EU-Australia Trade Deal, Sanctions Relief for Russia and Iran, UK Steel Tariffs, and US-Ecuador Agreement

Summary

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The Trade Guys – Episode Summary

Podcast Title: The Trade Guys
Episode: EU-Australia Trade Deal, Sanctions Relief for Russia and Iran, UK Steel Tariffs, and US-Ecuador Agreement
Date: March 30, 2026
Hosts: Scott Miller (A), Bill Reinsch (B), with Alex Kisling (C)
Produced by: Center for Strategic and International Studies (CSIS)

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Episode Overview

This episode dives into major recent developments in international trade: the newly concluded EU-Australia trade agreement, U.S. moves to lift sanctions on Russian, Iranian, and Venezuelan oil, the UK's sweeping steel tariffs, and the newly signed US-Ecuador trade agreement. The hosts provide expert insights into how these policy moves play out on the global stage and affect future international trade relations.

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Key Segments and Insights

1. WTO 14th Ministerial Conference & EU Legislation Updates ([00:59])

• WTO 14th Ministerial Conference started in Yaoundé, Cameroon.

  • The focus is on creating a "work plan for future reform" rather than taking grand action.
  • The moratorium on E-commerce taxation remains a hot topic; decisions typically come down to the wire, often hinging on India’s position.
  • “The bar is fairly low for accomplishments.” (Bill, 01:42)
  • "Hopefully not an autopsy,"—on the planned post-summit analysis. (Bill, 01:21)

• EU-US Trade Agreement Legislation

  • European Parliament passed implementing legislation, but with some provisions potentially ruffling U.S. feathers (e.g., sunset clauses, steel tariffs).
  • “It has some steel provisions. If we don’t reduce our 50% tariff on steel and aluminum derivatives, they will take appropriate action on our steel imports.” (Bill, 02:21)
  • Overall mood is positive: “Our ambassador to the EU praised the action. So maybe…all will be forgiven and this will end up moving the thing forward, which would be a moment of peace and calm unexpectedly in the relationship.” (Bill, 03:09)

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2. EU–Australia Trade Agreement ([04:19])

Agreement Details

• 8 years in the making, officially signed days ago; signals closer EU-Australia ties.

• Both markets involved are relatively open, with generally low tariffs.

• Major outcomes:

  • “Zero tariffs” solidified (even if current rates are low). Similar approach to the 2004 US-Australia FTA.
  • Liberalization of restrictive agricultural trade, though still uses tariff rate quotas for sensitive items (meat, lamb, beef, sugar, dairy).
  • Extension of EU’s protected geographical indications (GIs) into Australia (e.g., Prosecco, feta, parmesan).
  • Security partnership announced alongside the trade deal: defense, maritime, cybersecurity, counter-terrorism, and disinformation.
  • Australia's robust mining industry (including lithium and other critical minerals) is positioned as a benefit to EU industry.

• “It’s fairly comprehensive, which is good. And it’s what you’d expect from developed economies… zero is better, and then that’s a preference.” (Scott, 04:36)

• “Australians are a great partner, a great trading nation and a relatively open market. So I wish them the best.” (Scott, 07:13)

Negotiation Dynamics

• “The Australian farmers are mad about it and the French farmers are mad about it, which probably means it’s a pretty decent agreement, partly because the farmers are always mad in every country all the time.” (Bill, 07:38)
• 99% of EU tariff lines to be duty-free; Australia will reach 98% soon, but these are “tariff line” numbers, not trade volume.
• “I was a little bit disappointed to see the commitment on geographical indications… There’s a lot of cheese geographical indications.” (Bill, 08:58)
• On Prosecco: “They had to work that one out. Apparently the Australians get to keep the name for a while... a 10-year phase out.” (Bill, 08:48–09:09)

Geopolitical Context

• “The reason they’re finishing, I think, is Trump. You know, we’ve talked about this before. The Trump message… has been: the United States is an unreliable trading partner and we’re going to squeeze you for everything we can get. And the obvious conclusion… is find other partners. And that’s exactly what these guys are doing.” (Bill, 09:34)
• The “Trump effect” has encouraged other countries to deepen relationships without US involvement.

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3. Sanctions Relief for Russian, Iranian, and Venezuelan Oil ([11:33])

Rationale & Immediate Impact

• U.S. is easing sanctions to reduce global oil price spikes, citing inelastic short-term oil demand.

