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Heavy Metal? A review of the European Commission Safeguard Investigation into Steel Imports
By Michael Swangard (Partner, London) and Caitriona McCarthy (Associate, London)
On 26 March 2018, the European Commission issued a “Notice of initiation of a safeguard investigation concerning imports of steel products”. The Commission explained that the rationale for its notice was that imports of certain steel products had recently increased sharply showing that there was sufficient evidence that these trends in imports appeared to call for safeguards measures.
position of the EU industry and have had a negative impact on the market share of EU producers.
To the casual observer the notice might look like a knee jerk reaction to recent measures taken by the Trump administration coming, as it did, a week after the US announced tariffs on foreign steel and aluminium. This is not the full story, however, and the reasoning is more nuanced than might appear from a glance at the latest news headlines. Over the course of this article, I will address the content of the notice and its timing, the procedure regarding a safeguard investigation by the Commission, its possible implications for the industry and what steps industry players should be considering. About the Notice The products subject to the notice are steel products. The products concerned, together with the CN codes within which they are currently classified, are listed in an annex to the notice and amount to 26 steel product categories. The information currently available to the Commission indicates that the total imports of the products concerned increased from 17.8 million tonnes to 29.3 million tonnes in the period 2013 – 2017. Imports of the products concerned increased by around 65 per cent. between 2013 and 2016. The main increases took place in 2015 and especially in 2016 when they reached 28.6 million tonnes and imports of the products concerned have remained at a significant level thereafter. The increase in imports appears to be the result of (i) global overcapacity in steel making and (ii) trade measures adopted by a series of third countries in the context of that global overcapacity including the recent Section 232 measures in the US. The Commission believes there is sufficient evidence showing that the volume and price of these imports have caused or are threatening to cause significant overall impairment of the
“The information currently available to the Commission indicates that the total imports of the products concerned increased from 17.8 million tonnes to 29.3 million tonnes in the period 2013 – 2017.”
What will the investigation consider? – Import trends – The conditions in which they take place – Whether the imports cause (or threaten to cause) serious harm to EU producers The main conclusions of the finished investigation will then be published as a regulation. Investigation procedure and timeline A safeguard investigation must normally be completed within 9 months although, in exceptional circumstances, it may be extended to 11 months. If the investigation shows that imports have increased so much that they cause (or threaten) serious harm to EU producers, safeguard measures can be imposed. These can take various forms such as increased customs duties or quotas which are set at least as high as the average level of imports over the last 3 representative years:
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