UK: TRA proposes increase in steel import quota amid domestic production decline

The Trade Remedies Authority (TRA) of the United Kingdom has announced a proposal to increase the tariff rate quota (TRQ) on imports of Category 1 steel products, following a significant reduction in domestic production. The proposed changes come in response to recent developments in the UK steel industry, particularly the closure of a blast furnace at Tata Steel UK's Port Talbot facility, which is transitioning to an electric arc furnace.

This shift in production capacity has led to a notable decrease in the UK’s output of Category 1 steel, a key material in the manufacturing sector, and has resulted in increased reliance on imports. Over the past year, the quota for Category 1 steel imports has been consistently exhausted, driving up costs for UK businesses that rely on these products.

In light of these circumstances, the TRA initiated a review of the TRQ in February 2024, following an application from Tata Steel and Kromat Trading Ltd. As a result, the TRA now proposes to adjust the existing quota by creating two distinct categories: 1A and 1B.

Under the new proposal, the quota for Category 1A, intended for commercial applications, will remain at its current level. In contrast, the quota for Category 1B, designated for downstream processing, will be set at a level 89% higher than that of Category 1A. Together, the total quota for Category 1 steel imports would increase to approximately 2.9 million tonnes per year.

To ensure a balanced distribution of imports, the TRA has suggested that the Category 1B quota be allocated globally, with a cap ranging between 37-42% to prevent any single country from dominating the market.

TRA Chief Executive Oliver Griffiths stated, "Our proposal today is designed to address the reduction in production of hot rolled flat steel at Port Talbot. These changes have resulted in higher imports and parts of the current quota being exhausted, creating uncertainty and driving up costs for steel users. We propose maintaining the current quota volumes for steel used for commercial applications and creating a new quota accessible for downstream processing."

The new import allowance would allocate just over 1 million tonnes annually for Category 1A and around 1.9 million tonnes for Category 1B. Importers exceeding these limits would be subject to a 25% tariff.

The TRA has opened a period for public comment on the proposed changes, with submissions accepted through the Trade Remedies Service until 19 August 2024. Interested parties can contact the TRA directly for assistance with the submission process.

The TRA is the UK’s body responsible for investigating trade remedy measures, which are designed to counter unfair import practices and manage unexpected surges in imports. Previously, such investigations were handled by the EU Commission on behalf of the UK. Since Brexit, the TRA has taken over these responsibilities and is reviewing EU measures to ensure they align with UK interests.

Safeguard measures, such as those proposed for Category 1 steel, are one of three types of trade remedies permitted under World Trade Organization (WTO) rules. These measures are intended as emergency responses to significant increases in imports that could cause serious harm to domestic industries. Category 1 steel, which is commonly used as a raw material in various steel products, accounts for nearly one-third of global steel production.

The TRA’s proposal is part of its ongoing efforts to balance the needs of UK industry with fair trade practices in the international market.

Source: UK Government, Photo: Fotolia