EU states back measures to limit steel imports after U.S. tariffs

FILE PHOTO: Steel rolls are pictured in Flins, near Paris, France, February 23, 2017. REUTERS/Benoit Tessier

BRUSSELS (Reuters) - European Union countries voted on Thursday in favor of provisional measures proposed by the European Commission to curb steel imports into the bloc, following a U.S. decision to slap tariffs on EU steel and aluminum.

The Commission has proposed a combination of a quota and a tariff to prevent a surge of steel imports that is threatened, notably after the United States imposed levies on incoming steel and aluminum. The EU fears that products no longer imported into the United States will instead flood European markets.

“This is intended to prevent the negative effects of trade diversion, but at the same time maintain traditional supply and effective competition on the EU market,” a Commission spokesman said.

The quota would be a reflection of imports over recent years, with a 25 percent tariff set for volumes exceeding that amount, according to a source familiar with the proposal.

A total of 25 EU countries voted in favor of the measures but three abstained, a source close to the negotiations said.

The Commission, which oversees trade policy in the EU, has started an investigation covering 28 steel grades and products made with steel, to assess the impact of the changed market.

At the launch of that investigation, the Commission noted that imports of the products concerned rose from 18.8 million tonnes in 2013 to 30.6 million tonnes in 2017, far exceeding an increase in domestic production.

While the investigation is ongoing, international trade rules allow the EU to impose “provisional safeguard” tariffs for up to 200 days, if it concludes that increased imports have caused or may cause serious injury to its steel sector.

The EU has also imposed its own tariffs on 2.8 billion euros ($3.3 billion) of U.S. imports, including bourbon and motor bikes, and has launched a legal challenge at the World Trade Organization.

Reporting by Philip Blenkinsop; Editing by Gareth Jones