The European Commission announced the allocation of country-specific quotas under its new steel import regime on Tuesday, June 30, just one day before it was due to take effect on July 1, ending months of uncertainty for parties on both sides of the market.
According to a document published in the Official Journal of the EU, reviewed by Fastmarkets, the new framework will include an expected significant reduction in duty-free volumes to 18.3 million tons.
But it will also lead to the introduction of a two-tier quota system, according to which one part will be available only to countries benefiting from the existing or future free trade agreement with the EU (part of the Free Trade Agreement), while the other part will be available to all third countries. Most-favored-nation (MFN) countries (the part concerning MFN).
MFN quotas were distributed according to the average share of each country in EU imports in each product category in 2022-2024. This has allowed for an increase in the number of countries that have been allocated country-specific quotas compared to previous precautionary measures.
As for the free trade area, quotas were allocated more flexibly, taking into account trade agreements, market distortions and the need to diversify supplies, as well as special situations affecting certain countries.
As a result, some free trade agreement partners have received different levels of access. In particular, Ukraine was provided with more favorable quotas than other countries in the free trade agreement.
Both the parts of the MFN quota for a particular country and the parts of the free trade agreement were available to economic operators simultaneously, acting as a single quota with a single serial number.
If a country is not included in the pool of countries with free trade zones, economic operators can access MFN only within the quota for a particular country.
The resolution also introduced changes to the remaining quotas, which come into force at the beginning of each quarter. Instead of a single residual quota available to "other countries", the new system will divide the remaining quotas into "FTA Quota – Country-specific Quota (CSQ)", "FTA quota - for other countries" and "Other countries".
The FTA– CSQ quota will be open to countries with an existing or future free trade agreement with the EU that have a country-specific quota.
FTA Quota – Other countries will be open to countries with an existing or future free trade agreement with the EU that do not have a quota for a specific country.
According to the regulations, this gives the countries of the free trade area more flexibility and potentially delays the application.