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Member States Agree to Imposition of Provisional Measures in Safeguard Action Targeting Steel Imports

On 5 July 2018, EU governments are reported to have approved the imposition of provisional safeguard measures on certain steel imports entering the EU market. The European Commission is said to have put forth a proposal detailing Tariff Rate Quotas, above which steel-product shipments would face duties of 25%. This proposal was approved by a majority of EU governments in the Safeguards Committee, with Sweden, Estonia and the Czech Republic abstaining.

The quotas, once imposed, will be distributed on a “first-come, first-served” basis and are expected to enter into force in the week of 16 July 2018, once formally adopted by the Commission.

Under EU law,  provisional safeguard measures may be imposed (i) in critical circumstances, where delay would cause damage which would be difficult to repair, making immediate action necessary; or (ii) where a preliminary determination provides clear evidence of harm or impending harm. Provisional measures can last up to 200 days, with definitive measures following for a maximum of four years, and a further possibility of being extended by an additional four years.

As previously reported, on 26 March 2018, the Commission initiated its safeguard investigation into certain steel imports entering the EU market. The impetus behind the investigation is the fear that certain countries, in response to the US tariffs on steel products which entered into force on 23 March 2018, will redirect their sales to the EU, flooding the market and depressing prices.

Notably, since the initiation of the investigation there have been various developments regarding the product categories falling within the scope of the Commission’s investigation. Hong Kong steel producers should be alerted to a Commission notice published on 28 June 2018, amending the initial notice of initiation of the safeguard investigation concerning imports of steel products. The new notice specifies additional product categories that will fall within the scope of the safeguard investigation and makes certain clarifications concerning specific product categories and CN codes.

The new notice specifies that the additional product categories are non-alloy and other alloy cold finished bars (Product number 27) and Non-alloy wire (Product number 28). It is submitted that the inclusion of these two categories is necessary since they are currently subject to steel surveillance measures. Furthermore, the Commission claims that it has obtained sufficient evidence that would justify their inclusion within the scope of the investigation.

With the inclusion of these new product groups, the information currently available to the Commission – including the information provided by the surveillance system for imports of steel, which has been in place since March 2016 – indicates that the total imports of the products concerned increased from 18.8 million tonnes to 30.6 million tonnes during the period 2013-2017.

Furthermore, the notice makes certain clarifications concerning specific product categories and CN codes as it has transpired that certain CN codes had not been allocated and others had been wrongly allocated. In this regard, the notice adds three CN codes to Product number 1, Non Alloy and Other Alloy Hot Rolled Sheets and Strips, namely 7208 52 10, 7208 53 10 and 7211 13 00, and adds one CN code to Product number 4, Metallic Coated Sheets, namely 7225 99 00. Furthermore, the notice removes one CN code from Product number 7, Non Alloy and Other Alloy Quarto Plates, namely 7225 99 00.

Moreover, it is reported that out of the 28 product categories under review, five are to be granted exclusions from the provisional measures: stainless hot-rolled quarto plates; grain-orientated electrical sheets; railway material; other seamless tubes; and non-alloy and other alloy cold-finished bars.

The safeguard measures are part of a three-pronged strategy that the EU has drawn up in response to the US restrictions on steel and aluminium. The other two prongs consist of a challenge at the World Trade Organisation in coordination with other partners, and a set of punitive tariffs on US industrial and farm products to offset the bloc’s trade loses.

Additionally, while aluminium imports are not included in the present safeguard investigation, the Commission has also put in place a surveillance system for such imports so that it is prepared in case action is required in that sector as well.

Content provided by Picture: HKTDC Research
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