EU to extend safeguards, cap ‘other country’ imports

The European Commission has proposed to extend the EU safeguard measure on steel by a further two years to 30 June 2026. It will also introduce a 15% cap per origin over the “other country” tariff-rate quota (TRQ) for hot rolled coil, to ensure market stability and avoid crowding out traditional suppliers, Kallanish notes.

The surge in imports from certain new origins is related to growing overcapacity in certain regions, as well as to the significant pressure exerted by a strong increase in Chinese exports to certain markets, the Commission says.

The import surge means the category 1 – HRC – other country TRQ has “been consistently exhausted on the first day of the quarter for several consecutive quarters. This has created an imbalance on the market throughout the remainder of those quarters by making available very large amounts immediately, thus generating substantial import pressure,” the Commission adds.

This has caused a stir in the European market.

“Import pressure is particularly acute in this product category as imports continued to gain ground despite an overall substantial drop in steel consumption in the Union. In fact, the market share of imports in this product category reached 30% in 2023, substantially above the average for the product concerned as a whole,” it continues.

The cap ensures import penetration on the first day of the quarter would be limited and allows the most affected exporting countries to still export relevant volumes, the Commission points out.

The same, 15% cap has also been introduced for category 16 – wire rod. “As of the quarter July-September 2023 the composition of origins changed abruptly within the residual TRQ in this product category, with several new origins suddenly exporting very large amounts in the last three quarters. This resulted in a massive reduction of free-of-duty imports from all other exporting countries which used to have a stable presence on the Union market. In fact, some of them virtually stopped exporting under this TRQ,” the Commission notes.

The rate of liberalisation will meanwhile be reduced from 4% to 1%. Data show the liberalisation rate in the past has largely outpaced the evolution of consumption, the Commission explains. While TRQs have been increased by almost 25% since the measure was imposed – including the 5% top-up applicable since February 2019 – consumption decreased 17% over the same period. These opposing trends have therefore significantly widened the gap between the level of TRQs and market demand.

The move will ensure the measure’s effectiveness “in a period where the Union market is suffering significant import-driven tensions, caused by the negative effects of overcapacity and the resulting responses to it across the world, in a context of weak demand,” the Commission notes.

The Commission is also proposing to include Mozambique within the scope of the safeguard measure as from 1 July.

Adam Smith Poland