EU trade measure unlikely before July, says Rudyuk
The European Commission’s proposed trade measure to replace steel safeguards is an unprecedented change in approach to imports, involving the renegotiation of access to the EU market with all supplying countries, says Van Bael & Bellis trade lawyer Yuriy Rudyuk. This complexity means it is unlikely to be implemented until July 2026.
It may also cause tensions with EU industries other than steel if they are consequently forced to make concessions.
Article four in the proposed legislation sets conditions for establishing country-specific quotas, which raises the big question of how quota allocations will be negotiated with the EU’s multitude of free trade agreement partners. This is likely to be a highly complex procedure since FTAs, signed for example with major steel suppliers such as Korea, Vietnam, Japan, Turkey and the UK, protect preferential trade with the EU and will be very difficult to change.
These partners could therefore have strong legal cases against the EU if the bloc imposes new restrictions on them, Rudyuk told delegates at the EUROMETAL Steel Trade Day in Düsseldorf attended by Kallanish.
The proposed legislation has been reviewed by the European Parliament, with one suggested amendment being to bring forward the first review of whether the scope of the measure needs to be extended. This will be important for many steel market players in order to protect downstream steel users, Rudyuk noted. The EU member states’ Trade Policy Committee weekly meetings are also likely to be discussing the new regime, although these talks are not made public.
The new trade regime includes no exemptions for developing countries. Trade partners will be able to request compensation for restricted EU steel market access by demanding improved access to other sectors, such as chemicals or medical equipment. These EU industries may consequently ask for protection measures of their own. If trade partners are not satisfied, they could retaliate with their own measures.
“Negotiations with FTA members, internal process and the World Trade Organisation consultations … it’s like a Swiss knife. The European Commission today has to … be really in all these points and deal with all these challenging elements. And it may, again, upset a number of industries in the EU,” Rudyuk noted.
Rather than confronting trade partners, therefore, the EU is more likely to aim for a multilateral agreement – or coalition – with like-minded countries, to unite against overcapacity.
“You will have to position your trading elements very well and know when to bring the product, when not to bring the product. But there will be lower availability of the product from abroad, probably because of the 50% duty; that’s very high,” Rudyuk said of the new measure.
The regime is formed of the basic regulation plus numerous implementing acts to follow, dealing with numerous points, and is likely to remain a work in progress for quite some time, meaning it will be very complex. This complexity means it is unlikely the new measure will be implemented until July.
The potential melt-and-pour rule implementation meanwhile brings in a “completely new level of complexity” as it may affect preferential and non-preferential origin rules, he added.
With steel imports being more restricted, there is a risk of more downstream products entering the EU market instead.
“We already see increases now, but with less quotas available, there will be more interest in bringing downstream product, so that may also complicate trading … Perhaps it will be more difficult for smaller companies to continue in such an environment. There’s going to be … lots of regulation, a low level of predictability. So some of the smaller companies may decide we cannot do this anymore because … 50% [tariff] is too risky. So there could be more consolidation of trading activities in the EU,” Rudyuk concluded.
Adam Smith Austria
