EU's new steel curbs spark worries of protectionist shift

The European Commission on Tuesday proposed a plan to protect the European Union's steel industry by tightening controls on imports of steel and related products.

Under the proposal, tariff-free import volumes would be capped at 18.3 million metric tons a year — a 47 percent reduction from last year's quota. The out-of-quota tariff would be doubled to 50 percent, while new Melt and Pour rules would be introduced to strengthen traceability and curb circumvention in steel markets.

"Although China's steel exports to the EU account for only a modest share of its total global exports, this move nevertheless signals a worrying rise in trade protectionism within the EU market," the China Chamber of Commerce to the EU said on its WeChat account.

Its reference to China's "only a modest share" of EU-bound steel exports is echoed by Eurostat data.

A March report on the EU's statistics website showed that India was the bloc's top steel supplier last year, with exports worth 3.9 billion euros ($4.53 billion), followed by South Korea at 3.6 billion euros and China at 3.5 billion euros. The United Kingdom also ranked among the top five, exporting 3.2 billion euros' worth of steel to the EU.

The same report noted that China was by far the leading source of articles of iron and steel, with imports totaling 12.5 billion euros — or 37.3 percent of the EU's total. Turkiye followed with 4.6 billion euros. It added that imports from Turkiye, India and China have surged since 2019, rising by 82.4 percent, 40.5 percent and 37 percent, respectively.

Commenting on the proposal, Jian Junbo, director of the Center for China-Europe Relations at Fudan University in Shanghai, said it should not be misunderstood — as some media outlets have hyped up — as a measure "targeting China".

"Rather, it's a move targeting all iron and steel trade partners, which is more alarming because of the protectionist tendency it implies behind," Jian said.

While the EU has long been a proponent of free trade, the latest proposal suggests it is resorting to protectionist measures to address its trade deficits, he said. "At a time when the world economy faces turbulence, such a move by such an influential economy might pressure others to follow."

Contradictory trend

The China Chamber of Commerce to the EU said, "Such a trend runs counter to the EU's long-standing commitment to open, rules-based and predictable trade."

Zhao Yongsheng, director of the French Economic Studies Center at the University of International Business and Economics in Beijing, expressed concern that the EU's move risks mirroring the protectionist approach of the United States — a "bad scenario" for the global economy, given the combined influence of the two economies.

Shi Shiwei, director of the Research Center for Europe at the same university, said that if the plan were legislated and implemented, it could even deal a blow to the US, which ranked as the EU's fourth-largest source of iron and steel articles last year.

Jian said, "Therefore, it would do both the world and the EU good if the proposal fails to pass legislation in (the European Parliament)." There is still hope considering the varying interests of different economies within the EU, he added.

In its statement, the China Chamber of Commerce to the EU also "respectfully urges the EU to conduct a comprehensive impact assessment of the proposed measures, taking into account the positive role Chinese enterprises play in supporting Europe's manufacturing competitiveness and green transition".

It also calls on the EU to uphold multilateral trade principles and to refrain from taking further steps that could escalate trade restrictions.