• “What you have is an immediate impact on almost everybody. Now oil is one of those commodities that is essential to modern life and everyone needs it... prices tend to spike and then re-correct sometime later.” (Scott, 12:01)

• Lifting Russian oil sanctions allows market “equilibration.”

• Venezuelan oil less impactful due to rundown infrastructure: “At one time PISA was a jewel… over the years… the buddies of El Presidente run the company. And it doesn’t run as well.” (Scott, 13:47)

• US is acting as a “financial backstop”—reinsuring shipping to keep oil moving.

Critique and Risks

• “We’re financing the enemy. It’s an unusual thing to do in a war.” (Bill, quoting Israeli commentator, 16:34)

• “The incompetence of all this… you would hope that our government would be smart enough to think about all possible contingencies in advance… We got caught flat footed.” (Bill, 16:37–17:40)

• Benefits unclear, especially in Iran’s case - much will go to the spot market, not long-term contracts.

• “If you're looking for an actual economic impact on the price of gas, gasoline in the United States, this is probably not going to make much difference. Most of this stuff goes to Asia… it’ll relieve pressure, but I don’t see it having a big impact. It's having a market calming effect.” (Bill, 18:47)

• Historical context: “There were cumulatively five years where the price was $100 a barrel or higher… People are accustomed to it. I don't think it’s going to make a lot of difference in the end, but it is a way to keep engagement going on.” (Scott, 19:31)

• Shift in Middle Eastern alliances noted (Israel, Saudi Arabia, Gulf States aligned with US against Iran).

• Larger supply-chain risks if the situation in Asia deteriorates due to shortages: “Asia and even China, but India and Southeast Asia, Australia for one, can’t get what they want, that’s going to affect US supply chains and a whole bunch of sectors…” (Bill, 20:28)

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4. UK Steel Tariffs ([21:43])

UK's New Approach

• UK sets goal: meet 50% of domestic steel demand with domestic production (up from 30%).
• Implementation: reduced tariff-free steel import quotas by 60% (effective July), imposes a 50% tariff on imports above new quotas.
• “Steel is sort of ground zero for the overcapacity issue. The earliest victim. Chinese steel capacity is more than all the rest of the world combined. And they’re dumping and underselling everywhere, including the UK.” (Bill, 21:44)
• UK is increasing their MFN steel tariff at the WTO to 50%—“really unusual… for a country that’s been trade negotiating for as long as Britain has” (Scott, 24:25)

Global Context and Effectiveness

• UK, US, EU, and Canada all moving against Chinese overcapacity, but without coordination; each country is focused on specific industries.
• “It would be nice if we could get all these countries together to do the same thing and present a common front. I think that would be a much more effective impact on Chinese policy than what’s going on right now.” (Bill, 25:38)
• “This is addressing a real problem… I’ve been hearing about steel overcapacity as a global problem for at least 30 years… very persistent, very hard to resolve.” (Scott, 25:55)

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5. U.S.-Ecuador Trade Agreement ([26:37])

Notable Aspects

• Not a large agreement in trade volume, but distinct in being more “MFN-based” without a special higher US tariff rate for Ecuador (unlike other recent deals).

• Ecuador agrees to eliminate many quantitative import restrictions; US gets tariff rate quotas for key agri-exports (corn, pork, dairy, etc.).

• “For most tariffs, we’re going to assess the MFN tariff, which is generally lower than all these numbers I’ve just been talking about. And I’ve been trying to figure out why we’re doing that with Ecuador.” (Bill, 26:59)

• Standard modern trade agreement provisions: acceptance of US standards, IP protection, digital services tax ban, prohibition of forced labor goods.

• National security clause—Ecuador agrees to “mirror” US import restrictions on shared economic and security threats (potentially including compliance with US “Section 232” tariffs and export controls).

• “There’s a difference between ‘we will do what you tell us to do’ and ‘we will cooperate with you.’ There’s a big difference. And so a lot of this ends up being sorted out in the implementation phase.” (Bill, 29:53)

Broader Implications

• The US had failed to secure a comprehensive Andean FTA in the early 2000s; Ecuador dropped out early, so “full marks” for even getting a signature.
  • “Ecuador has been nowhere since then in terms of US treatment. This at least provides some market opening on some products. And it’s got a signature on the bottom of the last page. Good for them.” (Scott, 31:09)
• “Critics of the Trump administration… have to deal with… they’ve done a lot of market opening things… WTO go-by-the-rule book softies have been trying to do this stuff for 30 years and you failed… we came in and used a big stick and we succeeded. So think about that.” (Bill, 30:10)

