EU reaches provisional deal on new steel trade regime to address overcapacity

The Council of the EU and the European Parliament have reached a provisional agreement on a new regulation aimed at protecting the European steel sector from the effects of global overcapacity and trade diversion.

The new framework will replace the current EU steel safeguard measures, which expire on June 30, 2026, ensuring continued protection of the EU market without regulatory gaps. It introduces a revised tariff-rate quota (TRQ) system designed to curb import pressure while maintaining supply for downstream industries.

Under the agreement, overall import quotas will be reduced by around 47% compared with 2024 levels, while out-of-quota imports will face a 50% duty. The system also allows limited flexibility, including the possibility to carry over unused quotas between quarters during the first year of application.

Michael Damianos, Minister for Energy, Commerce and Industry of Cyprus, said the agreement provides “a stronger and more effective instrument to address global overcapacity” while ensuring “fair competition and long-term resilience” for Europe’s steel sector.

Focus on circumvention and transparency

To address trade circumvention, the regulation introduces elements of the “melt and pour” principle, linking quota allocation partly to the country where steel is originally produced. The European Commission will assess within two years whether this criterion should become the main basis for quota allocation.

The scope of the measure remains broadly aligned with existing safeguards, but includes a reinforced review mechanism. Within six months, the Commission will assess a possible extension to additional products such as tubes, pipes, wire and forged bars. Further reviews are planned on a regular basis.

Response to structural market pressures

The agreement reflects growing concerns over global excess capacity, which is projected to reach 721 million tonnes by 2027. Combined with trade restrictions in other regions, this has increased import pressure on the EU market, contributing to lower capacity utilisation and higher cost pressures for European producers.

The EU steel industry, which employs around 300,000 people directly, has already lost significant capacity and jobs in recent years. Policymakers argue that maintaining a stable regulatory framework is essential to support investment, including in decarbonisation.

In parallel, the EU reaffirmed its intention to reduce dependence on Russian steel imports as part of broader efforts to diversify supply chains.

The provisional agreement will now be submitted to EU member states and the European Parliament for formal approval. If adopted, the new regulation will enter into force on July 1, 2026.

Source: EU Council, Photo: Fotolia