Written answers

Wednesday, 15 December 2021

Department of Enterprise, Trade and Employment

Trade Agreements

Photo of Fergus O'DowdFergus O'Dowd (Louth, Fine Gael)
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13. To ask the Minister for Enterprise, Trade and Employment if he will provide an update on talks and agreements that have taken place with member states in respect of tariffs for steel products being imported from outside of the European Union and the significant effect it is having on local steel businesses in Ireland given the very serious pressure on supply and the subsequent price hikes as a result; and if he will make a statement on the matter. [62307/21]

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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As the Deputy will be aware, the European Union imposed Safeguard Measures on steel imports into the EU in July 2018 in response to the United States applying a 25% tariff on steel imports originating from 3rd Countries, including the European Union. As a consequence of the US Measures, there was an increased risk of steel originally destined for the US market being diverted to the EU market and thereby distorting or severely disturbing the EU steel market. To address this risk, the EU introduced Steel Safeguards Measures in 2018 and these Measures have been continued following a review of the Measures in June 2021. The decision to continue the Measures for a minimum period of 2 years was based on a Commission-led review of the need for such Measures undertaken at the request of several Member States and which was conducted in the first half of 2021.

The withdrawal of the United Kingdom from the EU has also had an impact on the market as the UK is now treated as a third country and it has been provided with its own set of Tariff Rate Quotas as part of the EU's Safeguard Measures.

The current Safeguard Measures allow for the importation of steel from 3rd Countries by way of quotas, determined in line with traditional volumes of trade in steel, before the Safeguard tariff is applied. Thus, traditional trade flows should not be impacted

On 31st October, in a positive sign of improved EU-US relations, the United States announced that from 1st January 2022, it would establish a quota-based system on exports of EU steel and aluminium into the US in place of the 2018 tariffs on all such imports. This system would allow all EU Member States to export steel and aluminium products to the US - within traditional trade volumes - without attracting the additional 25% tariff. The volume of EU steel and aluminium exports affected by this new arrangement is approximately 4.4 million metric tonnes and this US decision will remove tariffs on $5.5 billion of EU steel and $1.2 billion of EU aluminium exports. These exports would have otherwise continued to be subject to duties. In response, the EU has suspended its rebalancing countermeasures against the US that were imposed in 2018. These joint actions are welcomed but are considered to be incremental steps in finding a permanent solution to the issue of trade in steel and aluminium between the EU and US. In that regard, I note that Irish industries impacted by the tariffs imposed on both sides of the Atlantic have welcomed the development and that they can now recommence traditional trade relations without the punitive 25% tariff being applied. However, we are all aware the a permanent resolution still needs to be worked on and the EU and US are committed to such endeavours.

Furthermore, in light of the changes made by the US, the EU Commission has recognised that its Safeguard Measures may need to be recalibrated to take into account changed internal market dynamics due to the potential of increased volumes of EU steel and aluminium products being exported to the US and the availability of EU produced steel for local users and importers. However, it is important to note that the US arrangement only applies to EU exports of steel and aluminium. Exports to the US from other third countries remain subject to the US "Section 232" tariff measures.

Therefore, the Commission will undertake a review of its Safeguard Measures in early 2022 which will include an analysis of the impact of the new US and EU arrangements on EU exports of steel and projections on future EU production capacity and user demands across Member States. This review process will be open to submissions from users and importers in order to better inform the Commission's decision-making process.

Since applying the original Safeguard Measures in 2018, the European Commission has completed 3 reviews of the Measures, with the most recent review published in June 2021. The findings of that most recent review included details on the availability of quotas across the product categories impacted by the Measures. The Commission's review found that during the first three years of application of the Measures (July 2018 – May 2021), there have been consistent and increasing free-of-duty TRQ volumes available at the end of each period in nearly all product categories. For example, in year-3 of the measures up to 20 May 2021, 36% of the available TRQs in steel remained unused, some 11 million tonnes. Thus, the data available indicated that the application of the EU's Safeguard Measures does not affect the availability of supply, as quotas, under which imports do not attract the Safeguard Measures' tariff, are not exhausted before the end of a given period. While it is acknowledged that many sectors of the Irish economy are experiencing price pressures as the global economy emerges from the economic impact of COVID-19 and the slow return of pre-pandemic levels of manufacturing production - as well as the new dispensation with the UK post-Brexit - the EU’s Safeguard Measures are not considered to be a principal cause of either supply availability or price increases.

It is also important to note that the current measures in place include a 3% year-on-year liberalisation rate which means that the available TRQs increase each year by 3% from the benchmark period of 2015-2017. Therefore, TRQs for the periods 2021/22 and 2022/23 will match the level of imports recorded in 2018 - a noted high watermark for trade in steel.

In designing the Measures, the European Commission has sought to ensure full compliance with the safeguard rules provided for under the World Trade Organisation and the Commission has reassured industry and Member States that it continues to monitor the situation for both producers, users and importers to limit any negative impact of the application of the Measures.

Officials in my Department continue to engage with Irish industry and representative groups on the matter and liaise closely with EU officials regarding the operation of the safeguard measures to ensure that they continue to meet their objective in guarding EU steel producers from the harmful impact of trade diversion of steel while at the same time ensuring that the EU market stays open to fair and sustainable competition where EU importers can secure supply at competitive prices. As always, steel sourced within the EU is not subject to any such tariffs as part of the Single Market.

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