2.07 Million Tons Not Enough: Korean Steel Now Faces EU 'Shared Quota' Battle

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The European Union (EU)'s new steel Tariff Rate Quota (TRQ) system officially came into effect this month. While the Korean government managed, through negotiations, to limit the reduction in Korea's country-specific quota to a smaller margin compared to major competitors, industry analysts say that future export competitiveness will depend largely on how effectively Korean companies utilize the shared quota, which is available to multiple countries.

According to the Ministry of Trade, Industry and Energy on July 5, the Korean government secured a country-specific quota of 2,073,000 tons for Korea in anticipation of the implementation of the EU's new steel TRQ system. This represents a 19.7% reduction from the previous 2,581,000 tons, but given that the EU's total steel quota has been cut by approximately 46%, Korea's relative performance is considered favorable.

In fact, the United Kingdom saw its quota decrease by 66.6%, Switzerland by 67.5%, Ukraine by 58.9%, and Türkiye by 28.4%, making Korea's reduction the lowest among major countries.

The most notable change in the new system is the expanded use of the shared quota. While the country-specific quota is reserved exclusively for Korean companies, the shared quota can be utilized by countries with Free Trade Agreements (FTA) and World Trade Organization (WTO) membership. The total quantity available to Korean companies, including the country-specific quota, could reach up to 3,809,000 tons. However, the shared quota is not specifically allocated to Korea, so Korean companies must compete with others to access it.

The EU's move to expand the shared quota system is aimed at strengthening protection for the regional steel industry. Through this new system, the EU has set a target to raise its internal steel facility utilization rate from the current level of about 67% to 80%. The intention is to reduce the inflow of foreign steel and expand domestic production within Europe.

As a result, the degree to which Korean companies can utilize the shared quota, in addition to the country-specific quota secured through negotiation, will become a key variable in Korea’s steel exports to the EU. Because the shared quota is not guaranteed to any specific country, its actual utilization depends on the export volumes of competing countries and demand within the EU market.

The steel industry also views securing the country-specific quota as a positive development, but believes that the real export competition begins now. An industry source stated, "Securing the country-specific quota at a more favorable level than major competitors is meaningful. However, actual exports will be affected by the operation and depletion of the shared quota, so we plan to closely monitor the EU's detailed operating guidelines and develop corresponding strategies."

The government also plans to continue consultations with the EU. Anticipating the possibility that the EU may convert country-specific quotas to shared quotas or introduce further policy changes, the government will continuously assess the impact on Korean steel exports and, if necessary, request improvements through talks with the EU. In addition, the government will maintain close communication with the industry to monitor export difficulties and will support both trade responses and market diversification efforts.

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Yeon Han-koo, Korea’s Trade Minister, said, "The negotiations are not over with the finalization of the country-specific quota. We will continue discussions to ensure that no unfair disadvantages are imposed on our industry during the EU’s steel policy implementation."

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