The Trade Remedies Authority (TRA) has today (9 February 2024) initiated two reviews of the current safeguards measure on the (Category 1) steel product, Hot Rolled Flat and Coil steel.
The TRA has initiated both a suspension review and a Tariff Rate Quota (TRQ) review in response to applications from Tata Steel UK (TSUK) and Kromat Trading Ltd. Both reviews respond to TSUK’s recent proposal to close its two blast furnaces in Port Talbot, Wales, as part of a transition to an electric arc furnace.
If adopted, the new production plan would significantly reduce TSUK’s capacity to produce Hot Rolled Flat and Coil steel in the UK for a period and would require greater imports to meet UK demand. This would mean that the current level of duty-free TRQs for Category 1 steel would be insufficient for UK industrial needs. Additional imports required in place of reduced domestic production would face tariffs of 25% after they exceeded the current quota size – something we have already started to see happening as imports have increased.
The production plan the reviews will consider is the same as TSUK submitted to Trade Unions for formal consultation on 19 January. Given the importance to the UK economy of managing the projected reduction in domestic production of Hot Rolled Flat and Coil steel, we are carrying out the reviews in parallel with the consultation between TSUK and Trade Unions. Should the consultation result in a different production plan, the TRA would take that into account in making a recommendation to the Secretary of State for Business and Trade.
The suspension review applications have requested a suspension of the safeguard measure, meaning that Category 1 steel products not subject to separate anti-dumping duties would enter the UK duty free. Based on the applications and from other evidence available on the current state of the market, it is the TRA’s preliminary view that the measure should be suspended. Subject to any further comments received from UK producers, the TRA intends to recommend to the Secretary of State for Business and Trade that the safeguard measure on Category 1 products is suspended for nine months.
In making this preliminary decision, the TRA found sufficient evidence that the following conditions exist:
- there has been a change in market conditions due to the sole UK producer, Tata, reducing or suspending domestic production and supply of Hot Rolled Flat and Coil steel;
- the nature of that change is temporary, as Tata is likely to be undertaking a 3-year ‘technical reconfiguration’ to achieve net zero decarbonisation goals;
- that there is an effect on the wider UK industry, which is likely to face a 25% increase in costs, once quarterly TRQ volumes are exceeded, and;
- serious injury is unlikely to recur to UK producers, as there will be significantly lower production of the goods concerned during this proposed technical reconfiguration.
Tariff Rate Quota review
The TRA has also opened a review [LINK TO NOI] of the tariff rate quota (TRQ) applicable to imports of Hot Rolled Flat and Coil steel, following applications submitted by Tata and Kromat.
During the TRQ review the TRA may consider:
- Whether the amount or allocation of the TRQ is now appropriate for domestic market conditions in light of production changes at Port Talbot;
- The desirability of maintaining, as far as possible, traditional trade flows; and
- Any other factors that the TRA considers relevant.
Our expectation is that the TRQ review will take longer to carry out than the suspension review. We would anticipate a revised TRQ regime resulting from the TRQ review then replacing the temporary suspension of the safeguard measure for this steel category.
Currently, TRQs are allocated to countries based on traditional trade flows. As part of this review, the TRA is considering whether it is appropriate to change the method of allocation to give importers an individual allocation of TRQs. The proposed scheme would not tie quotas to an individual country so that importers would be free to choose the source of imports.
TRA Chief Executive, Oliver Griffiths, said:
“These reviews are designed to prepare the current steel trade regime for future changes in production at Port Talbot. We want to avoid a situation where new imports needed to backfill reduced domestic production pay tariffs of 25%, loading additional costs onto the UK economy. ”
Hot Rolled Flat and Coil steel is commonly used as a raw material for other types of steel and makes up almost a third of all steel production globally.
Anyone interested in taking part in either the suspension review, the TRQ review or both can register their interest through the Trade Remedies Service by 25 February 2024.
- The TRA is the UK body that investigates whether trade remedy measures are needed to counter unfair trading practices and unforeseen surges of imports.
- Trade remedy investigations were carried out by the EU Commission on the UK’s behalf until the UK left the EU. A number of EU trade remedy measures of interest to UK producers were carried across into UK law when the UK left the EU and the TRA has been reviewing each one to assess whether they are suitable for UK needs.
Safeguard measures are one of three types of trade remedies – along with anti-dumping measures which counter goods being ‘dumped’ into countries at prices below their normal price in their country of origin and countervailing measures against countervailable subsidies – that are allowed under World Trade Organisation (WTO) rules.
- Safeguard measures are emergency actions responding to increased imports of particular products, which cause serious injury to the importing country’s domestic industry. They apply to all imports (with some exceptions), rather than being focused on imports from particular countries. They impose duties when imports exceed a level reflecting traditional trading patterns.
- The TRA is currently reviewing the safeguard measure on all 15 categories of steel as the measure is due to expire on 30 June 2024. The review will recommend to the Secretary of State for Business and Trade if the safeguard measure for all categories it covers should be extended by up to two further years to 2026.
- For further background on the steel safeguard measure and the reviews initiated today, please see the TRA’s blog.