According to the Trade Defense Department (Ministry of Industry and Trade), the European Commission recently published the Steel and Metals Action Plan. This action plan "implements measures to maintain and expand Europe's industrial capacity in the steel and metals sectors" and is designed to "enhance the competitiveness of the sector and protect its future".

The action plan is built on six distinct pillars, including: Ensuring abundant and affordable clean energy; Preventing carbon leakage; Promoting and protecting Europe's industrial capacity; Promoting circularity for metals; Protecting high-quality jobs in industry; Reducing risks through mainstream markets and supporting investment .

It is worth noting that countries exporting aluminium and steel to the EU are  also concerned that the Action Plan has a clear “defence” component.

The key measures announced by the European Commission in its Action Plan could impact manufacturing and exporting businesses in the near future.

Specifically, the EC will extend the Carbon Border Mechanism (CBAM) to downstream steel and aluminium products.

The EC identifies a risk that carbon leakage in CBAM-covered goods could shift further up the value chain (e.g., through avoidance through minor modifications of CBAM base goods or when “ EU consumers begin to favour downstream goods imported from producers in third countries with weaker climate policies”).

To address this risk, the EU commits to a comprehensive review of CBAM by Q4 2025, accompanied by an anti-circumvention strategy and a new legislative proposal “extending the scope of CBAM to downstream products that use a lot of steel and aluminium” along with additional anti-circumvention measures.

At the same time, the EC identified a number of important upcoming changes to the trade defence mechanism to address global overcapacity that "seriously threatens the profitability and competitiveness of European industries".

Key changes include: Immediate tightening of the EU's existing steel safeguard measure, aiming to reduce imports of steel products subject to the safeguard measure by 15%.

The EU steel safeguard measure is expected to be replaced by a longer-term measure. Specifically, when the current measure expires on June 30, 2026, the EU plans to apply a new "long-term" measure from July 1, 2026.

At present, the EC has not provided details on the nature or form of the new measure, but these are expected to be released no later than Q3/2025.

In addition, the EC also noted the decline in the aluminium industry and announced its intention to launch an investigation to consider the possibility of applying a similar safeguard measure to steel on aluminium.

In order to prevent the circumvention of EU trade defence measures (such as by transferring the final production stage to third countries not covered by the measure), the EC is considering adjusting the trade defence mechanism by introducing a “melting and casting” rule.

The application of this rule will eliminate the possibility of changing the origin of metal products through minimal processing steps and provide greater certainty in the traceability of products.

In the Action Plan, the EC has signalled that it will fundamentally adjust its approach to conducting trade defence investigations on steel and metal products.

“Overall, the EC will strengthen its trade flow monitoring mechanism and proactively initiate investigations based on a “threat of injury” without waiting for actual injury to occur,” the EC Action Plan states.

Faced with a series of measures to protect the EU's aluminum and steel manufacturing industry,  the Trade Defense Department (Ministry of Industry and Trade) recommends that the Association and enterprises producing/exporting products such as steel and aluminum review their production and export activities to the EU and closely monitor market movements to promptly develop response plans if necessary.

The EU is currently an important export market for the steel industry. In peak years, steel exports to this market area were about 2 billion USD.

(Source: Đầu tư Online)

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