EU Council and Parliament Agree on Regulation to Protect EU Steel Industry from Global Overcapacity
The Council of the EU and the European Parliament concluded a provisional agreement on 30 June 2026 concerning new regulatory measures to address global steel overcapacity affecting the EU market. This regulation will replace the current steel safeguard mechanisms set to expire on 30 June 2026, ensuring uninterrupted protection for the EU's steel industry. The regulation introduces a revised tariff-rate quota (TRQ) system that significantly reduces the volume of steel import quotas by approximately 47% relative to the 2024 safeguard quotas, equating to 18.3 million tonnes of annual import volumes. Imports exceeding these quotas will incur a heightened out-of-quota duty of 50%, discouraging excessive imports while allowing controlled access for traditional suppliers. To enhance flexibility for economic operators and safeguard supply chain stability, during the first year of implementation, the regulation permits the carry-over of unused import quotas from one quarter to the next across all product categories. From the second year forward, the European Commission will evaluate whether to allow such carry-over on a product-specific basis, contingent on import pressure, quota utilization rates, and supply availability for downstream industries. The regulation incorporates provisions regarding the 'melt and pour' principle, designating the country where steel is originally melted and poured as a key factor in allocating tariff quotas to exporting countries. This aims to prevent circumvention and increase transparency in supply chains while aligning with the EU's trade rules under the WTO and existing free trade agreements. The Commission will reassess within two years the appropriateness of adopting this principle as the primary basis for tariff quota allocation and propose legislative updates if necessary. The new regulation maintains consistency in product scope compared to existing safeguards to ensure legal clarity and effective administration. It also establishes a reinforced, time-bound review procedure whereby the Commission will monitor, report, and assess the measure's ongoing effectiveness and propose adjustments to reflect evolving market and global overcapacity conditions. Accompanying the regulation, a joint declaration by co-legislators and the European Commission reaffirms the commitment to reduce economic reliance on Russia by progressing the phased reduction of Russian steel imports. The regulation will take effect on 1 July 2026 following formal adoption by the Council and European Parliament. The EU steel industry, the world's third-largest steel producer, directly employs approximately 300,000 individuals and is vital to the EU economy, including sectors linked to security and the green transition. The global steel overcapacity is expected to reach 721 million tonnes by 2027, more than five times the EU's annual consumption, which pressures the EU market through excess imports and suppresses production capacity utilization, recorded at 67% in 2024. This situation threatens the sector's long-term investment in decarbonization and has contributed to a loss of 65 million tonnes of capacity and up to 100,000 jobs since 2007. This regulatory advancement aims to secure the EU steel market against unsustainable import levels and facilitate a rules-based approach to global steel trade challenges, ensuring the sector's sustainability and competitiveness.
