EU poised to open steel-safeguard probe in face of US tariffs

8 March 2018 1:54pm
US and EU Flags

7 March 2018. By Poppy Carnell.

The EU could be ready to impose volume caps on steel imports within two months, to counter any excess global supply redirected as a result of US President Donald Trump’s planned tariffs, MLex has learned.

The European Commission assured EU members today that it was ready to open a safeguard investigation on global steel. Provisional quotas, with duties attached, could come as soon as six to eight weeks after opening the probe.

Aluminum producers will have to wait longer for similar action, as investigators are yet to gather solid enough evidence to warrant a safeguard probe.

EU Trade Commissioner Cecilia Malmström told reporters today that the bloc is ready to take action against the US’s expected catch-all tariffs of 25 percent on steel and 10 percent on aluminum imports. The EU and other trading partners have said if the US goes ahead with a move to impose the tariffs, which is expected by the end of the week, it will be breaking global trade rules.

The EU has drawn up a list of some 100 US goods that could face duties in retaliation.

The bloc also intends to open safeguard investigations for the two products, since global trade restrictions on exports to the US could cause a market glut, according to domestic producers that fear a subsequent flood of imports into Europe’s market.

The commission has the evidence it needs to open a safeguard probe on steel, but not yet on aluminum, MLex understands.

Nuclear option

According to EU law, officials must have evidence of a sudden and significant surge in imports that is causing serious injury to European producers. The levels needed to prove this are higher than in typical trade defense probes.

Investigators are poised to open the steel probe if the US moves to impose its own safeguard measures, MLex understands. Provisionals can last a maximum of 200 days, with definitive measures following for a maximum of four years — although they can be extended by an additional four years.

Safeguards are rarely used in trade defense, especially by the EU due to their non-discriminate nature, and are often seen as the “nuclear” option in tackling cheap imports.

In this case, all countries’ imports would be subject to measures, but most likely with a tariff-free quota, meaning duties will only apply after a certain volume of imports. Malmström has stated publicly that the EU is in touch with trading partners to make sure fair traders avoid being penalized, and will continue to have access to the European market.

Import caps, which are intended to block a surge in imports, will be based on average import volumes over the past three years, to avoid disrupting current levels of trade. Last year the EU imported around 40 million tons of steel from around the world.