South African exporters are preparing for EU restrictions on steel imports

Previously, South Africa enjoyed significant advantages thanks to its trade agreement with the EU

South African steel exporters are preparing for potential disruptions to trade flows with the European Union. This is due to a new import quota regime, which comes into force on 1 July and will be accompanied by the introduction of a 50 per cent duty on shipments exceeding the set limits. This is according to Business Day.

Market participants are currently analysing trade data to assess the vulnerability of South Africa’s export sector. The main focus is on specific product categories and trends in export flows over recent years.

The approved mechanism provides for the establishment of fixed annual import volumes (quotas), within which standard tariff rates will apply. Should these thresholds be exceeded, imported steel will be subject to an additional 50 per cent duty.

Peter du Plessis, Chief Operating Officer of the analytical firm XA Global Trade Advisors, noted that South Africa previously enjoyed significant advantages thanks to its trade agreement with the EU. This agreement provided expanded market access and stimulated growth in exports of certain categories of steel products.

However, in the current climate, the previous growth in shipments could work against exporters, as the new regime links the level of tariff protection to long-term import patterns.

As reported by GMK Center, the European Commission has published an implementing regulation setting out the allocation of tariff quotas for steel imports amongst the EU’s trading partners. Half of the EU’s annual import quota (18.3 million tonnes) is reserved exclusively for partners under free trade agreements. The remaining 9.15 million tonnes will be available to all trading partners without discrimination, including those with free trade agreements.