Safeguard Extension Requested by EUROFER

The European Steel Association recently asked the European Commission to extend the safeguard scheduled to expire on June 30, 2021, saying that the industry is on the precipice due to China’s dumping, U.S. tariffs and COVID-19. According to the association, European steelmakers’ production volume dropped 17 percent in the period of March to October this year, 28 percent of employees in the industry are facing an employment crisis and it will take two years for the industry to recover.

The safeguard became effective in July 2018. No tariff is applied to a certain import volume and a tariff rate of 25 percent is applied once it is exceeded. Earlier, the United States introduced a 25 percent steel tariff along with a 10 percent aluminum tariff in March 2018. Then, the European Commission implemented the safeguard on 26 steel materials and products with Asian steel exports predicted to flood into Europe instead of the United States.

South Korean steelmakers will be inevitably affected if the European Commission extends the safeguard. Their annual exports to the EU region increased from 3.2 million tons to 3.4 million tons in 2018 but fell to 2.9 million tons in 2019.

The association also requested the introduction of a carbon border adjustment tax, saying that cheap imports from China are surging with the expansion of offshore wind power generation leading to an increasing steel tower demand. The tax targets products produced in countries emitting more carbon. The association’s stance is that the price difference between steel produced in Europe and imported steel attributable to environmental regulation compliance has to be offset by the tax.