The European Commission has published country quota allocations for the Steel Regulation that will replace the safeguard measure from 1 July. Half of the 18.3 million-tonne annual quota has been allocated exclusively to free trade agreement partners, with the other half accessible for all countries, including FTA partners, Kallanish notes.
FTA partners will therefore retain a higher share of EU market access than the average quota volume reduction of 47%. A significant number of partners have provisionally agreed to their allocated quotas following negotiations, the Commission says. However, it adds it will continue engaging with trading partners at the WTO under the ongoing Article XXVII GATT negotiations.
Because the regulation is being adopted by urgency procedure, it is initially valid until end-2026. Member States will be asked to vote within 14 days after the regulation’s adoption by the College of Commissioners.
The regulation will then be re-submitted to the relevant Member State committee under the normal comitology procedure before the end of 2026.
Quotas incorporate two parts – those available to all third countries on a Most Favoured Nation (MFN) basis, and those available only to countries benefiting from an existing or future free trade agreement with the EU.
In addition, when a country-specific quota opened for a country having an existing or future free trade agreement with the Union is exhausted, operators from that country should be allowed access to an additional tariff quota – FTA Quota – Country-Specific Quota (CSQ). This quota is accessible on a first-come, first-served basis.
Whenever a country does not have a country-specific quota in a certain product category, that country should have access only to a residual, “other countries” quota. The residual quota is also split into two parts: a residual MFN Part and a residual FTA Part.
In view of the specificity of product category 1A – hot rolled coil – which amounts to nearly one third of total quota volumes, the Commission considers it necessary to guarantee specific quotas to certain trading partners under both the MFN Part of the residual quota and FTA Quota – Other countries.
The Commission says it also identified a serious risk of crowding out of certain origins leading to reduced sources of supply that would negatively impact effective market access for several FTA partners, also impacting their Union customers.
Turkey, for example, has been allocated a 642,295-tonne annual quota for category 1A – hot rolled coil. This is split into a 321,749t MFN quota and 320,546t FTA quota. This means Turkey receives a quarterly quota of 160,574t, valid through June 2027. India’s annual quota is 597,274t, equating to 149,319t quarterly.
The FTA quota CSQ is 120,921t per quarter.
The other countries (MFN residual) quota is 5,564t per quarter. The FTA quota – other countries (residual) quota is 4,272t per quarter.
Other large quota allocations include Vietnam’s 469,988t annual quota for Category 4A Metallic Coated Sheets and South Korea’s 442,795t for Category 4B Metallic Coated Sheets.
In a Q&A issued regarding the regulation, the Commission poses the question of whether partners will retaliate against the new measure. “Ultimately, the only way to avoid this proliferation of unilateral measures is to address the root of overcapacity collectively,” it answers.
EU trade commissioner Maroš Šefčovič says: “We are providing market participants with predictability through clear and transparent quota distribution rules, while applying a fair and objective methodology. The approach strikes a careful balance between our FTA commitments, the Article XXVIII negotiations in the WTO and the need to maintain diversified supply. The constructive progress made with our trading partners also shows that the EU’s WTO-compliant approach is effective in practice.”
