EU Steel Quota Cuts Threaten European Automakers

Carmakers concern over rising costs
ACEA indicated that most of the steel used by European car manufacturers is sourced from Europe approximately 90% of the time, but they are "worried" that cutting import quotas early will lead to higher prices and reduced availability. The proposal that would remove up to 50% of the quota for steel imports and raise the out of quptoa duty to 50% would ultimately give a more favourable position to European steel producers, and the proposal is still for "eventual agreement" by the European governments and European Parliament.

ACEA's Director General Sigrid de Vries said, "While all sectors of all industries will ultimately require some level of protection for the steel sector, this proposal is going too far in ring-fencing the European market." Although car makers could source specific grades of steel from Europe, the quotas allocating steel imports likely would not permit the sourcing and allocation of another grade of steel. "At the same time," said de Vries, the grade runs out quickly under the current quota allocation.

Intricate supply chains and changing cost structures
The automotive sector also expressed concern over the proposed approach to where the steel was melted and poured, which would restrict the importing circumvention. ACEA stated it would be impractical, if not impossible, to track within the global complex supply chain used by the automotive sector.

Representatives from the automobile sector asserted that a more equitable rule change should be looked at, given that the use of materials was produced, and the end users will be involved in the measures that may impact access and costs. They further reiterated that proposed rule changes may run the risk of increasing costs and will only contribute to higher access for area suppliers, which would create a disallowable cost impact burden for the automotive sector as a whole.