The European Commission is determined to tackle the problem of overcapacity in a more radical way: on Tuesday 7 October it presented a proposal for a regulation imposing tariff quotas on steel imports. Above a certain volume, steel exporters to the EU could face a tariff of 50% rather than the current 25%.
Duty-free import quotas will also be cut almost in half (18 million tonnes, compared with 33 million tonnes at present), if the proposal is adopted.
If the EU fails to take action when the current safeguard expires in June 2026, the consequences would be dire, explained a European official. On 7 October, European Commission Vice-President Stéphane Séjourné pointed out that “18,000 direct jobs were lost in the steel industry in the EU in 2024”.
Double rate. The Commission claims that doubling the over-quota tariff and reducing duty-free volumes is the most effective way of protecting what remains of the European steel industry.
The 50% rate allows the EU to curb redirections of flows, while the United States has imposed a flat tariff of 50% on steel and several hundred by-products.
In practice, all third countries will be allocated a certain volume of duty-free exports to the EU. The Commission will adopt delegated acts to set these quotas once the basic regulation has been adopted.
States that have trade agreements with the EU will not be exempt from this measure. According to one source, it would not have been “reasonable” for the EU to exempt these partners.
Only countries in the European Economic Area are excluded, and Ukraine will be eligible for special treatment as a candidate country “ facing an exceptional and immediate security situation”.
In terms of scope, the new proposed regulation covers exactly the same products as the safeguard currently in force. According to a European official, the EU has no evidence that other products are at risk. However, the Commission has included a mandatory revision clause every two years, to adjust the scope of the products concerned if necessary.
The EU is adding a new feature to the rules of origin: the country of origin will have to be the one where the steel was “melted and poured” to avoid circumvention. Chinese steel, for example, must not be allowed to enter the EU via the quotas of a third country where it has undergone slight processing.
Negotiations with affected supplier countries. World Trade Organization (WTO) rules allow the EU to take such measures, provided that it undertakes to maintain “a general level of reciprocal and mutually advantageous concessions no less favourable to trade than before the modification”.
The Commission will therefore have to enter into discussions with certain affected countries to negotiate the exact scope of the measure or compensation.
“Unlike others, the EU continues to be open and will transparently engage with its partners, offering compensation”, assured the European Commissioner for Trade, Maroš Šefčovič.
If the talks fail to reach a satisfactory outcome, the EU will be able to impose its tariff quotas as presented, and the countries affected will be entitled to retaliate. On this point, however, the Commission says that the countries that contribute to overcapacity - primarily China - are already imposing restrictive measures themselves.
On 7 October, the European Commission published an EU Council decision to open negotiations at the WTO, which must be approved by a qualified majority. “We hope that the Council gives us the green light to negotiate really quickly”, explained a European official.
With regard to the regulation proposed on the same day, the Commission also hopes that the decision of the co-legislators will be taken quickly. A deadline has been set for June 2026, when the current safeguard expires, but an adoption before then would be welcome.
To see the proposal for a regulation: https://aeur.eu/f/its (Original version in French by Léa Marchal)