On April 13th local time, the European Parliament and the European Council reached a temporary agreement on regulations to protect the EU steel industry from the impact of global overcapacity.

Compared to the 2024 safeguard quota (183 million tons of steel imports per year), the new agreement reduces the total steel import quota by about 47% and doubles the import tariff for imports exceeding the quota to 50%. These measures aim to curb excessive imports while maintaining controlled market access from traditional suppliers.

Once adopted, the regulation would replace the current EU steel safeguard measures, which are set to expire on June 30, 2026.

In addition to introducing the revised TRQ system for managing steel imports in the EU, the agreement also clarifies issues related to quota management and its allocation among exporting countries.

The agreement stipulates that, in the first year of implementation, all unused import quotas for all product categories can be carried over to the next quarter to enhance the flexibility of economic operators and support the supply chain.

From the second year, the committee will decide, based on specific criteria, whether to allow a carry-over of specific product categories on a quarterly basis. These criteria include factors such as import pressure levels, the rate of quota utilization, and the supply situation in the downstream industry, aiming to prevent market volatility while ensuring sufficient supply.

In addition, in order to improve supply chain transparency, the regulation also introduces the principle of "smelting and casting", which determines the country where steel is initially smelted and cast - i.e. the country where steel is initially produced in a liquid form in a furnace and then cast into its first solid shape. The country where steel is smelted and cast will be one of the factors to be taken into account in the allocation of quotas to third countries, as required by the regulation.

The Committee shall assess whether the melting and casting countries should be designated as specific countries for the allocation of tariff quotas within two years and, if necessary, submit new legislative proposals.

Steel is a key enabling material for the EU economy, particularly strategic for green transition and defense industries. The EU steel manufacturing industry is the third largest production system in the world, directly employing around 300,000 people and supporting regional development in member states.

European Commission official in charge of trade affairs, Maros Sefcovic, has warned that global overcapacity is threatening Europe's industrial strength. He stated, "The scale and global position of the European steel industry are crucial for our strategic autonomy and industrial strength. Therefore, we cannot turn a blind eye to the critical level of global overcapacity."

He welcomed the agreement: "Today's result helps to provide the much needed stable environment for our manufacturers to develop in Europe."

However, the temporary agreement needs to be formally adopted by the European Council and the European Parliament before it can enter into force. The full assembly could vote on the temporary agreement in May.

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