.
"With the change of administration (in Brazil), we will have an initial move which is President Lula's trip to the US, and the idea is that as soon as possible we will send a new mission of our own," said Lopes.
The steel trade involves $3,2 billion in steel from Brazil to the US, of which 85% is semi-finished products, and about $1 billion in coal from the US to Brazil, the largest importer of the American product, said Lopes.
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