How do you assess the EU's latest statement on its safeguards policy?
The latest protective measures proposed by the EU Commission to protect EU steel production are designed to limit the impact of global overcapacity on EU producers and increase the traceability of imported steel. This measure is expected to have an inflationary impact on steel prices in the EU, which, in turn, will affect steel-producing consumers. The requirement of the "melt and bottle" plan is particularly relevant in any discussion of the EU Carbon Boundary Regulation Mechanism (CBAM), as it improves traceability. Traceability is at the heart of the EU CBAM, as importers must now demonstrate the impact of imported steel on carbon dioxide emissions. However, the guarantee policy combined with CBAM obligations significantly complicates the importer's work from an administrative point of view and makes it more risky.
Are these trade measures effective in ensuring a level playing field, or do they distort competition?
The EU's new steel safeguards are specifically designed to create a more level playing field by protecting domestic producers from unfair trade consequences caused by global overcapacity, especially in subsidized or distorted markets such as China. Since such opinions about violations of competition can vary depending on the point of view, import restrictions are clearly anti-competitive, but it is also anti-competitive to subsidize and market goods in another market. Importers will perceive these precautions as an unfair increase in their costs compared to competitors, while EU producers will benefit from the fact that the market will not fall below economically acceptable levels due to subsidizing foreign production, so they will consider it absolutely fair. How effective the trade measures will be will only become clear over time, but from an objective point of view, these measures are more likely to be justified than not.
In your opinion, what are the main problems of CBAM and what consequences do you expect for trade flows?
CBAM is currently plagued by information gaps that prevent importers from quantifying and fixing their costs. Despite the financial obligations of the EU CBAM, which will enter into force in 2026, today this is a problem for those companies that seek to fix supply prices in 2026. The main uncertainty factor
