G/LIC/Q/EU/2  
 
24 February  2017 
(17-1119) Page: 1/5 
Committee on Import Licensing  Original: English  
 
EUROPEAN UNION – STEEL IMPORT LICENSI NG SYSTEM  
REPLIES BY THE EUROP EAN UNION TO THE QUESTIONS FROM THE RUSSIAN FEDERATI ON 
CONCERNING PRIOR SUR VEILLANCE OF IMPORTS  OF CERTAIN IRON AND  
STEEL PRODUCTS ORIGI NATING IN CERTAIN TH IRD COUNTRIES  
The following notif ication, dated 22 February 2017 , is being circulated at the request of the 
delegation of the European Union . 
 
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2. GENERAL QUESTIONS  
11. Please, clarify what is the added value of this measure when official trade statistics comes 
within a short time lag (for example, in the Russian Federation it is available within 1.5 months)?  
 
EU reply : The EU interest requires that imports of certain steel products be subject to prior Union 
surveillance in order to provide early and advanced statistical  information permitting rapid analysis 
of import trends from all non -EU member countries, already at the level of the intention to import.  
Rapid and anticipated trade data is necessary to deal with the vulnerability of the EU steel market. 
This is particu larly important in the present serious overcapacity situation marked by uncertainties 
as to whether the demand will structurally pick up.  
 
12. According to Article 1 of the Regulation (EU) 2016/670 “[t]he release for free circulation in the 
Union of certai n iron and steel products listed in Annex I to this Regulation shall be subject to prior 
Union surveillance in accordance with Regulation (EU) 2015/478 and Regulation (EU) 2015/755. 
This applies to imports whose net weight exceeds 2 500 kg.” In this case t he questions are:  
 
12.1 Why the licensing measure is applied only to import s whose net weight exceeds 
2500 kg?  
 
12.2  Please, clarify the grounds for choosing such weight threshold.  
 
EU reply : the EU considered appropriate to exempt transactions up to a  certain threshold in order 
to minimise unnecessary constraints and not disturb excessively the activities of companies.  
 
The EU already set the 2500 kilograms threshold in the previous surveillance system originally 
established by Regulation (EC) No 1915 /20061, and that was in force until 31 December 2012. At 
that time, this threshold was established on the basis of the requests received from the economic 
operators. The EU considers that, in the absence of any counter indications, such threshold 
appears s till the appropriate level.   
 
13. According to paragraph 7(a) of Article 2, “[w]ithout prejudice to possible changes in the import 
regulations in force or decisions taken in the framework of an agreement or the management of a 
quota: (a) the period of val idity of the surveillance document is hereby fixed at 4 months…” .  
 
13.1  What is the reason for limitation of license validity period?  
 
                                                
1 http://eur -lex.europa.eu/legal -
content/EN/TXT/PDF/?uri=CELEX:32006R1915&qid=1481709421791&from=EN  G/LIC/Q/EU/2  
 
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  EU reply:  In order to obtain meaningful information about the expected/intended import levels on 
the steel market, it is necessary to set a certain time -limit to these documents. Such limitation is 
also required by the Regulation (EU) No 2015/4782 that is the EU Regulation setting common rules 
for imports.  
 
According to Article 11(5) of this regulation "surveillance docum ents may not in any event be used 
beyond the expiry of a period which shall be laid down at the same time and by means of the 
same procedure as the imposition of surveillance". Similar provisi ons are laid down under 
Article  8(5) of Regulation (EU) 755/20153 that is the EU Regulation setting common rules for 
imports from certain third countries.  
 
14. According to Article 6, “[t]his Regulation shall apply from the day following its publication in 
the Official Journal of the European Union until 15 May 2020”.  
 
14.1  Please, explain the reasons for choosing such period of application of the system.  
 
14.2  Can the measure be prolonged beyond 15 May 2020?  
 
EU reply:  Considering that overcapacity in the steel sector is unlikely to be resolved in the short 
term, the EU considered that the application of the system should re main in place for a period of 
4 years. The EU will examine closer (and just prior) to the expiration date whether a prolongation 
would be necessary or not on the basis of the global steel overca pacity situation at that time.  
 
15. According to the paragraph 2 of Article 4, “the member States shall give… where relevant, the 
basis on which they have refused to grant a surveillance document”. However, this provision does 
not include an exhaustive li st of such bases.  
 
