European Union applies provisional safeguard measures on steel products

On July 18, 2018, in the context of an investigation initiated on March 2018, the European Union announced the imposition of provisional safeguard measures over 23 steel products. Safeguards, which have the purpose of protecting a country of bloc’s domestic industry from a sudden and sharp increase on imports of a certain product into its territory, will in this case take the form of a tariff rate import quota, in excess of which an additional duty of 25% shall be levied.[1]

In spite of the fact that all countries are subject to the measures, multilateral rules establish that products originating in developing countries must be excluded from it, provided that they collectively do not exceed 9% of total EU imports, and that each country does not exceed 3% of this total. Due to this rule, Brazil is not subject to the measures for most of the 23 products, but rather only for the following: (i) hot rolled sheets and strips; (ii) cold rolled sheets; (iii) tin mill products; (iv) quarto plates, and (v) angles, shapes and sections.

According to the European Commission, the safeguard investigation and its developments consist in one prong of a threefold strategy in response to the United States’ decision to impose, for national security reasons, an additional 25% and 10% duty on steel and aluminum products. The other two prongs besides the safeguard case, already in practice, are requesting consultations with the US before the WTO dispute settlement system, and imposing extra “rebalancing” duties over several products traditionally exported by the U.S.

The measures enter into force immediately and shall last for 200 days, although they do not apply to products already in transit whose destination cannot be changed.

[1] In case imports are already subject to a trade remedy, for example an antidumping duty, the measure in force will be suspended or reduced in a way that the combination of a previous measure with the current one does not surpass the highest safeguard amount or the antidumping/countervailing measure in force (in other words, in case of a product subject to an ad valorem antidumping duty of 60%, the combination of this duty with the safeguard surcharge cannot exceed 60%).