Seoul proposes law to protect steel industry

The Star

a day ago

Tough times: Steel coils at a port in Pyeongtaek, South Korea. The country's steel industry is caught between the global push for carbon neutrality, cheap Chinese imports and steep tariffs from the United States, lawmakers say. — AFP
SEOUL: South Korea is launching an aggressive policy push to rescue its steel industry from mounting global pressure, unveiling a bipartisan bill aimed at helping domestic producers hit hard by a 50% US tariff and a surge of low-cost Chinese products.
Announced on Monday by 106 lawmakers from both ruling and opposition parties, the proposed 'K-Steel Act' outlines a long-term industrial strategy that frames steel as a vital base for national security and economic resilience.
'South Korea's steel industry has grown rapidly since 1970. But today, it faces an unprecedented crisis, caught between the global push for carbon neutrality, a flood of cheap Chinese imports and steep tariffs from key trading partners,' lawmakers said in explaining the purpose of the bill.
They warned that failure to act would leave South Korea exposed on multiple fronts.
A shrinking domestic steel base could ripple across its broader industrial ecosystem, threatening other sectors from shipbuilding to electric vehicle development.
'This bill is about both survival and transformation,' said Representative Eoh Kiy-ku of the ruling Democratic Party and co-chair of the National Assembly Steel Forum.
'With bipartisan support, we plan to pass this bill quickly and follow up with additional legislation if needed.'
Steel remains a pillar of South Korea's manufacturing economy, accounting for 4.8% of national output and supporting more than 430,000 jobs.
But that foundation is under threat.
Despite a recent South Korea-US tariff deal lowering duties on most goods to 15%, the United States will maintain a 50% tariff on South Korean steel.
At the same time, the European Union's (EU) Carbon Border Adjustment Mechanism, set to be launched next year, will impose extra costs on South Korean steelmakers exporting to the EU unless they decarbonise fast.
South Korea's push comes as other major economies, including the United States, EU and Japan, have already begun ramping up public support for their own steel sectors.
From the US Inflation Reduction Act to EU climate subsidies, governments are blending industrial policy with climate action in a bid to secure supply chains, while hitting net-zero targets.
The K-Steel Act lays out a comprehensive policy framework that would give the government a more direct role in shaping the industry's future.
Central to the proposal is the creation of a presidential committee tasked with crafting five-year master plans and annual action roadmaps to steer the steel sector through economic and environmental challenges.
To support the industry's green transition, the bill includes a wide range of financial incentives.
These include subsidies, low interest loans, tax breaks and production cost support for companies investing in hydrogen-based and other low-emission technologies.
It also introduces 'green steel zones' – designated areas where permitting and regulatory processes would be streamlined to encourage investment and innovation.
The legislation also strengthens South Korea's defensive trade measures. It calls for tighter rules of origin, curbs on low quality steel imports and expanded authority for the government to counter unfair trade practices.
In cases where market-driven restructuring proves insufficient, the government would be authorised to step in with financial and regulatory support, including temporary exemptions from antitrust laws for mergers deemed necessary to stabilise the industry. — The Korea Herald/ANN