EU member states support proposed extension of steel import safeguards

European Union member states have supported a European Commission proposal to extend the region's current steel import safeguards measures, a Commission spokesperson said June 18.

However, this is not yet a final decision on the process, which still to be taken by the Commission, the spokesperson said in an emailed statement.

"Member States supported the draft implementing act on the prolongation of the steel safeguard. The Commission intends to take a decision on the prolongation before the end of June 2021," the spokesperson said. "The Commission initiated an investigation on 26 February to assess whether the safeguard measure currently in place on imports of certain steel products should be prolonged beyond 30 June 2021. The results of the investigation were transmitted to Member States, who have expressed their positions on the Commission's proposal."

The European Union notified the World Trade Organization June 10 that it planned to extend its steel import safeguards system for a further three years "to prevent or remedy serious injury or threat thereof" to its steel industry, noting that "the industry concerned is adjusting." The proposed extension – set to replace existing controls which will expire June 30 - would continue to subject imports of a wide variety of steel products to tariff rate quotas which would be increased by 3% annually. The product scope would be unchanged under the extension.

A consultation period on the proposed measures ended June 18.

Decarbonization costs

Producers have been calling for an extension to the safeguards for months, while some steel downstream processor and trading sources have expressed fears an extension will prolong the current spate of high steel prices and exacerbate supply tightness, particularly in flat rolled and galvanized products, in regional markets.

European steelmakers' association Eurofer, a strong campaigner for the extension, declined June 18 to give make a formal statement on the extension until it's "really official".

Hans Jürgen Kerkhoff, head of German steel industry association WV Stahl said this was the right decision.

"The extension of safeguard measures of the EU is the right and appropriate decision in light of the current challenges as the structural distortions of the global steel industry which are the US steel tariffs and global overcapacity," Kerkhoff said in an emailed statement. "These continue despite economic recovery. The [safeguard] measures are especially needed in light of the aim to enter the transformation to green steel industry quickly."

Some EU steelmakers have highlighted the high costs of decarbonizing their production processes to comply with the EU's 2050 net-zero carbon target, an ambition not shared with some other steel-producing regions or nations.

The EU introduced safeguards in 2018, following an import surge and the US decision in March of that year to implement a 25% import tariff on steel under Section 232.

US-EU talks

The US and EU have now agreed to work together in resolving a metals trade dispute, stemming from the former's Section 232 steel and aluminum tariffs against European countries, by the end of the year, according to a joint statement released following the US-EU Summit June 15.

The UK is also set to make a final decision on a plan to extend its own steel import safeguards for three years from June 30 on 10 product categories and revoke the import controls on a further nine categories.