News Room - Trade Measure

Posted on 21 May 2021

UK proposes three-year steel import safeguards extension only on certain products

The UK’s Department of International Trade has published an intended preliminary decision to extend UK steel import safeguards and tariff rate quotas for three years from July 1 on certain product categories, including hot-rolled sheets and strips, cold-rolled sheets and rebars, where imports have been “significant.”

Imports of other products deemed not to have been imported in significant quantities, or which are not produced in the UK or have not caused serious injury to domestic producers, including some metallic coated sheets, tin mill products and stainless bars, are to be freed from quotas.

The preliminary decision – still subject to public consultation and government approval — intends to recommend that safeguard measures are revoked on 135 product codes and extended on 102 product codes, said the department’s Trade Remedies Investigations Directorate, or TRID.

The announcement late on May 19 was criticized by steelmakers’ group UK Steel as being too liberal and also surprised analysts.

Out-of-quota duty of 25%

TRID said that goods still to be included under the safeguards are subject to tariff rate quotas and an out-of-quota safeguarding duty of 25%.

The liberalization rate for the measures is set at 3% for each year that the measure is in place, meaning that the quota amounts will increase by 3% annually, allowing an increased volume of imports to access the UK market. This will ensure that the pace of liberalization is maintained, TRID said.

After leaving the European Union, the UK “transitioned” the existing EU tariff rate quotas, introduced in 2018 under its safeguard scheme, to the UK. In October 2020, TRID started a transition review of the quotas for the UK market, which has now been completed. This considered whether certain products had been imported into the UK in increased quantities during the investigation period, whether imports were likely to reoccur, and whether there would be serious injury to UK producers if those goods were no longer subject to tariff rate quotas.

Products listed

According to the TRID proposal, safeguard measures and tariff rate quotas will be maintained on imports of non alloy and other alloy hot rolled sheets and strips and cold rolled sheets, some metallic coated sheets, organic coated sheets, rebars, stainless wire rod, some railway material, gas pipes, hollow sections and other welded pipes.

Certain developing countries will be exempt from the tariff rate quotas on these products, TRID said.

According to the TRID proposal, safeguards and tariff rate quotas will be revoked on imports of some metallic coated sheets, tin mill products, non alloy and other alloy merchant bars and light sections, stainless bars and light sections, non alloy and other alloy wire rod, angles, shapes and sections of iron or non alloy steel, some railway material, non alloy and other alloy cold finished bars, non alloy wire, large welded tubes and nonalloy and other alloy quarto plates.

TRID has invited comments on its proposals by 5 pm BST on May 26.

Analyst Alan Spence at Jefferies Equity Research indicated that the planned partial extension could be mirrored by the European Union, which is also currently investigating its steel safeguard measures. “We view this as a positive read-across, but not a guarantee, to the European Union doing so with current measures set to lapse on 30 June,” Spence said.

“Ten product categories will be extended and nine revoked where the UK does not produce those particular products. Recommendations look similar to the current Phase 3; 25% tariffs once quotas are exhausted, 3% annual increase in quota levels, quarterly quotas and country specific for the majority of categories. We are surprised the UK recommended to extend the measures by three years out of the gate, as trade press has been reporting that a one-year extension (for European measures) would face much less scrutiny from the WTO.”

Producers call for safeguards on all products

Steel industry group UK Steel, representing producers, called on the government to extend the safeguards on all products for a further three years. It described TRID’s formal proposal to slash the safeguards as “a hammer blow to the UK steel sector and to the many thousands it employs. The recommendation by TRID to the Secretary of State to remove huge elements of the protection steel manufacturers require against import surges is madness and one that needs to be urgently rethought.”

Protection will be removed on steel sections, made in Teesside; tubes made in Hartlepool, wire-rod made in Cardiff, Scunthorpe and Rotherham, and plate made in Motherwell, according to UK Steel.

“At a time when the steel sector is recovering from COVID-19, and both the US and EU are maintaining their full import restrictions on steel products, it is astonishing that a public body would propose the UK unilaterally slash its safeguarding measures in half,” said UK Steel Director-General Gareth Stace in a statement. “The UK will become a magnet for huge volumes of steel imports, it is beyond worrying to consider the damage this could do to the UK steel sector and its long-term viability.”

Source:Platts