According to sources close to the European Commission (EC), steel producers such as China Baowu Steel Group and Nippon Steel & Sumitomo Metal Corp. (NSSMC), as well as Indonesian producers, may have to deal with changes to EU import limits earlier than the deadline set by the EC for reviewing its safeguard measures, i.e., July 1, 2019.
The definitive safeguard measures on imports of certain steel products came into force at the beginning of February this year in order to rebalance the European market after the activation of the Section 232 measures by the United States. The regulation that was published on January 31 in the Official Journal of the EU stated that the first review investigation of such measures would start "no later than on July 1, 2019, but according to Leopoldo Rubinacci, the EC’s director of trade defence, the review could very well begin before this deadline.
Mr. Rubinacci underlined that the review does not aim to question the measures, but rather to assess whether adjustments are needed in terms of tariff quotas. While the majority of quotas do not pose problems, he pointed out that EU importers have now fully used up the quotas for rebar and wire rod. This means they have to pay a 25 percent tariff on the surplus volumes until the quota is reset. The EC official said that some importers are complaining that they are allegedly no longer able to source the products during the current period.
Rubinacci pointed out that Turkey has made full use of its quotas due to the high steel volumes it has exported to the EU. Most of the quotas are divided up by country, which, Rubinacci said, was necessary, and without this Turkey might have "taken all of the global quota" for rebar and wire rod.
Finally, the EC official reported that Indonesia, which recently raised concerns regarding the strong increase in its stainless steel exports to the EU, could be assigned a country-specific quota. Indonesia did not export volumes above the three percent threshold considered for country-specific quotas when the EC originally drew up its regulation, but in stainless steel products Indonesia has now started exporting very large quantities. As a result, Rubinacci concluded, the EC will consider whether to include Indonesia or other countries in its regulation.
Incidentally, the EC said that, besides Brazil, Turkey, Taiwan and Russia have also told the EU they intend to impose "rebalancing measures" in the wake of the EU's safeguard measures. The EC official said that, under World Trade Organization rules, such compensation can only occur three years after the EU's safeguard has entered into force.