European Union governments cleared the way for five-year EU trade protection against electrical steel from the U.S., Russia, Japan, China and South Korea in a bid to curb competition for producers in the bloc such as ArcelorMittal and ThyssenKrupp AG, according to two people familiar with the matter.

Trade representatives from the 28-nation EU gave the green light on Thursday in Brussels to a European Commission proposal to impose minimum-import prices on American, Russian, Japanese, Chinese and Korean shipments of grain-oriented electrical steel -- or GOES -- until late 2020, the people said on condition of anonymity because the deliberations were private.

The measures on this niche steel product, which is used in power transformers, are meant to punish exporters in the five countries for allegedly having sold it in the EU’s 400 million-euro ($450 million) market below cost, a practice known as dumping. The five-year protection, due to be published by Nov. 14, will follow provisional European measures introduced in May that took the form of ad valorem duties as high as 35.9 percent.

Under the system of minimum-import prices, GOES sold below the price floors would be subject to EU tariffs. The duty rates would amount to the difference between the minimum prices and any lower import prices.
Lobbying Power

The GOES trade dispute became a test of lobbying power in the EU between European electrical-steel makers, which also include Tata Steel U.K. Ltd., and users such as Siemens AG in Germany, ABB AB in Spain and Alstom Grid U.K. Ltd. in Britain.

The European Steel Association has said the planned five-year EU trade protection would safeguard “a vital strategic subsector” of the steel industry, whereas a group representing transformer manufacturers has argued the measures would set GOES prices at “unreasonably high” levels and force large transformer producers to shrink or move their factories outside the bloc.

The European Steel Association, also known as Eurofer, said earlier this month that the commission had calculated a minimum-import price for premium-grade electrical steel of about 2,050 euros a metric ton.

The trade spokesman at the commission, the EU’s executive arm in Brussels, declined to comment on the case when reached by Bloomberg on Thursday by telephone.

 

bloomberg.com

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