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Notable Quotes & Moments

• On the EU-Australia Deal:
  “The Australian farmers are mad about it and the French farmers are mad about it, which probably means it’s a pretty decent agreement…” (Bill, 07:38)

• On Geopolitics:
  “The Trump message to these countries has been the United States is an unreliable trading partner and we’re going to squeeze you for everything we can get. And the obvious conclusion is find other partners. And that’s exactly what these guys are doing.” (Bill, 09:34)

• On Oil Sanctions Relief:
  “Every time they announce something like this, you know, the market, the stock market goes back up and Trump watches that.” (Bill, 18:47) “There were cumulatively five years where the price was $100 a barrel or higher… People are accustomed to it.” (Scott, 19:25)

• On Steel Policy:
  “It would be nice if we could get all these countries together to do the same thing and present a common front… But right now this is where it is. But I look forward to grow. I think we’re going to see it more often.” (Bill, 25:38)

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Timestamps for Key Segments

• [00:59] – WTO and EU Legislation Updates
• [04:19] – EU-Australia Trade Agreement
• [11:33] – Sanctions Relief for Russian, Iranian, and Venezuelan Oil
• [21:43] – UK Steel Tariffs
• [26:37] – U.S.-Ecuador Trade Agreement

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Tone and Style

The conversation is candid, expert-focused, occasionally sardonic, and rich with real-world trade policy context—using anecdotes, dry humor, and historical perspectives to make complex global trade issues accessible to all listeners.

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For further details and analysis, visit the CSIS podcast page and look out for their post-WTO conference breakdown next week.

Transcript

[A]

I'm Scott.

[B]

I'm Bill and we're the Trade Guys.

[C]

You're listening to the Trade Guys, a podcast produced by CSIS where we talk about trade in terms that everyone can understand. I'm Alex Kisling and I'm here with Scott Miller and Bill Reinsch, the CSIS Trade Guys. Thanks for listening to the Trade Guys. On today's episode, we dig into the EU Australia trade deal and unpack the recent easing of sanctions on Russian, Iranian and Venezuelan oil. Then we turn to the US Ecuador trade Agreement and take a look at what the UK is doing to protect its steel industry. All that and more on today's Trade Guys. Trade Guys, it's great to be back with you after a couple of weeks away. We're going to dive into a lot of different topics today, but before we get there, Bill, I want to turn the floor over to you for a couple of quick updates from the WTO and the eu. So Bill, what's going on there?

[B]

Well, a news flash. Although most of you out there probably know about this, the WTO 14th Ministerial Conference started today in Yonda, Cameroon. If you are really interested in getting into the details of this shameless plug here, CSIS just put out a paper by Angela Ellard, former Deputy Director General of the WTO and me about the ministerial what the issues are and what the stakes are. And we also did a video on the same subject, both of which can be found on the website. So check those out if you want to follow it. We were going to do a prospective on the WTO last week, but got caught up in a bunch of other issues. And I think now what we're going to do is a postmortem, hopefully not an autopsy. But the schedule of these things, they always last longer than they're supposed to last. So I would think it's going to go at least into Sunday and it will probably go another day after that would be my guess. The bar is fairly low for accomplishments. What they want to do is produce a work plan for future reform. Two years ago they were talking about doing actual reform and they discovered how hard that is. And so now they're going to try to agree on a work plan for future reform, which means basically they're not going to do anything on that this time around. The big thing for the US Is the continuing the moratorium on E commerce taxation, which will be taken up, I think on Saturday and it remains to be seen what will happen. And that usually goes down to the wire. There's usually somebody almost every time India, who objects and then at very last minute in the past has folded. They may or may not do that this time. So stay tuned and we will have a report for you next week. For the next podcast, we'll do a little analysis of what, if anything, happened. The second item is that yesterday the European Parliament passed the implementing legislation for the US EU Trade agreement. This has been long pending, and you may recall that it was about to come up when Trump did the Greenland thing in February, and that caused them to cancel and back off. They put it back onto the table. The committee approved it, and yesterday they voted it out by actually a fairly healthy margin. It was not a close vote, not the end of the process. As EU Experts know, it now needs to be negotiated with the member states. There will probably be a revised version that will come back and will have to be addressed again by the parliament. It does have some provisions that will give the United States some heartburn. I mean, basically it's authorizing the tariff reductions that they committed to, but it has a sunset if we don't reach a permanent, longer agreement by, I think, March 2028. It has some steel provisions. If we don't reduce our 50% tariff on steel and aluminum derivatives, they will take appropriate action on our steel imports. So there's a couple things in there that I think will give the US Some heartburn, although thus far the US has been quiet about it. Our ambassador to the EU praised the action. So maybe this will be, you know, all will be forgiven and this will end up moving the thing forward, which would be a moment of peace and calm unexpectedly in the relationship.

