September was a busy month for Trade Tracker, with wide-ranging developments to the trade protection frameworks of the world’s steel trading nations, as detailed in McCloskey’s October database.
The European Union (EU) was this month’s biggest mover, not only imposing definitive anti-dumping (AD) duties on hot-rolled steel, and initiating an AD investigation into cold-rolled coils/sheets, but also giving first signals on its intentions for the long-term replacement to its existing safeguard mechanism, as reported and detailed exclusively by McCloskey.
Egypt is extending its safeguard protections both up and downstream to new steel products, seeing current defenses on hot-rolled coil as insufficient in scope to shield its domestic industry.
The Americas also saw extensive developments, and Asia was well-represented in this month’s updates, though primarily as a target rather than an instigator of steel trade protection measures.
Europe – a new steel trade landscape
McCloskey had early sight of the European Commission’s draft proposals for its long-awaited replacement to the EU’s steel protection framework last week, exclusively detailing the unprecedented changes the Commission’s proposals would bring for Europe’s steel trade landscape.
The EU’s current protections take the form of a safeguard, imposed unilaterally in response to US President Trump’s original section 232 steel tariffs during his first term in 2018. Safeguard measures impose additional tariffs to a country’s base tariff rate on steel products, where emergency criteria defining injury or a threat of injury to domestic industries from an increase in international imports, are met.
Under World Trade Organization (WTO) rules, safeguard measures have a maximum term of eight years – the deadline for which falls at the end of June next year – meaning the EU has two options if it wishes to continue to shield its steel industry: either allow the safeguard to lapse, and leave its steel market unprotected beyond existing AD or countervailing duty (CVD) protections, or work within the WTO framework to permanently increase its base steel tariff rate from duty-free or minimal levels (unless imported in excess of the current safeguard quotas, at which point a 25% additional duty currently applies), to the Commission’s proposed 50%.
To increase the EU’s base steel tariff – its tariff concessions – in this way, the Commission’s draft proposals indicate that the EU intends to seek acceptance of a higher steel duty from affected WTO members through formal negotiations, the process for which is dictated by the WTO’s General Agreement on Tariffs and Trade (GATT) Article XXVIII.
The Commission’s draft proposal seeks authority from the European Council to open negotiations and consultations with “those WTO Members that have negotiating rights” – defined by the GATT as countries with a principal supplying interest; a substantial interest; or those members who were party to negotiations setting the EU’s original steel tariff rates. This group is obviously extensive due to the wide jurisdiction of the global steel markets, and includes basically any country that is exporting, or has exported steel to the EU.
To increase steel tariff concessions, compensation would generally be required to affected WTO members, and the Commission has signaled a willingness in its draft document to reduce tariff concessions in other markets in order to secure agreement to higher steel duties. This means that the EU’s replacement steel protection framework could affect all markets and commodity trade flows, not just those in the steel or wider metals sector. It also suggests that speculation within the European market that replacement steel protections could come as early as January, are now pretty unrealistic given the amount of legwork required in assessing, conducting, settling, and implementing the results of these WTO negotiations.
The details of the draft proposals are laid out extensively in McCloskey’s primer, but would generally reduce steel import quota volumes by around 45% and see out-of-quota duties doubled to 50%, and introduce a ‘melted and poured’ mechanism to dictate how import volumes are allocated to the as-of-yet undetailed country-specific quotas. The total quota volume to be available – with divisions by product category and country-specific quotas as yet unavailable – was calculated on the basis of a 2013 import share of 13%, cited by the Commission to be 18,345,922 tons.
The Commission has indicated that the formal proposal will be released 7 October, and as with previous draft proposals like the Steel and Metals Action Plan, it could differ significantly from the draft.
While taking care not to speculate too widely, the draft proposal also shares common language – particularly surrounding steel overcapacity agreements – with the US-EU framework trade agreement from June, and August’s associated joint statement, which suggests these WTO negotiations could be the EU’s intended route to secure duty-free steel quotas vis-a-vis the US. China has also announced its intentions to renounce its developing country status as relates to the WTO – very relevant to potential article XXVIII negotiations – and has signaled commitments to reducing and modernising its steel capacities as per its September steel work plan.
Beyond the Commission’s draft proposals, the EU also imposed definitive anti-dumping duties on hot-rolled coil/sheets from Egypt, Japan, Thailand and Vietnam in September at rates of 6.9-30%; and initiated an investigation into cold-rolled coils and sheets from India, Japan, Turkey, Vietnam and Taiwan, China.
Trade restrictions were also introduced against Iran’s nuclear and petrochemical supply chains, but contrary to some media reports, this appears to be limited to export and brokering/financing restrictions on Iranian consumption of relevant goods, and does not appear to entail a ban on imports of Iranian semi-finished products into the EU.
