The European Union (EU) currently has in place a safeguard order against 26 product categories of steel. The EU first adopted a provisional measure in July 2018 and a definitive one in January 2019, the latter having been amended several times. The EU measure places an additional tariff (of 25%) upon the listed steel products where imports exceed a quota (with some country-specific quotas, and other general quotas applicable to other countries). The measure was adopted, in essence, because the European Commission determined that there had been an increase of imports into the EU, caused by unforeseen developments, including the increased use of trade defense instruments globally and in particular the US Section 232 measure of March 2018. The latter measure diverted steel exports to the EU and which threatened to cause injury to the EU steel industry.
Under the Withdrawal Agreement between the EU and the UK, EU safeguard measures currently apply to the UK and will do so until the conclusion of the transition period for the UK’s withdrawal from the EU on 31 December 2020. The UK Government currently has to decide whether to transition existing EU trade remedy measure to equivalent UK measures on 1 January 2021. In the case of the steel safeguard measure, the Government issued a Notice of Determination on 30 September 2020 to transition 19 of the 26 products, with adjustments being made to the level of the quotas for each product category. The EU for its part is in the process of amending its tariff rate quotas in light of the end of the transition period and the UK’s exit from the umbrella of the EU’s safeguard measure.
In light of the UK’s Notice of Determination, the new UK Trade Remedies Investigations Directorate (the TRID) has initiated a review of the steel related measure to decide whether to continue the UK safeguard on the same terms as those inherited from the EU (save for the adjustments described above), vary or revoke it. In making such a determination, the TRID must have regard to Part 9 of the Trade Remedies (Increase in Imports Causing Serious Injury to UK Producers) (EU Exit) Regulations 2019 and Schedule 5 of the Taxation (Cross-border Trade) Act 2018. In essence, the TRID must consider whether:
- importation of the referenced steel goods in increased quantities would be likely to recur if they were no longer subject to the tariff quota;
- there would be serious injury to UK producers of like goods and directly competitive goods if goods belonging to the specified category were no longer subject to a tariff rate quota;
- the continuation of a tariff rate quota is necessary to facilitate the adjustment of UK producers of the like goods and directly competitive goods to the importation of goods belonging to that category; and
- whether an alternative tariff rate quota or the application of a safeguarding amount to goods belonging to that category would better meet the aim of preventing serious injury to UK producers of the like goods and directly competitive goods.
A timeline for the review process has been released and a preliminary decision on the review is expected in June 2021. Although the deadline to register interest in the case has elapsed, the TRID has the discretion to accept late registration.
Questionnaires have now been released, enabling the TRID to collect the information required to make its assessment. Parties in the matter are now in the process of responding. Publication of a non-confidential version of the questionnaire responses is expected in January 2021. Authentication (to obtain the information necessary to verify the contents of the questionnaire) is expected between January to April 2021.
The TRID will make a statement of intended final determination, a summary of facts and its intended decision (upon which the parties can comment) in May 2021, before making its final determination and recommendation to the Secretary of State in June 2021. This final determination must also consider whether continuation or variation would meet the economic interest test, namely whether the measure would be in the economic interest of the UK.
The UK Secretary of State must then decide whether to accept or reject the recommendation. The Secretary of State can only decide against the recommendation if it does not meet the economic interest test or is not otherwise in the public interest.
Currently, steel is the sole UK safeguard transition review. However, there are otherwise ongoing UK transition reviews for other EU trade remedy measures.