The UK Trade Remedies Authority (TRA) has initiated two reviews of the current safeguards measure on Category 1 steel product hot rolled flat and coil steel, Kallanish notes.
The suspension review and Tariff Rate Quota (TRQ) review are in response to applications from Tata Steel UK (TSUK) and Kromat Trading Ltd. Both reviews respond to TSUK’s recent proposal to close its two blast furnaces in Port Talbot.
If adopted, the production plan TSUK submitted to trade unions for formal consultation on 19 January would significantly reduce TSUK’s capacity to produce hot rolled flat steel for a period, and would require greater imports.
“This would mean that the current level of duty-free TRQs for Category 1 steel would be insufficient for UK industrial needs. Additional imports required in place of reduced domestic production would face tariffs of 25% after they exceeded the current quota size – something we have already started to see happening as imports have increased,” TRA says.
“We are carrying out the reviews in parallel with the consultation between TSUK and trade unions. Should the consultation result in a different production plan, the TRA would take that into account in making a recommendation to the Secretary of State for Business and Trade,” it adds.
Subject to any further comments received from UK producers, the TRA intends to recommend that the safeguard measure on Category 1 products is suspended for nine months.
TRA expects the TRQ review to take longer to carry out than the suspension review. The revised TRQ regime will then replace the temporary suspension of the safeguard measure for this steel category.
Currently, TRQs are allocated to countries based on traditional trade flows. As part of this review, the TRA is considering whether it is appropriate to change the method of allocation to give importers an individual allocation of TRQs. The proposed scheme would not tie quotas to an individual country, meaning importers would be free to choose the source of imports.
“We want to avoid a situation where new imports needed to backfill reduced domestic production pay tariffs of 25%, loading additional costs onto the UK economy,” says TRA chief executive Oliver Griffiths.
Interested parties must register their interest by 25 February.
Adam Smith Poland