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| Steel coils wait to be shipped overseas at POSCO's steel mill in Gwangyang, South Jeolla Province in this Nov, 2020 photo. Yonhap |
By Baek Byung-yeul
The local steel industry is expected to continue to suffer an export contraction as the European Commission is likely to extend a safeguard measure on steel imports for an additional year.
According to the Korea International Trade Association (KITA) and foreign media, Sunday, the European Commission is slated to announce the results of an investigation to assess the need for an extension of the safeguard measure on June 7 (local time).
The European Commission introduced the safeguard measure in July 2018 after the U.S. began imposing an additional 25 percent tariff on steel imports early that year. Due to the concern that cheaper steel from Asian makers would eat away at the European market, they imposed a 25 percent tariff on 26 steel "products" that exceeded a quota given to each country until June 30 this year.
KITA said multiple European Union (EU) officials told local media that the European Commission will propose a one-year extension of the safeguard measure. After the commission submits its opinion to the EU council, the latter will make a final decision on whether to approve the extension before the current measure expires.
The association added that the European Commission launched the investigation for extending the safeguard measure in February following requests from some member countries including Germany, Italy, France and Luxembourg.
The European Steel Association (EUROFER) also has continued to request the extension of safeguard measure over concerns that the steel industry there could be decimated by cheaper steel.
KITA said it believes that the current safeguard measure needs to be extended as long as the U.S. continues to carry out its section 232 measure which grants the American president the authority to impose restrictions on products that have been determined as posing a threat to U.S. national security.
During an online conference held last month, EUROFER said EU steel imports more than doubled, while exports decreased 26 percent, during the 2012-2018 period before the U.S. and EU implemented the section 232 tariffs on steel products and the safeguard measure, respectively.
If the safeguard measure is extended, Korea's steel industry will continue to suffer an export contraction.
According to EUROFER data, steel imported from Korea stood at 2.88 million tons in 2017 and 3.19 million tons in 2018, but the figure decreased to 2.68 million tons in 2019 when the safeguard measure went into effect and 2.62 million tons in 2020. It is estimated that the amount will decrease to 2.1 million tons this year. Korea's trade ministry also said the country's exports of steel to the EU decreased to $2.39 billion last year from $2.98 billion in 2017.
However, some also predict that the safeguard measure won't be extended. KITA said Valdis Dombrovskis, executive vice-president of the European Commission and former prime minister of Latvia, has maintained a negative stance on extending the safeguard measure as retaliatory actions may be taken by its trading partners.
"Under the rules of the World Trade Organization, safeguard measures can be extended beyond three years but, if they are extended, affected trade partners can also demand compensation and take retaliatory measures," KITA said.
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