European Union Set to Impose Provisional Quotas on Steel Imports

Why EU initiated safeguards investigation?

The EU had justified its action of safeguard investigation citing reasons of increased steel imports into Europe over past few years and also the likelihood of surge in steel imports into EU post U.S. tariffs announcement, as the steel manufacturers may divert their production to various countries across the globe and EU being one of the biggest steel consuming markets.

While the investigation is currently ongoing, international trade rules allow the EU to impose “provisional safeguard” tariffs for up to 200 days, if it concludes that increased imports have caused or may cause serious injury to its steel sector.

The provisional quota that is likely to come into effect

On 5 Jul’18 the committee within the European Commission concerned with trade safeguards met to discuss the probable implementation of provisional safeguard measures for the import of steel in Europe. These quotas are likely to be implemented from mid-Jul’18.

According to the sources, it is likely that EU could impose provisional import quotas on a global level on steel imports and a tariff of 25% on imports above the imposed quota. Also, the question of country quota could be addressed further going toward definitive measures that will be announced before the end of the year.

All steel products are expected to be included in the provisional measures, excluding stainless hot-rolled quarto plates, grain-oriented electrical sheets, and railway products as imports of the above products decreased during the investigated period of 2013-2017.

ISSB (International Steel Statistics Bureau) data suggest that EU’s total steel imports during the period under investigation has increased from 26.8 MnT in 2013 to 39.08 MnT in 2017.

Resistance from end-users segment

While the steel manufacturers in Europe are supporting EU’s safeguard move, heavy resistance is building up by steel users, including ACEA, the European Automobiles Manufacturers` association, in order to avoid provisional and in particular final measures.

According to ACEA, European steel producers are in good health, reporting high profits in 2017 and similar outlooks for 2018. Capacity utilisation in the EU steel sector is also currently high, with some producers even experiencing a shortage of capacity leading to increased prices and longer lead times. ACEA has also stated that it is vital for the end-user industries in European countries to have the ability to procure raw materials and semi-finished products at competitive prices as many steel products are already subject to antidumping and anti-subsidy measures imposed by EU.