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Duration of Safeguard Investigation Concerning Imports of Certain Steel Products Extended by Two Months for Reasons Related to Overwhelming Workload

The notice published on 19 December 2018 notes that under the EU legislation dealing with safeguards investigations, any such investigation has to be concluded no later than 9 months from the initiation of the investigation. This time limit may, however, be extended by a maximum period of 2 months in exceptional circumstances. If this is the case, the Commission is required to publish a notice setting forth the duration of the extension and a summary of the reasons thereof.

Accordingly, the Commission has informed the general public, by means of the notice, that the investigation will be extended by a maximum period of 2 months, for the following reasons:

  • The size of the investigation, in terms of product scope (28 product categories) as well as a number of interested parties (over 800 parties registered), is unprecedented.
  • The investigation, therefore, entails a heavy administrative burden on the Commission in order to deal with a significant number of representations made by the parties, as well as a complex legal and economic analysis of recent data.
  • There has been a large number of interested parties which have actively participated in the investigation by providing questionnaire replies, submitting written comments and/or participating in hearings. The collection and analysis of such vast amounts of information received have required a significant amount of time and resources.
  • Moreover, the current provisional safeguard measures, adopted against certain steel products, ensures the necessary temporary protection of the Union industry, so that an extension of the current investigation would not (according to the Commission) have negative effects.

It is, therefore, considered that the current situation qualifies as “exceptional circumstances” under which the Commission is allowed to extend the duration of the investigation beyond 9 months.

As a result, should definitive measures be adopted, the Commission will, it is noted, publish an Implementing Regulation by 1 February 2019 at the latest.

Previously, on 18 July 2018, Commission Implementing Regulation 2018/1013 imposing provisional safeguard measures with regard to imports of certain steel products was published in the Official Journal of the EU. Hong Kong and mainland Chinese exporters of the steel products covered by the safeguard measures may have already started to be affected by them. Provisional safeguard measures were imposed on 23 categories of steel products, including hot-rolled and cold-rolled sheets and strips, metallic coated sheets, quarto-plates, and different kinds of wire rod, tubes and pipes. The provisional safeguard measures will apply – since their imposition – for a period of 200 calendar days, that is, until 3 February 2019.

The provisional safeguard measures take the form of a system of tariff quotas per product category, in excess of which an additional duty of 25% will be levied. The tariff quotas are based on the average of the annual level of imports in the years 2015, 2016 and 2017 and will be allocated on a first come first served basis.

At this stage, the quotas are global, meaning that they apply to products regardless of their country of origin and are not allocated by individual exporting country. Once the tariff quota is exhausted for a certain product category, an additional duty of 25% will be levied. This additional duty shall apply to the customs value of the imported product.

In principle, the provisional safeguard measures apply with regard to all countries. However, in line with WTO and EU law, imports from developing countries are excluded from the scope of the provisional safeguard measures, provided that these imports do not exceed 3% of imports from that product category, and that imports from all developing countries collectively do not account for more than 9% of imports from that product category.

Annex IV to Regulation 2018/1013 contains a list of 121 countries which the Commission qualifies as “developing countries”. This list includes, amongst others, Mainland China, Hong Kong, Brazil, Malaysia, Turkey, and Vietnam. Annex IV also indicates, for each of the 23 categories of steel products, the developing countries to which the provisional safeguard measures apply. These product categories are marked with an “X”. For example, despite being recognised as a developing country, the provisional safeguard measures apply to Mainland China for 13 of the 23 product categories. For Hong Kong, the provisional safeguard measures do not apply for any product category, meaning that Hong Kong-origin imports will not be subject to the tariff quota or the additional duty.

For the steel products which are already subject to EU anti-dumping or countervailing duties, Regulation 2018/1013 provides that the imposition of “double remedies” will be avoided. In this respect, whenever the tariff quota of the safeguard measures is exceeded, the level of the existing anti-dumping and countervailing duties will be suspended or reduced to ensure that the combined effect of those measures does not exceed the highest level of the safeguard or anti-dumping/countervailing duties in place.

It should be recalled that safeguard measures are, under WTO rules, extraordinary remedies. While a WTO Member may, in emergency situations, impose temporary emergency tariffs and/or quotas to protect its domestic industry, the right to do so only arises if certain substantive conditions are fulfilled. Safeguard measures can only be justified when, as a result of unforeseen developments, a product is being imported in such increased quantities and under such conditions as to cause or threaten to cause serious injury to the domestic industry that produces like or directly competing products.

Content provided by Picture: HKTDC Research
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