No Abandonment of US Market... Steel Industry "Must Continue Demanding Renegotiation"

EU, Japan, and UK Shift to Quota System
Korea's Tariff-Free Competitiveness Disappears

Must Seek Third Market Opportunities
Calls for Continued Renegotiation

[Asia Economy Reporter Oh Hyung-gil] "Even if the U.S. firmly maintains that there are no plans for renegotiation with us, we cannot simply lose the U.S. market. We must keep knocking on the door."

With the U.S. reaching agreements on steel import tariffs under Section 232 of the Trade Expansion Act with the European Union (EU), Japan, and now the United Kingdom, warning signs have been lit for steel exports to the U.S. Steel companies are engulfed in a disheartened atmosphere, interpreting the U.S. statement that renegotiation with South Korea is not a priority as a sign of 'no hope.'

On the other hand, as steel production in China, the world's largest steel producer, is shrinking and European steel production is affected by the Russia-Ukraine war, there remains an opportunity to secure new sales channels, leading to opinions that this should be taken as a chance for renewed determination.

According to the industry on the 25th, the volume of steel product exports to the U.S. totaled 291,319 tons cumulatively through February this year, down 9.0% from 317,589 tons in the same period last year. Although the rise in prices of raw materials such as iron ore and coking coal has been reflected in product prices, increasing export value significantly from $295 million last year to $457 million, the industry is closely monitoring whether the decline in export volume will continue.

A steel industry official said, "Last year’s steel exports to the U.S. reached 1.67 million tons, the highest since the introduction of the quota system, so the base effect should be considered," adding, "Given the recent improving U.S. economy, the decrease in exports to the U.S. is likely influenced by the tariff agreements with major countries."

Previously, South Korea accepted a quota system limiting exports to 70% of the average volume of finished steel products from 2015 to 2017 as a means to avoid high tariffs under the Trump administration in 2018. The quota volume eligible for duty-free treatment is about 2.63 million tons.

Steel exports to the U.S. reached 2.52 million tons in 2016 but decreased to 1.27 million tons by 2020. Even considering other variables such as the COVID-19 pandemic and U.S. economic recession, the decline is significant. Unlike South Korea, the EU and Japan accepted a 25% tariff on steel products, citing their relatively low exports to the U.S.

However, the situation changed under the Biden administration. With the EU, Japan, and the UK switching from tariffs to a quota system, conditions were created to export duty-free, causing the competitiveness of Korean steel products, which had enjoyed duty-free status, to disappear.

Although the government and steel industry have proposed negotiations to the U.S. side to increase the flexibility of the quota, the prevailing view is that there is little room for renegotiation in the near term due to the firm stance of the U.S. side. U.S. Commerce Secretary Gina Raimondo stated on the 23rd (local time), "South Korea reached a kind of agreement with the previous (U.S.) administration through quota adjustments," adding, "Renegotiating this is not a high priority for us at the moment."

Earlier, Katherine Tai, U.S. Trade Representative (USTR), also expressed a negative stance on renegotiation, saying, "The quota system already allows duty-free imports from South Korea, which is not the case for most of our trade partners."

The steel industry says, "Since we have not met with the U.S., there are no immediate measures we can take," but urges the government to continue efforts for dialogue. They also plan to actively utilize the situation of shrinking steel production in China to secure third-party sales channels.

A steel company official said, "The U.S. market offers better product prices compared to other countries, so securing volume there is meaningful," adding, "However, since China has not yet fully released its volume, we plan to actively expand into markets other than the U.S. as well."

This content was produced with the assistance of AI translation services.