EC unveils official steel trade protection rework

The European Commission released its official proposals for its rework of the EU’s steel protection framework 7 October, detailing extensive cuts variable across product category volumes.

The official proposals largely mirror the changes recommended in the draft proposals revealed by McCloskey last week, and now include annexes detailing the CN code categorization of steel products and their respective allocation of the overall quota volume of 18,345,922 tons – a total reduction of 47%.

The out-of-quota duty for steel imports will increase – potentially permanently due to formulation as a new law – to 50%, and specific allocation to country-specific quotas, which will be established via subsequent implementing regulations on the basis of negotiations with World Trade Organization (WTO) members, will be subject to a ‘melted and poured’ clause ensuring that allocations match the origin in of primary steelmaking.

Specific allocations by product category under the new framework, alongside a comparison to the total country-specific and other countries quotas for each product category in year eight of the existing safeguard system, are detailed in the appendix below.

Trade defense measures already in place – namely anti-dumping and anti-subsidy duties – will continue to apply in addition to the new measures.

The date of implementation will be 20 days following publication in the Official Journal of the European Union, but is signaled to take effect from July when current protections lapse, due to the lead time inherent to consulting with World Trade Organization (WTO) partners and the EU’s comitology process.

The official proposals are also packaged alongside the Commission’s staff working document assessing both the potential impact of the measures and a variety of alternative strategies.

The staff working document evidences that the majority of consulted stakeholders were in support of the direction the European Commission has ultimately taken, but the margin was very close for some provisions, including the doubling of the out-of-quota duty level to 50% (57.6% of respondents in support); the elimination of the carry-over mechanism (53% support); and the permanent duration of the measures (57% support).

Other elements received stronger majority support, including the formulation of the protections as a tariff-rate quota framework (88% support); universal application across all exporting origins (“a large majority”); the inclusion of the ‘melted and poured’ clause (77.5% support); and the fundamental necessity of the measures (75.1% support).

Communications from the Commission accompanying its documented proposals illustrate that the significant cuts to the quotas are intended to give sufficient room for our industry to reach healthier capacity utilization levels of 80%, versus the cited current level of “around 67%,” and are designed – or at least intended – to be compliant with WTO rules.

The European Economic Area (EEA) countries will not be subject to the measures – and the Commission details that Free Trade Agreement partners more generally will be involved in discussions on the implications of the proposal, within the context of finding a “collective solution to the global overcapacity problem.”

Importantly however, the Commission stresses the “need to be realistic,” stating that “an exclusion of FTA partners’ imports is not possible. They represent 2/3 of total imports, some of which contribute to overcapacity, and such an exclusion would make the measure totally ineffective.”

As relates to Trump’s US administration and the US-EU framework trade deal agreed in the summer, the Commission emphasizes that its measure is “unilateral,” and based on the European Steel and Metals Action Plan, “which predates the EU-US Joint Statement.”

“However, the Commission shares many of the concerns of the US on this sector,” says the Commission. EU exports to the US continue to be subject to a 50% tariff rate, though the US-EU framework trade deal indicated parties would work together to establish duty-free quotas for the bloc’s steel exports.

Benjamin Steven Journalist, Steel

opisnet.com