EU's Bold Move to Safeguard Steel Deal with US

US Calls on EU to Act Against Chinese Steel Producers

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The United States has reached out to Brussels, urging action against Chinese steel producers to avert the re-imposition of previous tariffs on EU steel and aluminum. Both parties aim to finalize an agreement by the end of October with a focus on combating steel overcapacity and promoting environmentally-friendly "green" steel. Washington's objective is to prevent the influx of Chinese steel and aluminum into the U.S. market.

While the European Commission refrained from commenting on potential investigations, they expressed a commitment to reaching an agreement that eliminates tariff threats, encourages the decarbonization of steel production, and addresses excess capacity in economies deemed non-market, including China.

Importantly, any agreement would adhere to World Trade Organization regulations and domestic climate policies, preventing the EU from imposing tariffs without conducting investigations into alleged subsidies. The EU also remains steadfast in its dedication to the carbon border tariff system.

China's Ministry of Commerce has not yet responded to requests for comment regarding this report.

It's worth noting that the EU has already imposed punitive tariffs on 20 varieties of Chinese steel and stainless steel products, alongside import quotas designed to safeguard its market until mid-2024. Chinese steel shipments to the EU have steadily decreased since 2015 when they constituted 25% of EU steel imports by volume, falling below 10% since 2018, according to Eurofer, the EU steelmakers federation.

Axel Eggert, the Director General of Eurofer, emphasized that conventional trade measures alone would not effectively address the issue. He pointed out that there are plans to add 150 million tonnes of new global capacity in the next three years, resulting in annual emissions surpassing the entire CO2 output of the EU steel sector by 2026. Excess capacity remains a concern not only in China but also in other Asian countries, the Middle East, and North Africa.

These potential investigations are part of a broader spectrum of actions being contemplated by the EU, including areas such as wind turbines, or investigations that have already been initiated. Last week, Brussels formally launched an investigation to counter the influx of cheaper Chinese electric vehicle (EV) imports, which are benefiting from state subsidies, as noted by European Commission President von der Leyen.

Source : Reuters (Reporting by Nilutpal Timsina, Philip Blenkinsop, and Amy Lv)