"A further reduction in import quotas for steel is incomprehensible." In a recent letter of intervention, the German Sheet Metal Forming Association (IBU) and the German Cold Rolling Mills Association (FVK) addressed the Directorate-General for Trade (DG) of the EU Commission in Brussels. This was triggered by the current discussion and the monitoring procedure to reduce the duty-free import quotas for steel by 75 percent. This stricter protective measure would unilaterally privilege the steel industry, but at the same time severely weaken the steel processing companies. "The competitiveness of steel manufacturers must not come at the expense of processors, who provide many times more jobs," both associations warn.
Since mid-2018, the EU has been limiting steel imports from third countries through so-called safeguards ("measures applicable to imports of certain steel products"). Further reducing the duty-free import quota would pose an additional threat to suppliers. Many of them are already struggling to survive due to coronavirus. For the IBU and FVK, the import quota discussion is incomprehensible, unmeasured and also not WTO-compliant: "There are no prerequisites or legal basis for a quota change. There is no proper review process, the sectors affected are not involved and, above all, the changes that are absolutely necessary on the import side are not recognizable. We do not see and do not expect a sudden increase in imports - for example from China," emphasizes IBU Managing Director Bernhard Jacobs.
Steel exports will fall
Current figures on EU imports support the arguments of the IBU and FVK - there are no import increases in sight. Imports of rolled steel, for example, fell by 13% in 2019 and by as much as 17% by February of this year. The further development is completely unclear - an increase is very unlikely due to declining demand. On the contrary: global steel exports are expected to fall further, and stocks in the domestic markets are already high. It is therefore unlikely that the EU steel industry will be damaged by rising imports, and estimates of steel market developments are purely speculative. "As a partner to the steel industry, we naturally have a great interest in keeping it competitive. But we must not give the impression that the safeguards - which are intended to protect EU steel producers - are now being used to lock in their market shares. The acceptance of these measures has already suffered as a result of this assessment," emphasizes Martin Kunkel, Managing Director of FVK.
Characterized by medium-sized companies
The associations, whose members are predominantly medium-sized suppliers, want to prevent serious, irreparable damage to the European economy with their objection: "The current discussion about reducing steel quotas is already creating a high level of uncertainty." Industries with millions of jobs would be affected by a further reduction in import quotas. While around 180,000 people are employed in steel production, there are around 4.2 million in the steel processing industry - excluding automotive and mechanical engineering.
www.industrieverband-blechumfomung.de
www.fv-kaltwalzwerke.de
