The European Union has taken a significant step to protect its steel industry by extending the steel safeguard measure for an additional two years, until June 2026. This decision, announced by the European Commission, comes as a response to ongoing global pressures and market imbalances that continue to threaten the stability of the EU's steel sector.
The extension of the safeguard measure is not a mere continuation of existing policies but includes adjustments to its functioning. These modifications are designed to better align the measure with current market conditions, ensuring its effectiveness in the face of evolving global trade dynamics. The European Commission's decision is based on a thorough investigation, which was initiated at the request of fourteen EU Member States, highlighting the widespread concern across the Union regarding the state of the steel industry.
The investigation revealed that the safeguard measure remains necessary to prevent or remedy serious injury to the EU's steel industry. The European Commission cited several factors contributing to the significant import pressure on the Union market. One of the primary concerns is the persistently high levels of global steel overcapacity, particularly the surge of exports from China to third countries, notably in Asia. This has resulted in increased exports from those third countries to the EU, creating a domino effect that impacts European producers.
Another factor influencing the decision is the increased number of trade defense measures and other trade restrictive measures imposed by other third countries. These actions have redirected steel flows, often towards the EU market, which is perceived as more open and attractive. Additionally, the Commission noted a significant reduction in demand within the EU, further exacerbating the challenges faced by domestic producers.
The technical adjustments to the safeguard measure will come into effect on July 1, 2024. These adjustments are expected to fine-tune the measure's effectiveness, ensuring it remains responsive to the current market realities. The measure is now set to expire on June 30, 2026, marking eight years since its first imposition. This duration represents the maximum application period allowed for a safeguard measure under both EU and World Trade Organization rules.
It's worth noting that while the measure has been extended to its maximum allowable duration, the European Commission retains the flexibility to review and adjust its functioning before the 2026 expiration date. This provision allows for further modifications if the Commission deems them necessary to address changing market conditions or unforeseen challenges to the EU steel industry.
The extension of the steel safeguard measure is likely to have far-reaching implications for both EU steel producers and global trade dynamics. For European steel companies, this decision provides a degree of certainty and protection against unfair competition, potentially encouraging investment and stabilization in the sector. However, it may also face criticism from steel-consuming industries within the EU and from international trading partners who view such measures as protectionist.