[C]

We could use that.

[B]

So, onto the real stuff, Alex, what's next?

[C]

All right. Well, let's stick with the EU because we have a trade agreement reached between the EU and Australia. It was signed just a few days ago. The agreement comes after eight or so years of negotiations. So it's been a long time coming. Scott, let's get into the details here. What's covered under the agreement?

[A]

Well, it's fairly comprehensive, which is good. And it's what you'd expect from developed economies, industrial economies that have relatively open markets. Australia probably more so on industrial goods than Europe in general. But both have relatively low MFN tariffs and a fairly sizable trading relationship. So what this agreement does is it solidifies a lot of those agreements at zero tariffs, even if they're low. It's zero is better, and then that's a preference. That's Certainly what the US Australia Free Trade Agreement did way back in 2004 when it was concluded. There are a lot of provisions which are ways to liberalize what's often very restrictive agricultural trade. There's a whole set of geographic indications that Europe maintains and demands protection of in their association agreements and they've demanded of Australia and apparently received it. There are also tariff rate quotas on some agricultural products, meat and lamb and beef, so sugar, some dairy products. The typical things where the European Union is still highly protected on agricultural products and they usually extend those with some leeway for additional trade in those products. So it looks a lot like the agreements that Europe does elsewhere. So that's probably pretty good. Australia managed to put this together with a security partnership. So the leaders also announced defense partnership and maritime security, cybersecurity and terrorism and fighting disinformation, whatever that means. But it's all of a part of both security and commercial benefits. So it's interesting that Australia is, is a very important source of many materials. They have a robust mining industry and not just processed aluminum, but things like lithium. And important commodities critical to modern production come from Australia and they have world class mining companies. So that's probably useful to Europe. And overall there's not much to criticize or object to from my standpoint. And then once again it's just Australia. So while Australia and New Zealand have basically a customs union, they're almost fully integrated in trade. We wind up doing agreements with Australia, at least the United States did that would had its own, own bizarre feature of we happen to have Don Rumsfeld back as Defense Secretary and turned out the guy had a long memory with regard to naval operations in New Zealand which, which had an effect on the agreement. But in any case, the beat goes on. Australians are a great partner, a great trading nation and a relatively open market. So I wish them the best.

[C]

Bill, do you agree? Nothing to really object to here.

[B]

Well, I talked to one of the representatives of one of the countries that participated in it and their comment was sort of typical from a negotiating standpoint. They said the Australian farmers are mad about it and the French farmers are mad about it, which probably means it's a pretty decent agreement, partly because the farmers are always mad in every country all the time. But they do seem to have made some inroads in both directions on a lot of things. Sometimes the data is deceptive on this. The EU was bragging that 99% of their tariff items, tariff lines are going to be duty free. And the Australian said for them it was going to be 97.8, moving in a year to 98%, but that's tariff lines. That's not necessarily volume trade. And that remaining 1% or 2% might actually be a significant volume of stuff that's still being protected. But 99% is good. It's a good deal. I was a little bit disappointed to see the commitment on geographical indications. For those of you that don't follow that, you know, these are things like feta cheese and parmesan cheese and there's a lot of cheese geographical indications.

[C]

Prosecco.

[B]

Prosecco. It turns out the Australians actually had to explain that. It turns out there's a wine variety in Australia called Prosecco in addition to the brand. And so they had to work that one out. Apparently the Australians get to keep the name for a while. So the next time it's a 10 year phase out.

[C]

They can't use it after 10 years.

[B]

The next time you're in Sydney, order a glass of Prosecco and think, this may be my last chance. But to me, the noteworthy thing about it was that it took eight years and now all of a sudden it's finished. And if you look at this collectively, you know, the EU India agreement, the EU, the UK India agreement, EU Mercosur took 20 years. All these things are finishing suddenly. And the reason they're finishing, I think, is Trump. You know, we've talked about this before. The Trump message to these countries has been the United States is an unreliable trading partner and we're going to squeeze you for everything we can get. And the obvious conclusion from that is find other partners. And, and that's exactly what these guys are doing. It's what the EU did. It's what the EU has done a number of times. And it's ironic because what, you know, Trump is really bringing all these things to closure, which may or may not be what he wants. I mean, Ambassador Greer at one point was asked about this and said he wasn't talking specifically about Australia, but he was talking about these negotiations and said, well, you know, they're doing exactly what they ought to do. And he's right. But the lesson for the United States is this is going on with us on the sidelines, this is going on around US relationships. I mean, there was obviously a relationship between the EU and Australia before, but these relationships are being cemented and constructed without us. And that's something that's going to have a long term impact.

