TMTPOST -- The European Union is planning to escalate its trade protectionism with lower import quotas and higher tariffs on steel.
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The European Commission plans to cut by nearly a half the imported steel quotas and hike tariffs on steel imports that exceed the cap to 50%, Bloomberg learned from a draft proposal. It was said that the EU plans to this week unveil a more permanent mechanism to protect its steel industry, replacing its temporary mechanism expires in June. The current mechanism impose a 25% duty on most imported steel goods once quotas are exhausted.
The new mechanism also include “melt-and-pour” provisions, which are designed to prevent steel goods originating from major producing countries to be transshipped to evade import duties, according to the report.
If the European Commission’s proposed plan is implemented, the 50% levy would apply to steel imports beyond the total volume quotas of 18.45 million tons, representing an average quota cut of 43.7% compared to levels in the year to July 2024, Bloomberg calculated.
The reported new measures would be reviewed every five years from July 2031 to evaluate overcapacity trends and their effects on the steel market. The scope of the product types and categories would be reviewed within two years of the regulation’s adoption, the draft says. The European Commission, which takes charge of trade matters for the EU, is reportedly seeking powers to set out country-specific quotas for the various thresholds.
An AFP report last week confirmed the reported plan. The EU will unveil new measures this week to lower steel import quotas and significantly increasing tariffs on the metal from abroad, the bloc's industry chief Stephane Sejourne told the sector in a meeting in Brussels, the report cited participants.
Sejourne said Brussels wants to reduce its foreign steel quotas by almost half and raise duties to levels similar to the EU's "American and Canadian partners", and the proposals, once approved, will not be temporary, per the report.
Sejourne said the EU continues to believe in an international order where trade is possible, but “we will not be the only ones to impose on ourselves the principles that others no longer apply,” Bloomberg cited people familiar with his remarks during the closed door meeting.
The EU’s move will align the bloc’s rate with the U.S., which has sought to push back against overcapacity from China. Canada has followed suit two months ago.
Canadian Prime Minister Mark Carney on July 16 said steel imports from non-U.S. countries "containing steel melted and poured in China" will be subjected to an additional 25% tariff, effective by the end of that month. He added products under the U.S.-Mexico-Canada Agreement (USMCA) will be exempted from the new tariffs.
Carney said foreign competitors "unfairly benefit" from non-market policies. This can include companies exporting products at a lower price than they charge domestically, a practice known as steel dumping. The prime minister said Canada will restrict tariff-free import of cheap, foreign steel to help domestic manufacturers reeling from levies imposed by the U.S.
Carney on July 16 also announced a tariff rate quota for countries with which it doesn’t have free trade agreements, excluding the United States. The Canadian government would tighten its tariff rate quote--from 100% to 50% of 2024 steel import volumes from the aforementioned non-U.S. countries, and a 50% tariff would apply to steel imports from these countries that surpass the quota limit.
Carney said the quota adjustment will ensure Canadian steel producers have a bigger share of the domestic market. He noted imports now make up nearly two thirds of Canada’s steel consumption, while over 90% Canadian steel exports were destined for the U.S., reflecting an “unsustainable” dependency.
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