Although the European Union (EU) has reduced the volume of steel imports exempt from tariffs by 46% to protect its domestic steel industry, South Korea has successfully limited the reduction to 19.7% through last-minute negotiations, including summit diplomacy.

The Ministry of Trade, Industry and Energy announced today (June 30) that the European Commission has unveiled its operational plan for new steel measures, which replace the existing steel safeguards, along with steel quotas by country.

The measures, which take effect on July 1, reflect the EU's heightened sense of security crisis following the prolonged war in Ukraine and concerns over the potential collapse of its domestic steel industry.

Under these measures, the EU's annual duty-free import volume has been reduced by approximately 46%, from 33.82 million tons to 18.35 million tons.

Imports exceeding this volume will be subject to a 50% tariff, which is double the current rate of 25%.

According to the Ministry of Trade, Industry and Energy, the EU imported a total of 3.24 million tons of South Korean steel last year, making it the second-largest export destination after ASEAN (5.14 million tons).

The United States ranked third with 2.54 million tons.

As some 20 steel-exporting countries around the world engaged in fierce negotiations over the halved duty-free pie, South Korea secured a country-specific quota of 2.073 million tons that it can use exclusively without competition from other nations.

This represents a reduction of approximately 19.7% compared to the previous South Korean quota of 2.581 million tons.

Given that the EU's total duty-free quota was cut in half, the outcome is being evaluated as a successful defense.

Looking at the detailed quota allocation structure, South Korea was assigned an exclusive country quota of 2,056,659 tons for 14 items where its average EU market share over the past three years (2022–2024) was 5% or higher, and 16,342 tons for 16 items where its market share was less than 5%.

In addition, based on its status as a country with a Free Trade Agreement (FTA) with the EU, South Korea also secured access to a common quota of 1,475,086 tons, which can be utilized through competition between countries.

If South Korean companies actively secure these common quotas, the total volume that can be exported duty-free could reach up to 3.548 million tons.

Yeo Han-koo, Minister for Trade at the Ministry of Trade, Industry and Energy, stated, "The common quota is based on a first-come, first-served basis that opens quarterly, and it can basically only be used after the exclusive country quotas have been fully exhausted." He added, "Because there are many other variables, it is difficult to say for certain at this moment how much of the common quota our companies will actually be able to utilize."

The Ministry of Trade, Industry and Energy has been simultaneously operating working-level negotiations in Geneva and high-level negotiation channels in Brussels to actively request favorable consideration for South Korean steel.

The government emphasized that South Korea is the first Asian country to sign an FTA with the EU and is a "good player" that has never been subject to anti-dumping duties.

The government pressured the EU by arguing that high-quality South Korean steel is used as essential raw material for South Korean automotive and battery factories established in the EU, thereby firmly supporting the EU's manufacturing supply chain and employment.

Minister Yeo explained that the South Korea-EU summit held on the 10th (local time) served as a decisive turning point in the final stages of the negotiations.

As negotiations intensified just weeks before the implementation of the EU's new steel measures, the summit brought the steel issue to the forefront as a key economic and trade agenda item between South Korea and the EU.

"I understand that South Korea is the first to directly raise the steel issue as an official agenda item at the summit level," Minister Yeo explained. "Thanks to the strong momentum provided by the leadership at the final stage of negotiations, the EU's understanding increased significantly, and this became the decisive turning point that led to substantive progress in the negotiations."

"This trade negotiation was not just a matter of numbers, but a process of comprehensively persuading them on supply chains, investment, employment, industrial competitiveness, and strategic trust," Minister Yeo said. "We will continue to take preemptive trade responses to protect our national interests and ensure stable overseas market access for our companies in the face of the trend of major countries strengthening import regulations."

(Photo: Yonhap News)