At the EUROMETAL Steel Day & YISAD Flat Steel Conference held at Istanbul Marriott Hotel Asia on Tuesday, April 8, in cooperation with SteelOrbis, Fabrizio Di Gianni, partner at law firm Van Bael & Bellis, talked about the recent developments in EU trade policy, its Clean Industrial Deal and its Action Plan on Steel and Metals.
Mr. Di Gianni gave details regarding the recent dramatic changes in the EU’s trade policy. He noted that, even though current trade defense instruments continue to play a crucial role, upcoming legislation is equally important for Turkish steelmakers to maintain trade relations with the EU, to keep the possibility of exporting and penetrating the European market, and to gain a strategic advantage.
One of the aspects of the trade policy is the Clean Industrial Deal (CID), which aims to decarbonize energy-intensive industries such as steel and aluminum that are the foundation of industrial growth.
Mr. Di Gianni said there are three main topics in the CID that are of importance to Turkish companies.
One are the Clean Trade and Investment Partnerships (CTIPs), which complement the free trade agreements. Under the CTIPs, clean energy supply chains and strategic trade relations will be strengthened. It will also prioritize clean technologies, renewable energy, and decarbonization.
Secondly, the European Commission (EC) will simplify the Carbon Border Adjustment Mechanism (CBAM) to reduce the burden on the industry, while ensuring carbon-intensive imports are regulated and global decarbonization is promoted. One of the most important changes to the CBAM will be the removal of about 90 percent of importers, mostly small and medium enterprises, from the scope of the mechanism. In addition, the EC will extend the scope of the CBAM to downstream products and to indirect emissions.
Lastly, the CID indicates the possibility of adjusting current tariffs to ensure a level playing field and the strengthening of trade defense instruments such as antidumping and countervailing duties, as well as safeguard measures to cope with the risk of trade frictions, especially as a result of the recent US measures.
Regarding the Action Plan on Steel and Metals, Mr. Di Gianni pointed out that the most crucial aspects of the plan for Turkish companies are the prevention of carbon leakage, and the promotion and protection of European industrial capacities. Therefore, in order to prevent carbon leakage, the threshold for quarterly emissions under the CBAM will be reduced to 50 percent from 80 percent.
The EC is also considering the possibility of extending the CBAM to certain downstream products to eliminate the risk of circumvention. Moreover, as the EC is taking a more aggressive stand, it will change its methods for the investigation. It would normally require evidence that imports from a certain country caused a major material injury.
With the new changes, it will proactively open investigations based on the threat of injury. Furthermore, the commission will launch stronger market surveillance. Also, there might be some modifications to the lesser duty rule, under which antidumping duties are set on the basis of the lowest level between dumping and injury margins. In the meantime, with the introduction of the melted and poured principle, origin will no longer be determined by the country of processing but by the country where the steel was originally melted.
The Van Bael & Bellis official concluded his presentation by saying that, by the third quarter of this year, the commission will consider limiting scrap exports. This could limit access to EU scrap for third-countries recyclers and may reduce the availability of scrap for export, he noted.
