The European Commission has unveiled a legislative proposal to replace the existing EU steel safeguard system, introducing a new framework designed to protect the EU’s steel industry from the negative effects of global overcapacity, which is expected to increase from the current 602 million mt to 721 million mt by 2027, according to a draft circulated. The new permanent framework, which will replace the current measures which will expire on June 30, 2026, will come into effect as of mid-2026.

Under the new regulation, the EU will maintain free-of-duty tariff quotas equivalent to pre-overcapacity market conditions – calculated based on the 2013 import share of around 13 percent of EU consumption, resulting in an annual total quota volume of 18.3 million mt. The EU’s import volume will decrease as a result of the decline in the quota volume. The quotas will be administered on a quarterly basis, without carry-over between quarters, to avoid market flooding. The quotas will also be allocated per product category based on the share of imports that each product category held over the 2022-24 period. If deemed necessary, the European Commission may implement country-specific quotas or restrictions. Once these quotas are exhausted, a 50 percent tariff will apply, up from the current 25 percent, in line with global tariff levels with an aim to minimize the risk of trade diversion.

The measures will require importers to declare the country of “melt and pour” origin, verifying where the steel was originally produced in liquid form to prevent circumvention.

The Commission will make an assessment at the latest within two years following the adoption of this regulation to evaluate the necessity to adjust the scope of products and, if deemed necessary, it will consider making a legislative proposal to add additional steel products, including products that are made of or contain a significant amount of steel. In addition, the Commission shall evaluate the effectiveness of this regulation before July 1, 2031, and every five years thereafter.