[C]

Scott, I assume you agree that it's. Well, yes, there is a Trump effect here, not just coincidence.

[A]

No, I think that there is. The America First Trump trade policy has created the opportunity to cement different alliances and that's what's happening. Whether it's good or bad, I don't know. I think that these agreements tend to be in both parties interests, but not earth changing this. Bilateral FTAs are one of the most popular devices in the trading system and over the last 30 years there have been hundreds of them. Most of them affect mostly the rules for production and basically sharing of intermediate and other manufactured goods. And they all work pretty well, but none of them changes the trajectory of a, of an economy, so.

[C]

Right, right.

[A]

It's good for Europe to take the opportunity to wrap things up, good for Australia to get some openings for their farmers and you know, hope it works for them.

[C]

All right, well, I want to turn next to the recent US moves to ease sanctions on Russian and Iranian oil, all of course done in the context of rising gas prices here at home. So let's start with Russia. The Trump administration's decision to allow countries to purchase sanctioned Russian oil has drawn criticism across the domestic political spectrum as well as unsurprisingly from European partners. Scott, what is the administration doing here and how significant is this step and as well as the step with Iran?

[A]

Sure. Well, don't want to comment on the conduct of the war itself and what's going on. Militarily we seem to be achieving objectives, but because of the importance of energy and trade and energy production in this region of the world, what you have is an immediate impact on almost everybody. Now oil is one of those commodities that is essential to modern life and everyone needs it. And because of that it has basically completely inelastic demand. In the short term you need about as many barrels of oil as a country today as you used yesterday has very little short term elasticity. As a result, prices tend to spike and then re correct sometime later. Now one of the things that lifting sanctions does is allows oil to go different places. And this is really the way to keep price spikes manageable is to the large reserve of oil in the world before the conflict started was in Russia because there was a great deal of sanctioned oil in Russia. So lifting Russian oil sanctions does help equilibrate the market and it seems to be having that effect. Lifting of Venezuelan sanctions does a little less partly because I think if the reports were accurate, the productivity and the, the, the ability to increase even modestly. The production of oil in Venezuela is quite limited because of the state of the industry. It's quite rickety. At one time PISA was a jewel of a company and attracted the very best people in Venezuela. Was Operated at a very high standard.

[C]

Yeah.

[A]

But over the years, one of the things that happens when you have leaders like Chavez or Maduro, instead of the best and brightest running the company, the buddies of the El presidente run the company. And, and it doesn't run as well. And because of the lack of investment, the history of expropriation that's gone on and poorly maintained assets, there's just that much flexibility to raise the output in Venezuela. But lifting residual sanctions, given that the US is basically controlling the flow of oil out of Venezuela, lifting those sanctions probably does help equilibrate the market. Keep in mind that the one reason that there is a global price on oil, to the extent there is a global price, there's lots of different kinds of oil, those kinds of things, but there is a price because there are so many ships full of crude oil floating around. And if there's a $10 spread between West Texas Intermediate and Brent crude, what will happen is the vessels on the water will go in a different direction to capture that, to essentially the vessels will conduct arbitrage. But what that does is balance and even out price spikes. So a very interesting world now that's in a world where vessels can get insurance and move freely.

[C]

Yeah.

[A]

And so there are actions being taken on that side too. The 22 Nation Coalition to basically keep the Strait of Hormuz open. The US backstopping insurance with reinsurance funding. We'd talked about them offering insurance before and I was a little concerned about the underwriting. But reinsurance is just a financial backstop that I think the US is right to step in and do just to get movement of the key assets going and keep economies at a predictable level. So this is one of those things that it was always going to happen. It was the reason for 47 years that the Iranian government has been able to run a protection racket is because nobody wanted to disturb the price of oil. And we're better positioned now than we would have been five or 10 years ago. But it's one of the things that's got to be managed in the conduct of this operation.