Egypt – new safeguards
Egypt looked to the safeguard route in protecting its steel industry in early-to-mid September, investigating semi-finished and downstream coil imports – namely steel billet, cold-rolled and hot-dipped galvanized coil, as well as pre-painted flat steels. This means that all major coil imports into Egypt are restricted by safeguards, with an earlier case into hot-rolled coil opened in late-April.
Egyptian authorities received evidence that a sharp rise in relevant imports was negatively impacting its domestic industry, linked to a decline in sales volumes, reduced rates of capacity utilization, and a decline in market share amongst domestic producers.
Targeted coil imports were hit with duties from 4.94-12.16%, with duties of 16.20% suggested on billet imports at a minimum effective duty of EGP4,613/t (around $97/t). The provisional safeguard measure will be effective for 200 days from 14 September.
Americas – additional AD restrictions
September also saw extensive developments in AD protections across Brazil, Canada, Mexico, and the US.
Brazil imposed static AD duties targeting flat rolled carbon steel from Asian exporters, as well as Chinese-origin stainless cold-rolled steel and seamless pipes and tubes from Ukraine. Brazil also introduced provisional tariff-quotas for beam products as defined by the Mercosur framework.
Canada introduced a range of provisional AD measures against European and Asian countries on carbon and alloy steel wire, and definitive duties on Turkish and Vietnamese corrosion-resistant steel. An administrative review was also opened into welded tubes and pipes from Pakistan, the Philippines, Turkey, and Vietnam.
Mexico eliminated its AD duties on Chinese wind towers, as no domestic producers registered interest in preserving the protections; and engaged a review of its AD measures on Ukrainian bars and rods, Romanian, Russian, and Ukrainian carbon steel plate products; and Chinese screws, nuts and bolts. Investigations were also started into seamless pipes and tubes from China, and Taiwan, China; and wire ropes from Malaysia and Vietnam. Definitive duties were also brought in to protect Brazil’s stainless hot-rolled steel from dumping ex-China.
In the US, AD measures came into force on carbon steel plate exports from Belgium, Italy and South Korea, with a CVD also brought in against Posco’s South Korean plate exports in lieu of AD duty. Imports of hot-rolled coils/sheets were also hit by definitive AD and CVD duties, targeting China, India, Indonesia, the Netherlands, Thailand, Ukraine, and Taiwan, China. AD/CVD measures were also brought in on oil country tubular goods (OCTG); seamless pipes and tubes; stainless steel welded pipe; rebar; and welded tubes and pipes from a variety of exporters, predominantly focused across Europe and Asia, as detailed in McCloskey’s accompanying October steel protection database.
Asia and Oceania – primarily a target, though some AD developments
Asian countries were primarily a target, rather than an instigator of trade protection measures in September, though India did launch an investigation into the alleged dumping of stainless cold-rolled products from China, Indonesia, and Vietnam.
South Korea also introduced provisional AD measures on hot-rolled coils/sheets against China and Japan.
Thailand proceeded an investigation into Chinese H-beam products, and introduced definitive AD duties on cold-rolled coils/sheets targeting China, Vietnam, and Taiwan, China.
Vietnam is also said to be mulling a circumvention probe into wide-width hot-rolled coil (HRC) imports from China, as China’s largest steel export destination.
Database Updates October, summary table
| Product | Total Actions | Key Complainants | Key Origins |
|---|---|---|---|
| Hot Rolled Coils/Sheets | 18 | EU, Egypt, Indonesia, Taiwan, China, US | China, Egypt, India, Indonesia, Japan, Thailand, Ukraine, Vietnam, All countries |
| Carbon Steel Plate | 13 | Brazil, Canada, Mexico, Turkey, US | China, Italy, Romania, Russia, South Korea, Ukraine |
| Welded Tubes & Pipes | 12 | Canada, US | Mexico, Pakistan, Philippines, South Korea, Turkey, Vietnam |
| Carbon and Alloy Steel Wire | 10 | Canada | China, India, Italy, Malaysia, Portugal, Spain, Thailand, Turkey, Vietnam, Taiwan, China |
| Cold Rolled Coils/Sheets | 9 | EU, Egypt, Thailand | China, India, Japan, Turkey, Vietnam, Taiwan, China, all countries |
| Steel Reinforcing Bar | 8 | Australia, US | Indonesia, Malaysia, Mexico, Thailand, Turkey, Vietnam |
| Stainless Steel Cold-Rolled Products |
Benjamin Steven Journalist, Steel
Maria Tanatar Associate Director, Steel and Green Steel
