Trade Cases

Quotas for Argentina and South Korea Steel

May 3, 2018

Argentina and South Korea will be exempt from Section 232 tariffs in exchange for agreeing to quotas on steel and aluminum products.

Argentina’s steel quota will be 135 percent of the average of Argentine steel exports during the past three years. The quota will allow the import of about 180,000 tons of steel per year from the South American country. The agreement will allow Argentina to continue to export seamless pipe to the U.S. energy sector, although less than the 200,000 tons exported in 2017.

“The results obtained after the negotiation are satisfactory and the market share that has been released to supply finished products to the U.S. is adequate to the expectations we had from the beginning,” said Carlos Vaccaro, executive director of steel association Acero Argentina.

The aluminum quota will be equal to 100 percent of its past three-year average.

Vaccaro chairs the G20 and leads the Global Forum on Steel Excess Capacity. His involvement in the groups provided speculation as to why Argentina was granted the exception. Lighthizer hinted that the U.S. looks more favorably, when granting exclusions, at countries who participate in the forum. However, he “wouldn’t guarantee” his own attendance at future meetings of the Forum.

South Korea quotas were issued in a Presidential Proclamation on April 30 under Section 232 of the Trade Act of 1974 and published by U.S. Customs and Border Protection.

For steel products, the proclamation states: “Imports from South Korea in an aggregate quantity under any such subheading below during any of the periods January through March, April through June, July through September, or October through December in any year that is in excess of 30 percent of the total aggregate quantity provided for a calendar year for such country, as set forth on the Internet site of Customs, shall not be allowed. “

So in simpler terms, South Korea may import only 30 percent of the quantity established by CPB for the calendar year for a product during a single quarter. For instance, 90,336,230 kg of cold-rolled sheet is allowed into the U.S. from Korea per year, so no more than approximately 27 million kg is allowed per quarter.

CPB established 55 separate “sub limits” for a variety of steel products. Under the agreement, eight of those categories have already been met, including OCTG. The quotas are retroactive to the beginning of 2018.

The quotas are more restrictive than past agreements. If Korea had been restricted to a certain amount of steel tonnage exports per year, regardless of product, the Korean industry or government would have to decide how to allocate the quota among individual products. It would have allowed the flexibility to send more of one product than another depending on demand. That flexibility is removed under the absolute quota system imposed.

No expiration dates for the quotas were given.