Bülent Hacıoğlu, managing partner at Trade Resources, shared his views with SteelOrbis as follows on the EU's new quota volumes and how it will be implemented, as well as its effects on steel trade.
As of July 1, 2026, the European Union began implementing an entirely new tariff-rate quota regime to replace the steel safeguard measure that expired on June 30, 2026. The safeguard, which had been in force for eight years, has therefore come to an end. However, rather than easing protection on steel imports, the EU has transformed it into a new and permanent structure featuring more restrictive quotas and higher above-quota duty rates.
The new regime provides for a total annual duty-free quota of 18,345,922 mt across 26 product categories. This volume is approximately 47 percent lower than the quota under the safeguard measure. Excluding imports from Russia and Belarus, which are banned, the total quota was determined by applying the approximately 13 percent share of imports in EU steel consumption in 2013 to 2024 consumption. The distribution among product categories was based on the import breakdown for the 2022-2024 period. The EU's stated rationale for using 2013, a year in which imports were exceptionally low, is that it was the last year before global steel overcapacity began affecting markets. Imports exceeding the quota will be subject to an additional 50 percent duty, exactly double the 25 percent rate under the previous regime.
As will be recalled, the European Union had announced that the new measure would be based on the modification of tariff rate concessions under GATT Article XXVIII. The relevant article allows WTO members to modify or withdraw bound tariff rates, but requires such changes to be made through negotiations with affected supplying countries and in exchange for compensatory concessions. At the same time, the new tariff-rate quota regime also clearly constitutes a violation of the EU's existing free trade agreements, including the Customs Union with Turkey. Taking these obligations into account, the EU gives priority under the new tariff-rate quota regime to most-favored nation (MFN) and free trade agreement (FTA) countries. Around half of the total quota, approximately 9.15 million mt, has been reserved for FTA partners, including Turkey. Under the methodology determined by the EU, a country-specific quota is allocated if a country accounted for at least 5 percent of EU imports in the relevant product category during the 2022-2024 period. FTA countries that exhaust their own country-specific quotas can also benefit, depending on the category, from the special “FTA Quota-CSQ” (FTA-country-specific) quota, where they compete with other FTA countries. There are also general “other countries” quotas for countries without a country-specific allocation, as well as residual quotas open only to FTA partners. Which pool each country can access, and in what order, varies by product.
The quotas will be administered on a “first come, first served” basis in quarterly periods, with the annual volume divided into four equal parts. In the first quota year, unused balances will be carried over to the following quarter. From the second year onward, however, the EU will be able to reassess carryover arrangements on a product-by-product basis, taking into account utilization rates, import pressure and supply problems faced by users in the EU.
Another notable development under the new regime is the melt and pour declaration requirement. As of October 1, 2026, importers will be required to declare the country where the steel was first produced in liquid form and cast into its first solid form. Although at this stage the declaration is said to be for information purposes only, it would not be surprising if, in the near future, quota administration was shifted from standard rules of origin to the melt and pour country.
Despite the significant reduction in the overall quota, when the new tariff-rate quota regime is considered from the perspective of Turkey, which is in the group of FTA countries, Turkey appears to be among the relatively advantaged countries. For example, in the hot-rolled flat steel category, which has the largest quota allocation, Turkey has been guaranteed a total annual quota of 642,295 mt. Even if Turkey were to use the entire 483,682 mt quota available to other FTA countries once its own quota is exhausted, its total accessible volume of 1,125,977 mt would still be approximately 32 percent below the roughly 1.6 million mt allocated to Turkey under the safeguard. Accordingly, although Turkey has been allocated the highest country-specific quota under the new system in the HRC category, even in the most optimistic scenario it will lose roughly one-third of its previous exports.
The situation is somewhat different in category 4A, covering galvanized and other metallic-coated sheets, where Turkey has received its second-highest quota allocation. Under the new regime, Turkey has been granted a guaranteed country-specific quota of 255,701 mt, while the common FTA quota accessible after this allocation is exhausted amounts to 155,526 mt. Even if Turkey were to use this quota in full, the total volume it could access would be 411,227 mt. Although Turkey did not have a country-specific quota in this product category under the safeguard measure, the new quota is approximately 13 percent lower than the 473,000 mt it could have exported based on the 25 percent maximum cap. In short, the specific quota allocated to Turkey is significantly below the level available under the previous safeguard regime. However, considering that Turkey may also be able to access the residual FTA quotas more easily thanks to its geographical advantage, it remains in a more favorable position than other countries.
Of course, irrespective of quota volumes and Turkey's position, the European Union's new regime will deal a very serious blow to the rules-based trading system. Together with the many measures introduced by the US over the past 10 years, the shift away from “rules-based” trade toward a “managed trade” system is accelerating. In the coming period, we can expect to see similar actions targeting other strategic products such as batteries, solar panels or electric vehicles. As regards steel specifically, EUROFER has announced that it has begun initiatives to extend the scope of the new regime to steel-intensive downstream products. In the coming period, we can also expect tighter Carbon Border Adjustment Mechanism rules and perhaps even restrictions on scrap exports, an issue EUROFER has been raising for a very long time, to come onto the agenda.
The new tariff-rate quota regime cannot be considered entirely independent of the negotiations with the US. The European Union believes that, by protecting its own steel market in the manner requested by the US, it has fulfilled its part of the obligations in negotiations with Washington, and it is seeking a tariff-rate quota exempt from the Section 232 duty or subject to a lower duty, similar to the arrangement in place during the Biden administration.
