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EU carmakers oppose proposed definitive steel safeguards by the European Commission

London — The European Commission's proposal of definitive safeguard measures on steel imports was met with "regret" Friday by the European Automobile Manufacturers' Association (ACEA), which said the proposal would not consider the need of the automotive sector.

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"ACEA questions the need for such trade protectionist measures. In the automotive sector, access to EU steel production is extremely tight and imports remain necessary to fill supply-chain gaps," the association said in a press release Friday.

The EC, however, said that steel prices remain under downward pressure and said imports of steel products into the EU increased significantly in recent years and are likely to increase further - compounded by trade diversion resulting from US trade measures.

"Imports of steel into the EU have increased over the last year because European manufacturing output has grown substantially since the economic crisis," ACEA Secretary General Erik Jonnaert said. "Motor vehicle manufacturing has increased by 5 million units per year since 2014, and some increase in steel imports has been necessary to meet this higher demand." He added that a no-deal Brexit and the threat of US duties on European cars on top of the new measures would negatively impact the competitiveness of EU carmakers.

Anti-dumping measures against corrosion-resistant steel - one of the most sought-after products by carmakers - have only been in place for Chinese product grades that primarily go into production for other industries.

In a notification document to the World Trade Organization, obtained by S&P Global Platts Wednesday, the EC outlined its planned definitive safeguard measures, which include country-specific quotas on the biggest steel-supplying countries to the EU, with all other countries under a quarterly residual quota.

The safeguard measures are intended to be in place for three years, including the period of provisional safeguards that started in July 2018, and would expire on July 16, 2021. Once a quota is filled, a 25% tariff would apply.

When a country with "significant supplying interest" has exhausted its specific tariff-rate quota, it would be allowed to have access to the quarterly global tariff-rate quota for the specific steel product, which would apply to all other countries, but only in the last quarter of the year. An exemption for hot-rolled coil would apply, which would be under a quarterly global quota.

--Laura Varriale, laura.varriale@spglobal.com

--Edited by Jennifer Pedrick, newsdesk@spglobal.com