A proposal on extending EU’s steel safeguard measures beyond June is likely to be announced in late May, said European Commissioner for Trade Valdis Dombrovskis on 11th May, during a webinar titled “EU Trade Policy in a Post-Covid World”. EU steel producers want the safeguard to be maintained as, in their views, the critical conditions that led the EU to impose them are still present, such as protectionism in third country markets, global excess capacity, trade diversion towards the EU triggered by the US Section 232 import tariff having drastically reduced US imports, and the need for the domestic steel industry to recover from the pandemic-induced economic crisis. On the other hand, traders and distributors completely disagree, pointing at the ongoing severe shortage of material, and also at the risk of retaliations by third countries. Even Dombrovskis during yesterday’s event warned that proposing an extension of the safeguard would risk causing retaliations from countries such as Turkey and Russia. “There is one more factor which we need to keep in mind… if we extend the steel safeguard for a period longer than three years… It means that the EU [would open] itself to retaliation by third countries,” he said.
The safeguard was introduced in 2018 as a response to a 25-percent tariff that US President Donald Trump imposed on most steel imports. Under global trading rules, countries affected by safeguards that last longer than three years have the right to ask for compensation. If no agreement is reached on compensation, a country can retaliate by imposing import tariffs of a value corresponding to the damage it suffers. Dombrovskis said the Commission was analysing how such potential retaliation might affect the steel industry or other sectors. He concluded the Commission should be ready to reveal its proposal at the end of May, leaving around a month for discussions with EU governments.