[fn Editorial] EU Steel Trade Barriers: All-Out Effort Needed in Quota Negotiations

On the 7th (local time), the European Commission (EC) officially announced new regulations aimed at protecting the European steel industry. The core of the policy is to halve the global tariff-free import quota for steel products and to double the tariff on imports exceeding the quota from the current 25% to 50%. While the exact implementation date remains uncertain, it is highly likely to be introduced after a member state vote around the end of June next year.
If, following the United States (U.S.), Europe also enforces high steel tariffs, the Korean steel industry could find itself in an inescapable predicament. This is a critical moment that requires swift and unified action from both the government and businesses. Fortunately, while the total global tariff-free quota will be cut in half, country-specific quotas have not yet been determined. The EU has stated that these will be decided through individual negotiations with trading partners, making it imperative to devote every effort to the upcoming talks.
Throughout this year, the Korean steel industry has faced relentless challenges from China’s low-price offensive and the U.S.’s high tariffs. In March, the U.S. abruptly abolished its tariff-free import quota for steel products and raised tariffs from 25% to 50%. Except for April, steel exports have declined year-on-year every month. In May, exports fell by 12.4%, followed by drops of 8.2% in June, 3.0% in July, and a sharp 15.4% decrease in August. Since August, the 50% tariff has also been extended to more than 400 derivative products, including refrigerators, transformers, and electric cables. The outlook for steel exports to the U.S. is expected to worsen further.
Having barely managed to offset losses in the U.S. with gains in Europe, the Korean steel industry now faces mounting anxiety. Europe is Korea’s largest steel export market. According to the Korea International Trade Association (KITA), Korea’s steel exports to the EU last year totaled $4.48 billion (about 6.3 trillion won), surpassing the $4.35 billion exported to the U.S., Korea’s top single-country market. If both the U.S. and Europe become inaccessible, Korea’s steel industry could face an unprecedented crisis.
In the European market, Korea has greatly benefited from the Free Trade Agreement (FTA). Of the 3.8 million tons of steel products Korea exported to the EU last year, 2.63 million tons were shipped tariff-free under Korea’s quota. The remaining volume was exported duty-free using the global quota. With these advantages now at risk of disappearing overnight, extraordinary countermeasures are urgently needed.
The annual tariff-free quota announced by the EU is expected to be up to 18.3 million tons, based on the steel import volume in 2013, before the onset of global oversupply. As the total quota will be drastically reduced, Korea’s allocation is also likely to shrink, making it crucial to minimize the damage. The EU’s steel tariffs can be seen as a response to China’s low-price competition and as leverage in tariff negotiations with the U.S. Negotiation strategies should be crafted with this in mind. All diplomatic and intelligence resources must be mobilized to overcome the EU’s barriers.
In the long term, the best course is to increase local production in Europe and achieve major technological innovation. Accelerating the development of eco-friendly, high value-added steel in line with the EU’s carbon neutrality regulations is essential. Persistent research and development (R&D) is needed to enhance cost competitiveness and secure market leadership. Building and investing in local plants in Europe should also be actively considered. Bold government support is indispensable. Measures to advance the steel industry and alleviate industry hardships must be prepared without delay.