The UK government will halve the amount of tariff-free steel imports allowed in an attempt to counter a global oversupply of cheap Chinese metal and bolster its beleaguered local industry.
New “safeguards” will be introduced on 1 July and will coincide with similar new limits being introduced by the EU for the same purposes. The UK said it and the EU had agreed an approach that reflected each other’s “highly interconnected supply chains” after months of negotiations over retaining tariff-free access between the markets.
At the same time tariffs on steel imports above the duty-free quotas will be doubled to 50% of the product’s value.
The quotas replace existing pre-Brexit rules that set import levels across the EU. The UK had copied the rules after leaving the bloc, but they expire at the end of the month.
Under the new rules, the existing quota of tariff-free steel allowed into the UK will be reduced by 51%, less than the 60% reduction proposed in March. That means only 3.2m tonnes can be imported duty-free into Britain in future.
EU steel will make up the bulk of those tariff-free imports, with between half and nine-tenths of each quota depending on the product.
The business secretary, Peter Kyle, said: “This steel trade measure – including today’s finalised quota volumes – has been designed to both protect UK steel making from global overcapacity, while giving businesses across the supply chain the certainty they need.
“We will continue to engage with industry and review the measure after 12 months.”
The government will also exempt manufacturers using 11 specific types of steel from tariffs after pleas from industry that import duties would cripple them as no local alternative supply exists.
The reduced quotas did not satisfy everyone in the UK steel industry, including the country’s biggest steelmaker. Tata Steel said it believed the quotas were too high for metallic coated steels, packaging steels and hollow sections.
Rajesh Nair, the chief executive of Tata Steel UK, said: “In several categories, the quota volumes continue to allow significant import penetration into strategically important UK steel markets, exposing domestic production and supply chains to continued pressure.”
British steel’s biggest export market is the EU, and negotiators have spent the last three months trying to thrash out a deal with representatives from the bloc in talks in Geneva, the headquarters of the World Trade Organization.
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The European Commission declined to comment on the details of EU quotas available for British steel before the changes came into force on 1 July. The commission’s deputy chief spokesperson Olof Gill said the EU had been in “close and regular contact” with the UK with the shared objective of “ensuring the long-term viability of our steel industries”.
He added: “We have been talking to our trade partners around the world, particularly those with whom we have free-trade agreements in order to ensure that while we take this necessary step [safeguards] to offer a greater degree of protection to our EU steel sector, we still allow for the maximum amount of quota to those trade partners, in particular to our FTA partners in order that trade will continue to flow seamlessly.”
There are 28 types of steel in the safeguards ranging from steel bars used to reinforce concrete in construction to rolled sheets used in stainless steel sinks and aeroplanes.
The UK produces about 3m tonnes of steel a year compared with the world’s supply of almost 2bn tonnes. However, as Chinese demand has faltered, steel supplies are about 600m tonnes greater than demand, according to the Organisation for Economic Co-operation and Development.
UK Steel, the industry trade body in Britain, has said previously that without these dramatic measures the British industry faced an “existential threat”. However, steel users in the UK had protested that the quotas risked raising prices of many products that were not available from Britain’s few remaining furnaces.
