Steel Deal With EU Muddled by a Jumble of Quotas and Red Tape

Lawyers say new system will be tough for small importers to navigate; supporters say it will help ease a supply crunch, prevent flood of cheap imports 

By Josh Zumbrun of The WSJ. Excerpts:

"The Biden administration’s deal to ease off steel and aluminum tariffs from Europe has won plaudits from much of U.S. industry, but a complex new quota system that comes with it has fueled concerns for small importers.

The deal, announced during the Group of 20 summit last weekend, allows the European Union to export steel and aluminum duty free until reaching a quota of 3.3 million metric tons of steel and 384,000 metric tons of aluminum a year.

Amounts in excess of those limits will be subject to a 25% tariff for steel and a 10% tariff for aluminum, which previously applied to all European steel. In return, the EU agreed to drop retaliatory tariffs that hit a range of U.S. exports.

In practice, however, the system isn’t a single quota for steel and aluminum, but rather 54 distinct quotas for different types of steel as well as 16 quotas for different types of aluminum. Each EU member country will have its own quota for each category based on historical trade levels.

Importers will need to carefully track shipments to ensure they arrive before quotas kick in—giving an advantage to companies with the resources to monitor where quotas are still available, to handle complex documentation rules, and to arrange for carefully timed shipments that come in duty free, trade lawyers and others say.

“Giant companies are going to have the clout and financial capability where they can go in and place large orders and suck up the quota,” said Gregg Boucher, the president of the distribution division of Ulbrich Stainless Steel & Specialty Metals, a New Haven, Connecticut-based metal processing firm that imports some raw materials from Europe.

Scott Lincicome, a longtime international trade lawyer and a senior fellow at the Cato Institute, noted that most smaller companies don’t have teams of trade lawyers to navigate the complex quota system."

"In switching to a tariff-rate quota, the Biden administration is using its authority under Section 232 of the Trade Expansion Act of 1962—the same lever used by former President Donald Trump, who made the determination that imported steel was a threat to national security."