The European Union will launch a new system on July 1 that cuts by 47% the volume of steel that can access the EU market without paying tariffs and increases to 50% the levy on imports that exceed that quota. With this change, the bloc aims to shield the European steel industry from global overproduction, with special attention to the role of China.
In parallel, the European Commission has made public the regulation that sets out how tariff rate quotas are allocated among the different exporting countries and which, once it comes into force, will replace the provisional safeguards that expire this Tuesday.
The purpose of this new scheme is to contain the arrival of cheap steel that is saturating the European market from major global producers. Although Brussels insists that it is not a "targeted" measure against any specific country, EU sources admit that the pressure from overcapacity comes mainly from China, India, and Turkey.
In practice, the EU sets annual quotas of 18.3 million tons of steel and establishes a 50% tariff for volumes exceeding that quota —compared to the 25% in force until now—, in addition to introducing criteria such as the "melt and pour" principle to determine the origin of the product, strengthening compliance with trade rules, and preventing circumvention practices.
Starting Wednesday, purchases of 26 categories of duty-free steel products in the European Union will be limited, although the impact will not be uniform for all partners: the design of the quotas grants wider margins to countries with which the bloc has Free Trade Agreements.
Half of the annual import quota —9.15 million tons out of a total of 18.3 million— is reserved for partners with free trade regimes, while the other half will be available "without discrimination" to the rest of the countries, including those that can already access the first part of the quota, but not exclusively.
"We offer market participants predictability through clear and transparent quota distribution rules, while applying a fair and objective methodology," defended Trade Commissioner Maros Sefcovic, in a statement. In the same text, he underlined that the new rules respect a "careful balance" with trade agreements signed with third countries and with the framework of the World Trade Organization (WTO).