[C]

Yeah. I just want to say that the number we've all heard a lot this week is 14 billion. And that's the value of the Iranian oil, which sanctions were lifted. That's. Is that a good move from the administration here?

[A]

Well, to the extent that they control it, yes. It's where the oil's going and to whom and at what price. I mean, China was buying discounted oil from Iran in evasion of sanctions so if China now buys at world market price in dollars because the sanctions are lifted, that's a different calculation for China. So it's uneven. But I think what it does is keeps, keeps the world supplied to the extent possible.

[B]

Well, you know, I know was interested in a comment by Israeli commentator who said, basically, we're financing the enemy. You know, it's an unusual thing to do in a war. What it's indicative of, to my mind, which frustrates me, is the incompetence of all this. You know, people should have thought of this in advance. You know, I think the Venezuela episode with Maduro kind of got everybody in the administration thinking, oh, well, these are easy. We just swoop in and extract the guy and pull off sort of a mini coup and it's all quick and bloodless and clean and we move on. And this is the opposite of all that. And anybody that has done any work in the Middle east knew in advance that it was going to be the opposite of all that. Because everything in the Middle east is complicated and messy. And you would hope that our government would be smart enough to think about all these all possible contingencies in advance and say, well, if we do this, what are they going to do? And if they close the Strait of Hormuz, what are we going to do about that? Are we equipped to do anything about that, both from a military standpoint and from an economic standpoint? And the answer was, basically, I think we got caught flat footed. Nobody was expecting that. And here we are. The question that's been asked of me several times has been who's benefiting from the sanctions removal? And clearly the Russians are.

[A]

Yes.

[B]

And the EU is not happy about that, which is another issue. I'm not sure the extent to which the Iranians are benefiting from it because I'm not sure how much of that additional 14 billion they're going to be able to sell. I think all this stuff ends up on the spot market because people are not going to enter into contracts, any kind of long term contracts with any of these guys. I think that's right, Bill, because if the war is over, and of course, if you listen to Trump, it's going to be over very, very soon. A lot of these things are going to go back in place. So we're talking about what is maybe a short window, maybe a little bit longer window, which also leads me to believe that if you're looking for an actual economic impact on the price of gas, gasoline in the United States, this is probably not going to make Much difference. First of all, most of this stuff goes to other stores, most of it goes to Asia.

[C]

Right.

[B]

I mean it'll relieve pressure, but I don't see it having a big impact. It's having a market calming effect. Every time they announce something like this, you know, the market, the stock market goes back up and Trump watches that. So that's, you know, the last time he announced we were on the verge of some kind of deal with Iran. It was, you know, an hour and a half before the market opened Monday morning, which is convenient timing. I mean they pay attention to this and it does have that effect. I'm not sure if you're worried about, you know, the price at the pump that any of this is going to make much difference.

[A]

Bill, I think that's right. I mean if you look, there's been what, six days where oil's been over $100 a barrel in, you know, four week campaign here. So we had five years during the, the eight years of President Obama's administration, there were cumulatively five years where the price was $100 a barrel or higher. So we've operated at similar levels all the time. People are accustomed to it. I don't think it's going to make a lot of difference in the end, but it is a way to keep engagement going on. I would also note that this is a very different alliance in the Middle East. I mean, to have Israel and Saudi Arabia on the same side is quite fascinating. Most of the Gulf states also have announced their support for the US and the Israeli effort and opposition to Iran and have, have taken missiles as a result of it. So it's a new kind of conflict. From that standpoint, the alliances are definitely different.

[B]

I just think it was shortsighted on our part. I'm sure the administration was thinking, well, it's not really going to have a big effect on us because we're exporter, we've got oil, we've got gas, so who cares? And they really didn't think about the knock on effects for other countries. If Asia and even China, but India and Southeast Asia, Australia for one, can't get what they want. That's going to affect US Supply chains and a whole bunch of sectors. It's going to affect prices. But if the war continues, I mean all this depends of course on how long it lasts.

[A]

Sure, of course, that's right.

[B]

If it goes on for weeks, if not months, we're going to have shortages and we're going to have factories closing in Asia and that's going to affect U.S. supply chains and U.S. prices here, I don't think they thought about that. They're probably not thinking about it now. And that worries me.

[C]

And I'll tell you, there are a lot of people reading between the lines yesterday when the White House announced the rescheduled Trump XI summit in mid May and thinking that'd be some indicator of when this will all wrap up. But who knows? Who knows? So we'll continue to track it, but I want to turn now to steel. We have a move by the UK to boost its steel industry by imposing new import tariffs. Unsurprisingly, the UK steel industry is celebrating the move, though some manufacturers may be a little more wary. So Bill, what happened here and why did the UK feel the need to do this?

