The EU's new safeguards on ferro-manganese, silico-manganese, ferro-silicon and ferro-silico-magnesium entered into force today.
The publication of the regulation in the Official Journal of the European Union provided some much needed clarity on the measures, particularly on their immediate effect on material currently in transit. But it also opened up further questions and gave the EU significant leeway to change course before the measures expire.
Although the safeguards will be imposed for three years, the European Commission will review the measures in case of "change of circumstances" no later than one year from now. Possible changing circumstances include insufficient availability of ferro-alloys or unsustainable price increases for certain downstream users.
The commission did not clarify who those downstream users were, or what price levels would be viewed as unsustainable.
Tariff-rate quotas (TRQs) to be applied on quarterly basis
The measures, announced via press release yesterday morning, comprise country-dependent TRQs combined with an out-of-quota variable duty applied to material outside the quota. That variable duty will be the difference between the established price threshold for the product in question and the net free-at-EU frontier price (equivalent to the cif price). If the cif price is the same as or higher than the established price threshold, no duty will be applied.
The journal publication provided more detail on the practical application of the safeguards, which apply to CN codes 7202 11, 7202 19, 7202 21, 7202 30, and 7202 99 30.
The quotas, which are set at 75pc of the average imports from each country over the past three years, will be applied on a three-monthly basis. The quarterly periods are not aligned with the dates of standard annual quarters, but rather tied to the start date. This first quarter began on 18 November and ends on 17 February, the commission clarified in Article 1 of the regulation.
Each year, the measures will be liberalised annually, with the level of the free of duty quota increasing by 0.1pc each year. The first relaxation of the quota will take place on 18 November 2026.
Existing anti-dumping and countervailing duties on imports of the relevant products will still be applied up until the tariff quotas are exceeded and the safeguard measures are applicable.
After 20 working days at the end of each quarterly period, the draw-down on the quota will be stopped.
That 20 working days is essentially 20 days for paperwork, a senior executive at a major producer impacted by the measures told Argus. There is no online system connecting all 27 states, so they need 20 days to gather all the information to determine what occurred in the previous 90 days of the quarterly period.
With 27 countries in the EU, there are 27 different customs and legal entities, all of which have different processes. This is a challenge for the EU because the EU must be able to tell an importer what portion of the material they are presenting will be out of quota and therefore subject to the duty at the time that they present the material.
An open question for importers is if they will be able to cancel material if, at the point of presenting it to customs, they learn that a portion of it is out of quota.
"If I present 1,000t for customs clearance, and am informed that 50pc will be free of duty and 50pc is subject to it, can I keep that 50pc that would be subject to the quota in a bonded warehouse and customs clear it in the next quarter or am I required to pay the duty?" an executive asked.
Importers will therefore be racing to move material into the EU at the start of every three-month period.
Any balances that have not been used by the end of each quarter will not be rolled over to the next quarter. Unused balances at the end of the last quarter of the year will not roll over to the next year.
Immediate impact not seen today
Imports of the products subject to the measures that are already en route to the EU on the date that the measures go into force and whose destination cannot be changed will not be subject to the price threshold, according to Article 3 of the document.
Essentially all material that is currently in-warehouse in Rotterdam was customs cleared ahead of the vote, Argus heard, so although in the future importers will aim to clear bonded material stored in-warehouse on the first day of the quota, the competition to get material customs cleared for this first period has not yet taken off.
As material reaches Rotterdam over the coming weeks, the implementation of the measures in practice will become more clear.
