Steel Quota Becomes a ‘Sticking Point’ in India-UK Deal

Chennai: The United Kingdom’s steel import decision has hit the implementation of the trade deal with India.

The UK had a few days before announced that from July 1 onwards it will reduce the volume of steel that can be imported into the country tariff‑free by 60 per cent. Once the quota gets exhausted, imports will be subject to a 50 per cent tariff, an increase from the current 25 per cent above‑quota tariff.

This was not part of the trade deal with India, which was supposed to be operationalised soon.

As per an agency report, Commerce Secretary Rajesh Agrawal on Friday said that India and the UK are working on a "unique and creative solution" to address issues arising from Britain's recent steel safeguard measure so that the proposed Comprehensive Economic and Trade Agreement (CETA) can be operationalised at an early date.

“The UK’s decision to cut tariff-free steel import quotas by 60 per cent may become a sticking point for the India–UK Free Trade Agreement. London is effectively following the EU’s protectionist steel model by combining safeguard restrictions with carbon-linked border taxes,” said GTRI.

India already faces a harsh trade environment in the EU steel market. Despite the India–EU FTA, Indian steel exports will be subjected to EU’s Carbon Border Adjustment Mechanism (CBAM). Further, it also has a quota system for steel imports. Around 20 items will come under the quota system, said Pankaj Chadha, chairman, EEPC.

The UK is now moving in the same direction through tighter quotas, safeguard measures and its own CBAM-style framework.

“Even shipments entering within quota limits and paying zero customs duty could still face around $38 in CBAM-related costs for every $100 of steel exported. Once exports exceed safeguard quotas, the EU can impose a 50% over-quota duty, pushing the combined burden of safeguard duties and CBAM costs to as high as $95 per $100 shipment,” said GTRI.