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European Commission Initiates Review of Steel Safeguard Measures

On 17 May 2019, the EU’s Official Journal published a notice of initiation concerning the review of the safeguard measures applicable to imports of certain steel products. Hong Kong traders may recall that on 31 January 2019, the European Commission imposed definitive safeguard measures on certain steel products and had, at that time, announced its intention to initiate a first review investigation no later than on 1 July 2019. The measures currently in force consist of a tariff-rate quota opened on imports into the Union of 26 steel product categories. They will remain in place until 30 June 2021.

For each product category subject to the safeguard measures, except for product category 1 (Non Alloy and Other Alloy Hot Rolled Sheets and Strips), a part of each tariff-rate quota is allocated to specific countries (country-specific quotas) and freely available until the end of each of the three annual periods that the measures last.

For product category 1, and the remaining part of each tariff-rate quota (so-called residual tariff-rate quotas), the relevant annual quota is split into quarters and allocated on a first come-first serve basis during each of these quarters. At the end of each quarter, the unused balances of the residual quota are automatically transferred to the next quarter. No unused balance at the end of the last quarter of an annual period is transferred to the next period. Where the relevant country-specific quota is exhausted for a given product category, imports from that country can be made under the remaining part of the residual tariff quota for the same product category but only during the last quarter of each annual period of application of the measures.

Where the relevant tariff-rate quota is exhausted or where imports of the product categories under measures do not benefit from the relevant tariff-rate quota, an additional duty of 25% is levied on the net, free-at-Union-frontier price, before duty, of the imported product.

The products that are subject to the newly initiated review consist of certain steel products which are listed in Annex I to the notice.

As for the purpose of the review, the Commission has acknowledged that, on the basis of the Union interest, it may have to adjust the level or allocation of the tariff-rate quota in case of changes of circumstances during the period of imposition of the measures. It was considered that these changed circumstances could, for example, materialise in the case of an overall increase or contraction in Union demand for some product categories that would require a reassessment of the level of the tariff-rate quota. Likewise, changed circumstances could occur with the imposition of anti-dumping or anti-subsidy measures that may significantly affect future import developments, or even any development concerning the US Section 232 that may have a direct impact on the conclusions of this investigation, namely in terms of trade diversion.

The Commission opines that it is also in a position to review whether the existing operation of the measures could have detrimental effects in achieving the integration objectives pursued with its preferential trading partners, such as substantially risking their stabilization or economic development. Finally, the Commission also committed to reviewing the need to update the list of developing countries excluded from the scope of the definitive measures based on their most recent import level. Traders may recall that Hong Kong is currently listed in the List of Developing Countries laid out in Annex III of the EU Regulation imposing definitive safeguard measures.

Therefore, having determined that there is sufficient evidence for the review of certain aspects of the existing steel safeguard measures, the Commission has initiated the review of the existing measures, limited to the scope of the issues outlined above and elaborated upon in more detail within the notice.

In order to obtain all relevant information deemed necessary for the investigation, interested parties have been invited to make their views known, submit information and provide supporting evidence to the Commission. This information and supporting evidence must reach the Commission within 15 days from the date of publication of the notice (note that publication occurred on 17 May). Parties making a submission are requested to clearly state in their correspondence which of the review issue or issues is/are concerned by their submission.

Moreover, in order to guarantee their rights of defence, interested parties have the possibility to comment on the information submitted by other interested parties. When doing so, interested parties may only address the issues raised in the other interested parties' submissions and may not raise new issues. Such comments must reach the Commission within 7 days from the moment the submissions mentioned in the preceding paragraph are made available for inspection by interested parties.

It is also mentioned in the notice that the Commission will not organise hearings for the purpose of this investigation. Furthermore, the general rule remains that interested parties may only submit information within the timeframes specified in the notice. Any extension to the time limits provided for in the notice can only be requested in exceptional circumstances and will only be granted if duly justified. Duly justified exceptional extensions to the deadline to make a submission will normally be limited to three additional days.

The Commission aims to conclude the review in the shortest timeframe and, whenever possible, before 30 September 2019. In cases where any interested party does not provide the necessary information within the time limits, or significantly impedes the investigation, findings may be made on the basis of facts available. Where it is found that any interested party has supplied false or misleading information, the information may be disregarded and use may be made of facts available.

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