Background
On 13 April, the European Commission announced that an agreement had been reached between the European Parliament and the Council on the proposal for a Regulation (COM(2025)726 of 7/10/2025) aimed at introducing a more stringent safeguard measure and new declaratory requirements in connection with the importation of steel products.
The proposal, which is pending formal adoption by the two institutions and publication in the Official Journal of the European Union, is based on a system of Tariff Rate Quotas (TRQs): imports within the quotas are admitted free of duty. Once the quotas are exhausted, all subsequent imports will be subject to a 50% ad valorem duty. In addition, upon importation of steel products, it will be necessary to identify the country of melt and pour.
As indicated in the Press Release published by the Commission, the measure is expected to enter into force by 1 July 2026.
The current safeguard measure expires on 30 June 2026
A safeguard measure is currently in force (imposed by Commission Implementing Regulation (EU) 2019/159) which will expire on 30 June 2026 after eight years of application, having applied duties of up to 25% on imports of steel products beyond certain quotas.
The structural causes that justified its adoption — global excess production capacity and its negative effects on the sector — remain, however, more relevant than ever: an increasing number of third countries are adopting protectionist measures that divert global excess production towards the EU, effectively making the European market the main destination for global excess capacities, with negative effects on the consumption of domestic steel products.
Indeed, global overcapacity is estimated to grow from the current 602 million tonnes (equivalent to five times European demand) to 721 million tonnes by 2027.
The pillars of the new measure
1. Tariff quotas for 28 product categories
The Regulation opens free-of-duty tariff quotas for each of the steel product categories listed in Annex I, identified by their CN codes, with specific volumes set out for each category in Annex II.
The categories cover a wide range of products, including hot-rolled and cold-rolled coils, plates, galvanised products, tubes, bars, wire rod, rails and many others.
The total annual volume of tariff quotas amounts to 18,345,922 tonnes, calculated by applying the import market share in the EU in 2013 (the year preceding the impact of global overcapacity, approximately 13%) to total consumption data for the European steel market in 2024.
2. Out-of-quota duty at 50%
Where the relevant tariff quota is exhausted, a 50% ad valorem duty shall apply to imports of the products into the EU.
This rate is doubled compared to the 25% provided for under the current safeguard measure, with the objective of minimising the risk of trade diversion towards the European market.
3. Quarterly management of quotas
The tariff quotas are administered on a quarterly basis and unused quota volumes in one quarter shall not be carried over to the next quarter. This mechanism is designed to avoid disproportionately large concentrations of imports within short periods.
4. The “melt and pour” principle
One of the most significant innovations concerns the rules of origin. As specified in Article 3 of the Proposal, at the moment of importation it will be mandatory to identify the country in which the steel used in the production of the product was melted and poured (the so-called country of “melt and pour“), meaning the original location in which raw steel and iron is initially produced in liquid form within a steel making furnace and subsequently cast into its first solid state.
Importers will also be required to provide appropriate evidence demonstrating the accuracy of the declaration, for example through a production certificate (such as, by way of example, a mill certificate).
This rule aims to prevent steel produced in countries with excess capacity from entering the European market following further transformation in other countries, thereby circumventing the protective measures.
What should companies do?
Pending the publication of the official text of the measure, companies that import or export steel products to and from the EU — as well as companies that use steel as a raw material — should already take the following steps:
- Verify whether the products handled fall within the 28 categories covered by Annex I of the proposed Regulation;
- Assess the impact of the 50% out-of-quota duty on procurement costs and margins, and evaluate possible mitigation actions, such as the use of special inward processing or customs warehousing arrangements;
- Prepare to comply with the new “melt and pour” documentary requirement by obtaining mill certificates from suppliers;
- Monitor the country allocation of quotas, which will be determined by the Commission through implementing acts;
- Review supply chains to identify any exposures to countries not covered by free trade agreements or potentially subject to bilateral safeguard measures.
For further information, please contact:
Gaetano Salvioli, Partner, Bird & Bird
gaetano.salvioli@twobirds.com
