The European Union’s crackdown on steel imports shakes Switzerland and Ukraine.
Brussels is preparing to drastically reduce duty-free import quotas and increase tariffs on excesses to 50% starting July 1, a measure designed to counter global overcapacity, particularly Chinese, and to align with US trade policies.
The only exception to the new rules concerns countries of the European Economic Area (Norway, Iceland, and Liechtenstein). The new rules have thus sparked protests from Bern and Kyiv, who fear heavy economic and trade repercussions.
All the details.
SWITZERLAND’S CRITICISM OF THE NEW EU TARIFFS
Last Saturday the President of the Swiss Confederation Guy Parmelin called the new European steel import measures “unacceptable.” Speaking on Swiss public radio SRF, Parmelin also said he was “surprised” by the timing of the decision, which came while the Swiss Parliament is examining the recently signed package of agreements between Bern and Brussels.
According to the Swiss president, the tariffs also represent an “own goal” for Brussels, considering the level of economic integration between Switzerland and the European Union in strategic sectors such as space.
BRUSSELS’ POSITION
In response, the European Commission rejected Swiss criticism, stating that the new tariffs do not violate the joint declaration related to the “stabilization and development of Switzerland-EU relations” package.
“The declaration cannot prevent the EU from making autonomous decisions in other areas,” Brussels said. As Swissinfo recalls, steel trade is governed by the 1972 bilateral free trade agreement and is not part of the new package of agreements negotiated with Switzerland.
A Commission spokesperson also confirmed the European executive’s intention to adopt a delegated act by July 1 to define import quotas assigned to each partner country. The new measures foresee a reduction in allowed imports and a doubling of tariffs on excess quotas. The only exception concerns countries of the European Economic Area, namely Norway, Iceland, and Liechtenstein, while Switzerland will not benefit from any exemption.
THE EU STEEL CRACKDOWN
Brussels announced that from July 1 it will reduce the steel import quota by 47% and apply a 50% tariff on additional imports. The measure was adopted in response to the global steel sector overcapacity, which according to the EU has caused a sharp increase in imports and negative consequences for the European industry, with job losses and reduced production capacity, reports the Financial Times.
The same British financial daily recalls that the plan was agreed earlier this year after pressure from some member states, led by France, Spain, and Poland, to counter the excess supply resulting from Chinese overproduction. The European Commission now has the power to distribute the reduced quotas among various trading partners and has started negotiations with about twenty interested countries.
KYIV’S CONCERNS
But the European move has alarmed not only Bern.
Ukraine has also contested the European plan, warning that the quota reduction could have heavy economic consequences for Kyiv at a time marked by the intensification of the war with Russia.
In initial negotiations held in Geneva last month, the Commission proposed applying a bilateral duty-free quota of 713,000 tons to Ukrainian steel exports, according to official sources cited by the FT. Last year, Ukraine sold 2.65 million tons of steel to the bloc, with the EU as the main export market for Ukrainian steel.
Specifically, Ukrainian authorities warned that such a drastic reduction – equal to 70% compared to last year – could cost Kyiv up to 1 billion euros in lost export revenues, at a time when Moscow is intensifying its attacks against the country.
HOW THE EU WILL ACT
For its part, the Commission stated that Brussels “will take into account Ukraine’s difficult situation” and that “Ukraine will receive a country-specific quota that will guarantee its steel exports to the EU, albeit at a lower level than in previous years,” the Financial Times notes.
According to Karin Karlsbro, the MEP responsible for the dossier, the European Parliament insisted on granting Ukraine special treatment due to its “exceptional and immediate security situation” during talks with EU countries on quota reductions. “Ukraine should receive very special treatment as a candidate country, given its particular security situation: we have high expectations of the Commission to keep this promise,” she added.
