Europe’s Steelmakers Rip Into EU Revamp of Import Controls

(Bloomberg) -- The European Union steel industry lashed out at the EU’s trade authority for failing to slash import quotas in a planned revamp of them, saying producers in the bloc risk going bust.

The European Steel Association and chief executive officers of EU-based manufacturers took aim at the bloc’s proposed changes to the administration of import controls introduced two years ago. The curbs, known as “safeguard” measures, are meant to prevent a controversial 25% U.S. levy on foreign steel from diverting global shipments to the EU market and flooding it.

The European Commission, the EU’s executive arm, on May 29 announced an overhaul of the quotas to take account of the coronavirus-induced economic slump while stopping short of quota cuts demanded by the bloc’s producers. The changes, due to take effect on July 1, aim to guard against market distortions as the EU economy recovers from the Covid-19 pandemic.

“The commission’s plan is completely inadequate in the face of the crisis,” Axel Eggert, director general of the Brussels-based steel association, also known as Eurofer, said by phone on Tuesday. “We are desperate for more support from policy makers.”

The coronavirus sent the European economy into a tailspin shortly after the commission in February began a routine review of the EU steel-import limits. Slumps in the region’s consumption and production of the metal sparked concerns about stockpiling in exporting countries such as China and a possible surge in shipments to Europe as national lockdowns are eased.

Reduction Sought

“The import quotas should be reduced considerably,” Eurofer and the CEOs said in a joint statement released on Monday. “The European steel industry’s survival is at further, serious risk.”

Citing continued or restored steel production as well as stockpiling in countries such as China, Indonesia, India and Russia, the statement evoked the possibility of EU imports suddenly increasing their roughly 20% share of the European market.

“The current proposal could massively boost the market share of imports while a huge part of EU production capacity sits idle,” the statement said.

The European safeguard limits involve a 25% tariff on EU imports of 26 types of steel ranging from stainless hot-rolled and cold-rolled sheets to rebars and railway material when the shipments exceed a three-year average.

Changes planned by the commission include moving to quarterly management of all country-specific quotas and tightening access to residual quotas by nations that have exhausted their specific allotments.

Under WTO rules, safeguard measures are normally supposed to be limited in time and gradually loosened. The commission is heeding both elements, with the steel curbs due to lapse in mid-2021 and the overall quotas being increased by 3% over the remaining period.

Eurofer alleges that, with 40% of the European steel-industry workforce laid off or on part-time duty, the commission should exploit leeway under WTO law to go further with “crisis-oriented” changes.

“What sense do safeguard measures make if you don’t take account of the changed circumstances?” Eggert said. “The deflection of steel shipments to the EU will become much more serious.”

©2020 Bloomberg L.P.

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