Meeting with
ArcelorMittal
Ares(2020)3900681 - 24/07/2020
Ref. Ares(2020)5071176 - 28/09/2020
14 July 2020, 17h30-18h00
The EU’s safeguard measures for steel
On 1 July, the adjustments to the EU safeguard measures entered into force. The
adjustments after the second review go to the maximum protection that is compatible with
World Trade Organization rules. The changes under the second review take into account
the special circumstances prevailing in the market after the COVID-19 crisis (see
background for further details).
The steel industry is nevertheless unhappy with the outcome of the second review
and it has been very vocal in expressing its dissatisfaction.
We have explained to them several times that we could not accept some of the
adjustments they proposed, such as the reduction in quota volumes, elimination of
carryover of unused quotas and reduction of liberalisation pace because they were
clearly illegal under WTO rules. However, the approach taken by the Commission when
shaping the adjustments under the second review, which focuses on the management of
quotas, will produce a very substantial further reduction of exports of several million
tonnes, notably from critical origins such as Turkey or Russia.
Several other ongoing actions in the trade field benefit the EU steel industry. These
range from the continued engagement in the Global Forum on Steel Excess
Capacity/G20, to the development of new subsidy rules as part of WTO reform. They
include dispute settlement (e.g. the request for consultations with Indonesia with respect
to various measures restricting exports of certain input materials for the production of
stainless steel), to the negotiation of provisions ensuring unrestricted supply of raw
materials in our Free Trade Agreements or the market access efforts to remove barriers to
EU exports.
All the new tools being developed (including the enforcement regulation, International
Procurement Instrument, investment screening, the white paper on subsidies in the
internal market) would also benefit the steel industry in one way or another. Trade policy
will play an important role in all the above actions, but it cannot alone address issues it is
not equipped to solve. Only the effective and timely activation of all relevant industrial and
related policies can do so.
Main messages
The adjustments to the steel safeguards that came into force on 1 July were very
ambitious and will be effective in response to the needs of the Union industry in these
difficult times.
In particular, via the quarterly administration of all quotas, the adjustments will be
effective in
deterring the stockpiling behaviour of exporters who may try to sell
very high amounts of steel in the EU market in the very early phases of the recovery in
an opportunistic manner.
The Commission has also put in place a very effective adjustment for the most critical
category (
category 1 – hot-rolled flat products). This adjustment will be of great help
for the industry (and for Arcelor Mittal in particular).
I know from your previous discussions with my Cabinet, and with DG TRADE, that you
and several Member States had called for a more drastic approach.
I can again reassure you that we
turned every possible stone. However, accepting
certain requests would have seriously
jeopardised the legality of our measures. The
measures must be WTO-compatible, that is a red line for us.
Topics for discussion
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Meeting with
of ArcelorMittal
14 July 2020, 17h30-18h00
Use of Trade Defence Instruments to protect the EU steel sector
We will continue to use the full toolbox of Trade Defence Instruments effectively (
the
steel industry is by far the most protected industry in the EU).
The Commission has already started to deliver on the commitment vis-a-vis Member
States to deliver timely and detailed import data, resulting from a very close monitoring
exercise.
We have already shared the first report. This is an important step which I
trust Member States and the industry will find helpful. We will therefore monitor very
closely what is happening in the market.
As regards the situation of
worldwide over-capacity, the EU is currently co-chairing
the Global Forum on Steel Excess Capacity. Chinese State-sponsored excess capacity
is the root cause of the current problems in the steel sector. The EU works for robust
conclusions and recommendations by the Global Forum, which will be submitted to the
G20 Leaders in November. The EU
appreciates the strong engagement of the
industry in the process.
Trade Policy will continue to be effective – but it is not the remedy for all issues
Several actions in the trade field already benefit the EU steel industry. These
range from the continued engagement in the Global Forum on Steel Excess Capacity
and G20, the development of new subsidy rules as part of WTO reform, use of dispute
settlement, our Free Trade Agreement negotiations and the market access efforts to
remove barriers to EU exports.
In addition,
new tools and initiatives in the making will also benefit the steel industry
in various ways (examples of such initiatives are improvement of the enforcement
regulation, International Procurement Instrument, investment screening, and creating
rules on foreign subsidies in the internal market).
Defensives
Will the Commission carry out another review before the end of the third year of
measures?
The Commission made clear its commitment to review the measures again if
necessary.
However, I have to be clear as far as expectations are concerned. The adjustments
that just came into force were extremely ambitious within the existing legal framework.
The
red lines that we could not cross in this review remain applicable. Therefore,
one cannot expect that by means of a new review, we could introduce a drastic set of
new adjustments.
This said, our objective is to ensure the effectiveness of the measures in line with
legality and we therefore stand ready to review the measures
if there is a justification
for it.
Will the Commission consider extending the safeguard measures beyond their
current expiry date, 30 June 2021?
If a country imposes safeguard measures for a period beyond 3 years, the exporting
countries affected would then be legally entitled to take retaliatory measures. The
measures other WTO members could adopt against the EU would potentially affect
billions of EU exports of a wide array of products (other than steel), including high
added-value products, agricultural products (e.g. wine).
Therefore extending the measures would come with
very high costs and spillover
effect to many other EU sectors that should pay for the protection of the steel industry.
Topics for discussion
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Meeting with
ArcelorMittal
14 July 2020, 17h30-18h00
Background
The Commission imposed definitive safeguard measures on 1 February 2019. The
definitive measures took the form of a tariff-rate quotas (TRQs) for 26 product categories
under which an additional duty of 25% applies only when imports exceed the level of
traditional trade flows (average imports 2015-2017). Countries with an important economic
interest can export under a country-specific quota corresponding to their actual historical
imports, while others are subject to a residual (global) quota. The measures are in place
for three years, i.e. until 30 June 2021. The Commission committed to reassess the
measures each year of application and introduce appropriate adjustments.
On 29 May, the Commission notified the changes it intends to bring to the Steel safeguard
measures. In the Safeguards Committee on 12 June, 20 Member States voted in favour
(representing 93% of EU’s population) and none opposed the proposal. The adjustments
entered into force on 1 July 2020.
The basic adjustments that entered into force on 1 July consist of:
move to a quarterly, rather than yearly management of all country-specific quotas; this
adjustment, whilst preserving the total volumes per product category, will ensure a
more stable flow of imports and minimise the risk of undue import surge during the
remaining duration of the measures;
introduce a country-specific quota administration in product category 1 (hot-rolled flat
products);
introduce a refined regime for the access to the residual quota of countries benefiting
from country-specific quota. This adjustment will ring-fence, where appropriate, the use
of the residual quota for the incumbent smaller exporting countries falling within this
global section of the TRQs, and will minimise the risk that they are crowded out by
those exporters enjoying country-specific quotas.
update the list of developing countries excluded from the measures on the basis of the
most recent stable statistical data: 2019 import statistics.
Contacts
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Electronically signed on 28/09/2020 13:43 (UTC+02) in accordance with article 11 of Commission Decision C(2020) 4482
Topics for discussion
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