Eurofer views on the negotiations of new bilateral and regional Free Trade Agreements (FTA) with countries of ASEAN, India, South Korea, Ukraine and the ANDEAN Community and Central America.
Eurofer welcomes the opportunity to present its views on the negotiations of new bilateral and regional Free Trade Agreements (FTA) with countries of ASEAN, India, South Korea, Ukraine and the ANDEAN Community and Central America. Steel industries in these countries and regions, notably India, Ukraine and South Korea, have achieved world class cost and performance levels with major trade presence on international markets, particularly the EU market. For the European steel Industry, FTA negotiations should be based on the objective of achieving improved market access and reciprocity, particularly in relation to border restrictions, foreign investment, competition policy and trade defence.
As from 2004, the major industrialized economies, such as the EU and South Korea, have abolished import customs duties (bound tariffs) erga omnes on steel imports (zero-for-zero steel sectoral agreement concluded I the framework of the Uruguay Round). The FTA negotiations should include the phasing out and elimination of import customs duties on steel products (HS 72) which are still applied by the EU bilateral and regional trade partners.
In addition, non-tariff barriers (NTB) tend to become more numerous and noticeable particularly as tariffs are eliminated. Therefore, the EU steel industry calls for the negotiations to define NTB’s more closely, identify means to tackle them effectively and avoid creation of new NTB’s.
FTA negotiations should include the elimination of restrictions on export, such as export taxes, of metallurgic raw materials, such as iron ore, coke and scrap, having the effect of limiting directly or indirectly access to these raw materials at undistorted conditions for the steel production activities in the EU.
For decades, the industry has no longer cast liquid steel into ingots (HS 7206) before rolling into semi-finished products (slabs, blooms or billets). Thus, today, virtually nothing produced in the EU under the headings 7208 to 7217 is manufactured from ingots (7206), but from semi-finished products (7207). The same principle applies to stainless steels (7225 to 7229 from 7224). In addition, EU producers, increasingly present in different markets throughout the world, manufacture these semi-finished products in third countries for export to and further processing in the EU. In this respect, the criterion of processing of semi-finished products for purpose of conferring EU preferential origin reflects the reality of globalization of the steel industry and intensifying captive steel trade. Finally, customers inside the EU such as automotive insist on a certification from their steel suppliers guaranteeing the EU origin as they themselves have to fulfil their own preferential obligations for their products (cars, white goods,…) when exporting to a country with a preferential arrangement with the EU.
Therefore, EU bilateral preferential rules of origin on steel products should reflect these technical and industry realities by confirming that not only EU processing of non-originating ingot (7206), but also processing of non-originating semi-finished steel products (under 7207, 7218 and 7224) into finished steel products is a sufficient transformation to confer preferential EU origin to the finished products. This approach has been implemented in the EU – Mexico Free Trade Agreement (FTA) and requested by our industry to be adopted in the context of the ongoing FTA negotiations with the Gulf Cooperation Council, as well as in the context of the ongoing FTA negotiations with South Korea.
In general, there seems to be increasingly debate within the commission on the need for a principle reform of rules of preferential origin in bilateral agreements.
The question is whether the determination of origin should for all products follow the principle of a sufficient added value gained by the further processing within the EU of a third country pre-material. In detail, this would end up in a comparison of the value of the non-EU originating materials and the ex works price of the processed product. The sufficient processing threshold would be defined by a certain percentage.
This is totally unacceptable for the steel industry as it would not only create high administrative expenses, but would also lead to lack of prediction: Depending on the development of prices, exchange rates etc. you might in one case have preferential origin and in another case not. The EU steel industry is strictly against any system that produces such a legal uncertainty. (See Eurofer position on Preferential Rules of Origin)
The envisaged FTA’s should aim at creating conditions and enforcement mechanism in the field of competition policy ensuring undistorted competition between companies within the free trade zone. Improving discipline on subsidization, being a root cause of severe distortion of competition in our sector globally, in line with the “Acquis communautaire” should be a key objective for the Commission.
FTA’s should not weaken the current rules and use of EU Trade Defence instruments (EU TDI) including anti-dumping, countervailing and safeguard procedures, towards the EU FTA partners, for example:
Generally, the Commission should in no way accept dilution of the use of EU TDI as part of a package deal with the FTA negotiating partner.