EU Safeguard Duties on Stainless Steel Products

Developing Countries as defined by EU and European Economic Area (EEA) members – Norway, Iceland and Liechtenstein – are exempted from the new EU stainless steel policy. All other countries aside these are affected.

Against the backdrop of the US decision to improve tariffs of 25% and 10% on imported steel and aluminums respectively, the EU has instituted measures to implement provisional safeguards measures on imported steel. This measure is provisional as long as the US section 232 tariff remains in place.

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A global tariff Rate Quota of a 100% based on average import within the last three years for 23 products categories is in place. However, once that quota is exceeded, a 25% tariff is to be levied on the importation of these 23 products.

The quota is allotted on the basis of first-come-first-served. It is not allocated based on individual exporting countries. In essence, exporters will fight over themselves to fill the allotted quota.

The effect of the EU Safeguard Duties on EU consumers

The stainless steel industry within the EU will become more stifling. Since there is now restriction on the quantity of stainless steel, EU consumers are at the mercy of the EU producers. Without outside competition, consumers will be adversely affected. The result will be an immediate increase in cost of these 23 products, the price will skyrocket. Consumers will be forced to pay more.

This may lead to production of substandard products if care is not taken. The EU producers are confident that the market is all theirs; therefore, they can lower their standards and make more profits. After all, EU consumers can hardly access imported stainless steel products. Variety of stainless steel products may be hampered too.

Competition enhances growth and reduces cost of products. Restriction on importation will kill competition in the stainless steel sector. Limited sources of the 23 stainless steel product may not even benefit small scale stainless steel industries and distributors in the long run. The big shots may run them out of business, increasing the chances of monopoly. The consumer will of course bear the brunt.


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Are these Safeguard Duties on stainless steel here to stay?

This policy is provisional and will not be in place forever. It came into being as a retaliation against President Trump‘s tariff policy. In fact, these protectionist measures are against the global trade liberalization. Even though the EU thought it is wise to protect local industries which it says are under threat if products meant for US market end up diverted to the EU market. The restriction should not be allowed to last too long as it will also adversely affect EU consumers.

The end to the EU Safeguard duties on stainless steel is dependent on the death of the stifling political and economic situation instituted by President Donald Trump.

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