[B]

Well, steel is sort of ground zero for the overcapacity issue. Yeah, the earliest victim, Chinese steel capacity is more than all the rest of the world combined. And they're dumping and underselling everywhere, including the uk and countries are beginning to realize that this is devastating for their industries. In the UK case, it's steel, but it's also downstream from steel, people who make things out of steel. And more and more countries, I think, are realizing that they need to do something about it, even though doing something about it, as the UK did, which I'll get to in a second, violates the most fundamental WTO rule of most favored nation, which is a concession made to one needs to be made to all. And what we're evolving into is a world in which a lot of countries are saying a concession made to one needs to be made to all except China. Which parenthetically is why, if you read the Chinese WTO paper for the ministerial, they're a really, really strong supporter of MFN because they're the biggest beneficiary. It prevents other countries from ganging up on them. The UK is beginning to gang up on them. What they've done is they, they've set a national goal, which I found interesting, to meet their domestic demand with 50% domestic production. Currently it's 30. So that's going to be a big increase in steel production. I'm not enough of an expert on the British industry. I believe one of their largest plants, if not their biggest one, actually owned by a Chinese company, which is kind of interesting. But in order to help them get to that goal, they're reducing their tariff free steel import quotas by 60% starting in July. They're imposing, basically they're doing a tariff rate quota. They're reducing the amount of Steel that's eligible for tariff free treatment. They're imposing a 50% tariff on imports that exceed the levels that they're going to set. And they're also, this is interesting because I didn't know that they had this much flexibility. They're increasing their MFN steel tariff at the WTO to 50%. WTO wonks know that, you know, there's a difference between applied tariffs and tariffs that are, that have been committed to the wto. The tariff that you promise the WTO not to exceed sometimes can be high. The tariff you actually apply can be much lower, is much lower. Under WTO rules, it's always okay to go down. Going up is when you have the problem.

[A]

But that's really unusual, Bill. It's really unusual for a country that's been trade negotiating for as long as Britain has. I mean they've been part of the GATT from the very beginning to have a boundary that much higher than their applied rate. Wow.

[B]

We need to look into that a little bit more. But it's, that's apparently what they're doing. And that lines them up pretty much with the United States and with the EU and with Canada. The details are different, but they're all moving in the same direction and they're all trying to deal with the overcapacity issue caused by China. And I think it's an interesting move because if they get away with it here and it works, you're going to see it in other industries as well. I mean, the EU is already doing it on cars, on EVs and as have we, as a matter of fact. So there's a movement here that's growing and I've talked about this in the past. The difficulty is it's not organized. Every country is doing its own thing at their own speed with respect to the products that they care about, which are not always the same. Indonesia is hitting the Chinese on textiles and apparel because that's a big issue there. It would be nice if we could get all these countries together to do the same thing and present a common front. I think that would be a much more effective impact on Chinese policy than what's going on right now. But right now this is where it is. But I look forward to grow. I think we're going to see it more often.

[C]

Scott, what do you think?

[A]

Well, I think this is more than make Great Britain great again. This is addressing a real problem and it's a problem that is surprisingly persistent. I mean, I don't know much about steel. The company I worked for, had some steel tanks in their chemical operations. We didn't make it. We were a consumer of it. Now, having said that, I've been hearing about steel overcapacity as a global problem for at least 30 years, maybe goes back further than that. But it's a very persistent problem. It's very hard to resolve. And I think the action they took sounds well reasoned, sounds defensible, but also it addresses this bigger issue of it's such a persistent problem, I don't know if we're going to solve it.

[C]

All right, guys, we have one more topic to get to today, and that's the U.S. ecuador Trade Agreement that was signed on March 13th. Bill, you find a few things interesting about this agreement. What are you seeing?

