EU adds four more steel products to definitive safeguards due next month

7 January 2019 10:02pm

7 January 2019. By Joanna Sopinska.

Four more steel products could fall under the scope of EU safeguard measures that will come into effect next month under proposed definitive measures by the European Commission.

The draft, submitted to the World Trade Organization last week, adds four new steel products to an original list of 23 under the interim measures. They are stainless hot-rolled quarto plates, railway materials, other seamless tubes, and non-alloy and other alloy cold finished bars. One product — bearing tubes and pipes — is also removed, bringing the total to 26.

The safeguard measures are designed to protect the EU’s domestic industry from the knock-on effects of US tariffs imposed early last year, whereby exports once destined for America might be diverted to European markets. The EU proposes to implement a 25 percent duty on imports of certain steel products above a tariff-free quota.

The commission “concluded that the [EU] steel industry is in a situation of threat of serious injury for the product concerned, including the 26 product categories under assessment,” according to the draft proposal.

The measures will apply for three years and end on Jul. 16, 2021. The starting date is regarded as Jul. 19, 2018, which was when the provisional measures were introduced. A tariff rate quota should be open from Feb. 2, 2019, the draft proposal says.

Countries that export a large amount of steel to the EU — such as Brazil, China, Iran, Russia and Ukraine — will get individual quotas for each product except hot-rolled coils, while a separate quota will be open to all other exporters.

Norway, Iceland and Liechtenstein are exempt from the measures because of their membership in the European Economic Area. Countries with European partnership agreements, including many African countries, will also be exempt from the definitive measures.

The tariff-free quota will be based on export levels between 2015 and 2017, but will include a 5 percent increase over the average of these numbers to account for a surge in demand witnessed last year. The EU plans to increase the quota by a further 5 percent each year to meet the WTO requirement for progressive liberalization of restrictive measures.

The draft proposal will be reviewed and voted on by EU governments on Jan. 16, and is expected to enter into force on Feb. 1.

— Carmakers unhappy —

While welcomed by EU steel producers, the measures have had a frostier reception from those industries that consume steel, such as carmakers.

“These protective measures for steel imports come at a challenging time for the automotive sector and will negatively impact the competitiveness of European manufacturers,” Erik Jonnaert, Secretary General of the European Automobile Manufacturers’ Association, said in a statement.

Renault, Fiat and other carmakers in the EU are the main users of imported wire rod that has been subject to provisional measures. As almost all of the EU's tariff-free quota for this product category has already been used up for the year to Feb. 4, they may face a 25 percent duty on their imports for up to several weeks.

“In the automotive sector access to EU steel production is extremely tight and imports remain necessary to fill supply-chain gaps,” Jonnaert said. “Meanwhile, EU producers of steel are benefitting from long-term high prices and excellent capacity utilization rates, especially in the automotive sector.”