The European Commission’s (EC’s) rationale for the extension of the “safeguards measure” in the notification to the World Trade Organisation (WTO) is “flawed”, the Indian Steel Association has informed SteelMint, in an exclusive interview.
Dr Bhaskar Chatterjee, Secretary-General and Executive Head, Indian Steel Association, told SteelMint: “The inventory held by the EU industry has reduced from 2018 to 2020. The reduction in the EU industry’s profitability in 2020, despite higher market share, is primarily on account of the Covid-19 pandemic-induced lower sales realisation, that cannot be attributed to purported pressure from imports.”
Illustrating this point, Dr Chatterjee said EU imports have exhibited a sharp reduction by 27% from 34.18 million tonnes (mn t) in 2018 to 25.02 mn t in 2020. “The market share of the EU industry has increased from 79.6% in 2018 to 82.1% in 2020, whereas the market share of imports has reduced from 20.4% to 17.9% during the same period,” Dr Chatterjee emphasised.
India’s exports to the EU have already taken a hit since the inception of safeguard quotas in 2018. “The extensions of these safeguard quotas will further limit the exports of Indian steel companies to the EU for the next three years,” he said.
“The steel consumers in the European Union (EU) have consistently voiced opposition to the extension of the safeguard measure amid high prices and tight availability in the EU steel market,” he added.
Instead of increasing the liberalisation rate as per the WTO Safeguards Agreement, the European Commission has maintained it at 3% that has been in existence since September 2019, Chatterjee stressed.
It may be recalled the EU safeguards were taken by EU post-US 233 sanctions, to safeguard against diversions from those countries which were most affected by US sanctions.The quota has increased over the years and is independent of the growth of the overall EU steel market.
Key points in the quota structure
- The quota structure takes the form of a set of tariff-rate quotas, based on the average volume of traditional imports over 2015-17 plus 5%.
- Only once the quota is exceeded, does a 25% tariff apply to other imported products, with major traditional steel importers retaining their own country-specific quotas. The buyer has to bear the 25% tariff.
- Developing countries that have less than 3% import share are excluded from the measures.
- When a quarterly quota is under-utilised, the volume is rolled over into the next quarter (but not from “year to year”.
The current quarterly quota is approximately 160,000 tonnes. The HRC quota is already over for this calendar.
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