EU Strengthens Steel Regulations, Korea Fares Relatively Well While China Suffers

The European Union (EU) is strengthening import volume restrictions to protect its domestic steel industry, a move aimed at safeguarding European steel production bases and blocking the influx of low-priced steel. Each country's dedicated duty-free quota has been finalized, leading to conflicting national interests.

South Korea, among major exporting countries, avoided the worst-case scenario by recording a relatively small reduction in its duty-free import quota (TRQ). Korea secured a duty-free quota of 2.073 million tons, a decrease of about 19.7% from the previous 2.581 million tons. Considering that the overall EU duty-free market size has nearly halved, this is a favorable outcome, analyzed as a success for the government's negotiation strategy, which highlighted Korea's status as an FTA partner with the EU, its contribution to supply chain stability, and low market disruption concerns.

Compared to other major trading partners, Korea's reduction was also smaller. Turkey's quota decreased by 29.4%, from 3.994 million tons to 2.86 million tons, while India's dropped by 30.2%, from 2.785 million tons to 1.943 million tons. The EU designed the system by prioritizing FTA partners for half of the annual steel import quota, with the remaining half available for all trading partners to share. Consequently, many FTA partner countries experienced market access reductions lower than the overall average decrease of 47%. Ukraine, currently at war, was allocated a duty-free volume of 1.049 million tons, allowing it to maintain duty-free status for approximately 70% of its existing steel exports to the EU.

China was hit by the enhanced regulations. Its duty-free quota was reduced from 2.34 million tons to 799,000 tons, a decrease of about 66%, demonstrating the EU's intent to block large-scale imports of low-priced Chinese steel. Chinese Minister of Commerce Wang Wentao expressed regret regarding the steel import regulations during a meeting with EU representatives.

Japan is reportedly considering a complaint to the World Trade Organization (WTO), stating that the EU's new steel import system is contrary to the spirit of FTAs. The EU plans to continue consultations with non-agreement countries, including Japan. To date, the EU has reached principled agreements on steel import quotas with 13 countries, including South Korea, and the steel trade volume from these nations accounts for approximately 70% of the EU's total steel imports.

Through these protectionist measures, the EU stated its goal is to raise the operating rate of its domestic steel production facilities to 80% and to stably maintain the approximately 2.5 million jobs related to the steel industry.