UK seeks clarification on EU steel quotas as industry warns of crisis

By Alistair Smout

LONDON/MUMBAI (Reuters) -Britain said it was seeking urgent clarification on steel import quotas announced by the European Commission, as the country's steel industry warned the measures could wipe out many companies if the government fails to secure exemptions.

The proposed reduction of tariff-free steel import quotas to the EU, which accounts for 78% of all UK steel exports, and a duty on excess shipments could put the already struggling British industry at risk, a leading trade group said.

Asked whether Britain was seeking an exemption from the proposals, Prime Minister Keir Starmer said he would give strong support to the sector and would be able to say more in due course.

"I'm not going to go into the details, but I'm going to tell you in clear terms, as you would expect, we are discussing this with the EU and with the U.S.," he told reporters late on Tuesday on a plane en route to India for an official visit.

INDUSTRY WARNS OF FLOOD OF DIVERTED STEEL, JOBS AT RISK

The European Commission on Tuesday proposed cutting tariff-free steel import quotas by almost half and applying a 50% duty on excess shipments in a bid to preserve viable steelmaking in the European Union.

British industry minister Chris McDonald said the government was "pushing the European Commission for urgent clarification of the impact of this move on the UK".

Britain's steel industry said the proposals raised the risk of steel barred from the EU market flooding into the UK. It called on the government to negotiate preferential treatment with the EU and to put in place its own quotas to protect domestic producers.

"The probability of the EU's measures redirecting millions of tons of steel towards the UK could be terminal for many of our remaining steel companies," said Gareth Stace, director-general at industry group UK Steel.

The group said the proposals threatened thousands of jobs across Britain, where the steel industry employs 37,000 workers directly and supports 42,000 jobs in the supply chain.

"This is perhaps the biggest crisis the UK steel industry has ever faced," Stace said.

Starmer's government showed its commitment to the steel industry when it seized control of British Steel, the country's last remaining virgin steel manufacturer, from its Chinese owner to secure national supply earlier this year.

Starmer in May agreed a trade deal with the U.S. meaning British steel producers face U.S. tariffs of 25%, below the 50% faced by other countries. British officials had sought to lower the tariff to 0% under a quota.

Less than 10% of British steel exports are destined for the United States.

Britain said in August the EU would remove tariffs on key steel products under a quota system as part of a reset of ties and a recent deal to ease trade barriers.

(Reporting by Catarina Demony, Alistair Smout and Sarah Young; Editing by William James and Joe Bavier)