The EU has initiated a review of the safeguard duties and quota applicable to imports of certain steel products. The safeguard duties are set to expire in 2024 however, the review is happening to determine if the measure should be terminated by 30 June 2023. The EU has confirmed that exporter responses will be considered.
The steel safeguard duties in the EU are being considered for early removal which is a big deal to South Africa. We must not be caught napping. Combined with the Section 232 duties in the USA, and the safeguard duties in the UK, these actions have reduced South Africa’s access to three very important export markets for coated and stainless steel, as well as for steel tubes and pipes. This doesn’t have to remain this way, but if we do nothing, this will indeed be the outcome.
We have focused only on the exports under the tariff codes currently being reviewed by the EU. These break down into four broad categories, being coated steel (galvanised, aluminium and zinc-aluminium coated), stainless steel, seamless steel tubes and pipes and flat steel. The flat steel volumes are trivial and so are not further considered in this article.
The safeguard duties and quotas were implemented in the EU, USA and the UK in 2018, seeing our total exports dropping, but interestingly our prices rising significantly, particularly to the EU, despite the restrictions.
Looking at the EU, most of the gain has been contributed by stainless steel, as can be clearly seen below.
It is incredibly important to not only take a short-term view. Even if we are currently not maximising our exports to the EU, it is crucial to ensure this market remains as open as possible. A decision taken now to not act cannot be remedied in two months time. The deadline to respond is 13 January 2023, so South African producers need to file their responses by that date to have this important market further opened next year. No one knows what trade will look like next year, but there is no scenario where improved access to the EU is not a good thing.
This is not just about the steel producers; it is also about our government. Our relationship with the EU is definitely not where it should be, not helped by our stance on the Russian invasion of Ukraine, or a number of other trade issues, but it still remains functional. Industry needs to work with government to have the safeguard lifted early.
The recent Manufacturing Circle conference on growing exports aimed to do exactly this. To bring industry and government together to grow our exports. This is the perfect opportunity to move from talking to executing.
Don’t get this wrong:
- Remember the deadline is 13 January 2023. If the EU market matters then this deadline must be met.
- Industry and government need time to chat, so this cannot be left to the last minute.
- XA is the most experienced global trade consultancy in South Africa, with significant experience in the EU. You should contact us to assist you.