Following the United States, the European Union (EU) has announced plans to significantly tighten import restrictions on steel products. Under the new regulation, duty-free quotas will be reduced, while the tariff rate will be doubled from 25% to 50%. This move is seen as a signal of a new wave of protectionism in global trade.
The Korean government has officially conveyed its concerns to the EU and has begun preparing support measures for domestic producers to minimize potential losses in steel exports.
47% quota reduction
According to the EU’s plan, the total steel import quota will be reduced from 30.53 million tons to 18.3 million tons a 47% decrease. Steel imports exceeding the quota will be subject to a 50% tariff, twice the current 25% rate.
The new system is expected to take effect in June next year, when the existing safeguard measures expire, depending on the vote of EU member states.
Risk of decline in Korea’s exports
The Ministry of Trade, Industry and Energy warned that the planned reduction could severely affect Korea’s steel exports to the EU. According to the Korea International Trade Association, Korea’s steel exports to the EU reached USD 4.48 billion last year. The EU and the United States remain Korea’s two largest export markets, with purchases worth USD 4.35 billion and USD 4.48 billion respectively.
Following the United States’ imposition of higher tariffs earlier this year, Korea’s steel exports to the US have shown a downward trend, decreasing by 12.4% in May, 8.2% in June, 3% in July, and 15.4% in August on a yearly basis.
“Free trade agreements should be considered”
The Korean government emphasized that the EU mentioned taking free trade agreements (FTAs) into account in the new quota system and plans to use this clause to safeguard national interests. Minister of Trade Yeo Han-koo is expected to discuss the proposed tariff system with EU Trade Commissioner Maroš Šefčovič.
In addition, Deputy Minister of Trade Moon Shin-hak will visit steel export sites to gather firsthand information from industry stakeholders.
The ministry will hold a meeting on Friday (today) with representatives from the public and private sectors to discuss Korea’s response to the EU’s new measure and plans to strengthen the country’s steel industry.
Comments
No comment yet.