EU Allocates Steel Import Quotas to Combat Global Overcapacity

The EU has allocated import quotas for steel to its trading partners on Tuesday in an attempt to fight growing overcapacity from foreign producers.

The measure comes amid rising tensions between the EU and China, where most of the global steel surplus originates.

Seeking to shield its market from global overcapacity, EU legislators agreed last April to increase existing tariff-free steel quotas to 18.3 million tonnes per year while doubling tariffs beyond those quotas to 50 percent

The EU’s closest allies, such as the UK, Switzerland and Ukraine, are concerned that their own exports to the EU could be drastically affected by the new measures, and have heavily lobbied the European Commission in recent weeks for preferential access to the EU market.

“We are providing market participants with predictability through clear and transparent quota distribution rules, while applying a fair and objective methodology,” EU Trade Commissioner Maroš Šefčovič said in a statement.

Protectionist move

The protectionist move comes as global steel overcapacity is expected to grow to 721 million tonnes by 2027, according to the OECD, a volume that could threaten jobs across the entire EU steel sector.

The EU came under even greater pressure last year when the US imposed 50 percent tariffs on steel imports, rerouting the global surplus to the European market.

“They built a wall around their market, steel was hitting that wall and was coming back to our market in greater numbers,” a senior EU official said. “That is why we introduced a safeguard measure which followed an investigation.”

The EU is also fighting unfair trade practices across the board with 80 other measures already in place, among them anti-dumping duties, most of which target cheap steel imports from China.

Pressed by its closest allies to ease the measures to their benefit, the Commission announced on Tuesday that half of the 18.3 million tonnes allowed to enter its market each year will be allocated to partners bound by free trade agreements with the bloc, including India, Switzerland and the UK.

Many of the countries that have clinched a trade deal with the EU will be allocated country-specific quotas proportionate to the volumes traded with the EU between 2022 and 2024.

A special status has also been granted to Ukraine to support the country while it remains at war and ensure a certain level of exports to the EU.