The Trump government’s announcement of steep tariffs of 25% on steel imports in the month of March attracted a backlash from the majority of countries including South Korea which then initiated negotiations with U.S. to earn some exemptions.
The first such country to negotiate with U.S. was South Korea where both the countries reached upon an agreement that instead of levying 25% import tariffs on entire quantity of steel exported by South Korea, steel exports from Korea to U.S. shall limit to 2.68 MnT or 70% of the annual average of Korean steel exports to the U.S. between 2015-2017.
Now in line with this, the Korea Iron and Steel Association (KOSA) has announced that any person or company in the country that wants to export steel products to U.S. will have to obtain the export approval certificate of the association and has to submit it to the Customs department along with the existing export documents.
The mechanism of KOSA’s quota approval system
In order to prepare the country for such change in the export environment, the association had a discussion with the steel industry and reached upon an agreement on basic operation plan for steel quota for about 50 products.
KOSA has classified this quota as ‘basic type quotas’ that can be used by major exporters and ‘open quotas’ that are available for new and small exporters. Basic type quota is allocated as per the export performance of the company in last 15-17 years and ‘open quotas’ are set depending upon the size of the items and possibility of entry of new exporters.
For example in case of hot rolled steel sheets, the chances of new entrants in export market is highly unlikely and thus their quota is set at a minimum level of 1% whereas in case of high-end steel pipes which has the highest share in South Korea’s steel exports to U.S. the same is set at 15%.
In addition to this, KOSA also plans to investigate the quarterly and annual export plans of each company in advance in order to efficiently operate quota and to impose restriction in case there is manipulation of export volume.
However, the major issues related to the management of quota operation are set by industry-led ‘TMI Steel Quota Steering Committee’ so that industry opinions can also be effectively and actively reflected.
Below is the link for quota imposed on exports of South Korean steel products
http://www.steelmint.com/fileForMail/South_Korea_Steel_Quota.pdf
Inputs from Steel Daily
Leave a Reply