[B]

Yeah, I was intrigued by it. It's not a huge agreement because in many respects it's like a lot of the others with Guatemala, El Salvador, Argentina, they all were sort of done at the same time. But one of the things that we've noticed about this one is, is that it does not appear to have a US across the board reciprocal tariff. I mean, right now it does because of section 122, when everybody has 10%. But most of these agreements have a number that's unique to that country. So Malaysia is 18 and Indonesia is 19 and Vietnam is 20 and Australia's 10 and so on and so forth. It doesn't appear that Ecuador is getting that. And for most tariffs, we're going to assess the MFN tariff, which is generally lower than all these numbers that I've just been talking about. And I've been trying to figure out why we're doing that with Ecuador. And I don't really know why. I mean, it's. The trade impact on the United States either way is not great. It's not a huge economy. But it's an interesting step that we didn't feel the need to impose one of these arbitrary higher numbers that they've done in all the other cases. Beyond that, you know, it's kind of your. There's always special provisions. It's kind of your standard agreement. Ecuador is going to eliminate quantitative restrictions, which they apparently have on a lot of things, and they're going to provide TRQs, tariff rate quotas for a number of US agriculture exports. This will make the farmers happy, including corn, sorghum ethanol, poultry, pork, dairy and soybean oil. So they agree, and here it becomes sort of standard boilerplate. They agree to accept US Standards, technical regulations, FDA certifications, transparent import licensing, IP protection. They agree not to impose a digital services tax or customs duties on electronic transmissions. They agree to prohibit the importation of goods made with forced labor. These provisions appear in a lot of the agreements and they're not unusual. There is an interesting national security provision which has appeared in a couple others. I'm not sure the wording is exactly the same. Where Ecuador agrees basically to mirror US Import restrictions aimed at addressing shared economic and national security concerns. That means the 232s, I think, and that they agree to cooperate on export controls and sanctions and review inbound investments for surety risks. We've asked that for a lot of these countries. And of course, you know, when you get into it, some of this language is squishy. Shared economic and national security concerns, well, maybe they're not all shared. You know, we may have some that they don't share. So what does that. That means they don't have to do anything. They're going to cooperate on export controls. What does cooperate mean? You know, there's a difference between we will do what you tell us to do and we will cooperate with you. There's a big difference. And so a lot of this ends up being sorted out in the implementation phase, which will come later. But you know, I think there's a lot of market opening that's going on here. And one of the questions I think critics of the Trump administration have to deal with, and I'm one of them, although I'm not going to deal with it today, is that, and I listened to a speech about this the other day is, you know, they've done a lot of market opening things and one of the points that they make is, you know, WTO go by the rule book. Softies have been trying to do this stuff for 30 years and you failed. You know, and we came in and used a big stick and we succeeded. So, you know, think about that.

[A]

Well, that's precisely the situation with Ecuador. I mean, Ecuador had a preference program back in the aughts as part of an anti drug effort in the Andean region. And there was an effort in the George W. Bush administration to secure an Andean free trade agreement and make it into a. There were real market opening commitments on both sides. And as I recall, Ecuador made it through the first negotiating session and dropped out completely. So full marks to the USDR team just were getting to the signing ceremony. It's like the first time that was 20 years ago that the Andean agreement fell apart. We wound up with free trade agreements with Peru and Colombia out of it. But Ecuador has been nowhere since then in terms of U.S. u.S. Treatment. This at least provides some market opening on some products. And it's. It's got a signature on the bottom of the last page. Good for them.

[B]

Although it, like all the other ones, it won't be going to Congress, which makes you wonder how long it's going to last. But we will see.

[C]

We will see, and we will leave it there. Bill and Scott, thank you so much. Happy opening day to both of you.

[B]

Oh, that's right.

[C]

Today's the one day of the year where us Reds fans get excited about baseball, and it typically goes downhill pretty quickly after that.

[A]

So.

[C]

But this is. This is a holiday in Cincinnati.

[B]

Oh, really?

[C]

As Scott well knows from his PNG days, this is not a lot of productivity going on in Cincinnati's economy today.

[A]

The Reds are a beloved franchise, and because they're the oldest in Major League Baseball.

[C]

That's right.

[A]

They get the first game. One time it was called on account of cold weather, but other than that, those things happen in the Midwest. But it's a great day in Cincinnati.

[B]

They're older than the Pirates.

[A]

Yes.

[B]

Oh, dear.

[C]

The Reds were founded in 1869.

[A]

It's the oldest of all current teams.

[C]

Many, many years ago in college, I spent a summer working as an intern in the front office of the Reds, and I can best describe it as like a George Costanza with the Yankees experience. I didn't do a whole lot, but whenever there were afternoon games, I was sure to be found in the stand somewhere with a hot dog and watching. This was back in the Griffey days, so it was actually somewhat enjoyable to watch, but excellent. All right, guys, good to see you. We'll be back next week.

[A]

Thanks.

[B]

Thank you.

[C]

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