EU extends steel safeguards for three more years

In an anticipated move, the European Union has published its decision to extend its steel safeguards for three more years.
EU members voted on the extension June 18 and it published the implementing regulation June 28.
The safeguards will extend from July 1, 2021, to June 30, 2024.

E.U. flag
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“The initial safeguard measure was introduced in July 2018 to protect the Union steel market against trade diversion, following the US decision to impose, under its Section 232 legislation, duties on imports of steel into the US market,” the E.U. said in a statement. “The US Section 232 measures are still in force.”
Furthermore, the E.U. said that, in line with World Trade Organization (WTO) rules, duty-free steel import quotas will increase by 3% annually.
“The Commission will also initiate a review if the US introduces significant changes to its ‘Section 232’ measure on steel,” the E.U. added.
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EU steel safeguards to 2024

The EU steel safeguards first rolled out in provisional form in July 2018.
The European Steel Association welcomed the decision.

“We welcome that the EU steel safeguard regime has been extended,” said Axel Eggert, Director General of the European Steel Association (EUROFER). “The conditions that required the launch of the safeguard initially are still very much present – including global steel overcapacity and US Section 232.”

Eggert added that disruption of the market from the COVID-19 pandemic is not related to the safeguard measure.

“The current state of demand-supply disruption in the global steel industry – and in many other sectors – follows in the wake of the COVID crisis,” Eggert said. “However, it has nothing to do with the safeguard. Instead, the recovery of steel demand and the wider economic rebound has inspired a rush for material after the countercyclical destocking seen during the downturn.”

E.U.-U.S. trade relations

Trade tensions between the E.U. and U.S. rose throughout the Trump administration, which included the imposition of the Section 232 tariffs on steel and aluminum in 2018. Furthermore, tensions rose over the long-running Boeing-Airbus subsidy saga.
However, the two sides appear to be attempting to cool their jets vis-a-vis the dispute, which saw the WTO authorize billions of dollars in tariffs on both sides. Recently, the sides agreed to a suspension of the tariffs (albeit with the caveat that they could go back into effect if U.S. companies are not able to “compete fairly” in Europe).
As for Section 232, the Biden administration could look to further ease tensions.
“Nor will the widely reported probable removal of Section 232 tariffs on European mills this year have much impact on metal supply to U.S. consumers,” Stuart Burns wrote earlier this month. “Europe is almost as tight as the U.S. and simply doesn’t have much capacity to supply the U.S. market in 2021.
“The Biden administration is looking to relax the Section 232 tariffs, at least as far as Europe is concerned.”
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