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Last week, E.U. member states voted to go ahead with new quotas on steel imports extending until July 2021.
Last July, the E.U. voted to impose provisional steel safeguards, which were allowed to remain in place for a maximum of 200 days (that is, until Feb. 4).
On the heels of last week’s vote, Axel Eggert, director general of the European Steel Association (EUROFER), offered a mixed reaction.
“EU steel imports rose by an unprecedented 12% in 2018. For every three tonnes of steel blocked by the US’ section 232 tariffs, two tonnes have been shipped to the open EU market,” Eggert said.
“It was important that final safeguard measures be approved by the member states; these will now be implemented by 4 February 2019. While we welcome this endorsement, we are nevertheless worried that the form of the final measures may undermine their intended safeguarding function. It is therefore vital that the Commission closely monitors EU steel demand development and adjusts the generous increase of the tariff-free import quota accordingly in July 2019, if necessary.”
The quotas were put into place in response to the Trump administration’s Section 232 tariffs on steel and aluminum — amid concerns regarding the potential for diverted steel flooding the European market — and aimed to “preserve traditional trade flows.”
Eggert was critical of the scheduled increase of the quota — by 5%, an additional 5% in 2019 and an additional 5% in 2020 — and pointed to what might be unintended negative consequences of the move.
“This means that the rise in the quota may be multiple times larger than the increase in the size of the market, leaving EU producers to fight over a shrinking market share,” Eggert said. “Imports already account for around a quarter of the market, up from less than a fifth historically.”
Eggert also said exemptions for developing countries eventually need to be eliminated.
“So, while we reiterate our welcome for the final measures, and the overwhelming backing they have received from member states, we caution that steel demand must be monitored closely in the coming periods if this mechanism is to prove effective in the long run,” Eggert added.