Posted on 29 Mar 2018
The European Commission has confirmed that it has launched a safeguard investigation into steel products to prevent trade deflection into the EU. The European Steel Association (EUROFER) welcomes that the investigation is relatively broad, covering 26 steel product types. The basis for a safeguard comes from the need to defend the EU’s steel sector against product flows deflected from the US as a result of the Section 232 measures.
“The investigation must act fast and actually put safeguard measures in place on as wide a range of products as possible, to prevent harm to the industry from trade deflection”, said Axel Eggert, Director General of EUROFER. “As the European Council said on Friday, the EU has the right to ‘respond to the US measures as appropriate and in a proportionate manner’ – and EUROFER urges European Commission to impose provisional measures as swiftly as is possible under EU – and WTO – law.”
The EU – along with a limited number of other countries – were temporarily suspended from the US 232 tariffs. However, the risk of trade deflection is independent of the EU’s suspension and the threat of injury from deflected steel remains. For instance, as countries begin to cut deals with the US – such as the one South Korea has now concluded – there could potentially be a rise in deflection.
“The fact that the EU and other countries are out of the US measures for now does not mean we should not prepare. Indeed, in the first two months of the year, finished steel imports rose by 12%[1] in the EU – over and above the record import volume of 2017”, added Mr Eggert. “The volumes that could potentially be deflected to the EU market measure in the millions of tonnes and would have a devastating pricing impact.”
The US-South Korea deal to limit Korean steel exports to 2.7 million tonnes – 70% of the average of 2015-2017 volumes – could well see the remaining 30% deflected to the EU. Exports to the EU from South Korea have more than doubled since 2014 to over than 3.1 million tonnes.
“The EU steel sector has only just got back on its feet. This safeguard action – if sufficiently broad when deployed at the provisional and the definitive stages – could make the difference between continued recovery or a return to the dark days of steel crisis”, concluded Mr Eggert.
[1] For ‘finished steel products’ covered by EUROFER but excluding tubes and pipes.