15.1  Please, provide the exhaustive list of grounds for denial of granting license.  
 
EU reply:  As explained in the annual questionnaire submitted in accordance to Art. 7.3 of the 
Import Licensing Agreement (G/LIC/N/3/EU/5, point. 8 at  page 24), the granting of a licence can 
only be refused if the ordinary criteria specified in Article 2.6 of Regulation (EU) No 2016/670 are 
not met. Therefore, a refusal of granting a license could be justified if it does not meet one or 
more of these re quirements . 
  
Moreover, it has to be noted that the license's issuance falls under the responsibilities of the EU 
Member States’ competent national authorities, and that it is up to them to determine whether 
these requirements are met.  
 
3 REQUIREMENTS TO S UBMIT ORIGINAL DOCUMENTS  
16. We have been informed that the authorities of the European Union Member States (for 
example, in Italy4) frequently require submission of original versions of contracts and other 
commercial documents (with genuine signatures an d stamps) as a prerequisite for granting 
surveillance documents. That does not correspond to Article 2(f) of the Regulation (EU) 2016/670, 
which states that “the importer shall also submit commercial evidence of the intention to import, 
such as a copy of t he contract of sales or purchase or of the pro forma invoice”.  
 
17. In light of the foregoing, we kindly ask the European Union to provide answers to the following 
questions:  
 
17.1  What discretion is allowed to the authorities of the Member States in th e course of 
implementation of the measure?  
 
                                                
2 http://e ur-lex.europa.eu/legal -
content/EN/TXT/PDF/?uri=CELEX:32015R0478&qid=1481707191362&from=EN  
3http://eur -lex.europa.eu/legal -
content/EN/TXT/PDF/? uri=CELEX:32015R0755&qid=1481707397611&from=EN  
4  Ministry of Economic Development of Italy, Protocol No. 12326 of 5 May 2016.  
 G/LIC/Q/EU/2  
 
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  EU reply:  Regulation (EU) No 2016/670 sets the rules to be implemented by the EU Member 
States. Their margin of discretion for the implementation is limited to the conditions laid down in 
this Regulation.  
 
17.2  How does the European Union ensure that within its territory the implementation of 
the measure is carried out in a uniform manner?  
 
EU reply:  The EU legislation referring to surveillance of movements of goods at import and export 
is integrated (codified)  into the TARIC database. All the EU Member States use this database for 
validating the customs declarations at the time of putting the goods into the free circulation.  
 
This process ensures that all customs declarations lodged within the EU customs terri tory are 
treated in the same manner if they refer to the same product.  
 
17.3  Please describe the universe of “commercial evidence” that may be requested by the 
authorities, in particular mentioning whether they are entitled to request original 
documents.  
 
EU reply:  Examples of commercial evidence are provided in the last paragraph of Article 2(6) of 
Regulation (EU) No 2016/670. The list is not exhaustive. It lies in the discretion of the EU Member 
States to decide what constitutes sufficient grounds to de monstrate the intention to import, 
including whether they request the presentation of original documents.  
 
17.4  How the requirements to provide original documents serve for the proper functioning 
of the licensing system, in particular, given that it is a imed at, as the European Union 
stated, “collect[ing] advanced statistical information on the intention to import”?  
 
EU reply:  Article 2(6) of Regulation (EU) 2016/670 refers to copy of the contract of sale or 
purchase , but this is only an example of what would constitute commercial evidence. It cannot be 
excluded that Member States may require an original document for example if they have identified 
specific risks associated to a certain transaction which would require more than just a copy.  
 
17.5  Should the importer make a repeated application for surveillance document if the 
contract has been amended and such amendments have affected the information 
submitted in the first application?  
 
EU reply: A new import license should be requested when the amendmen ts to the underlying 
contract go beyond the requirements laid down by Article 3(1) of Regulation (EU) 2016/670.  
 
4 REQUIREMENTS TO SUBMIT DETAILED CUSTOMS CODES OF IMPORTED PRODUCTS  
18. Article 2.6(c)(2) of the Regulation (EU) 2016/670 requires that the description of the imported 
goods should include their TARIC code. We recall that Article 1.5 of the Agreement on Import 
Licensing Procedures establishes that only the information that is “strictly necessary” for the 
proper functioning of the licensing sys tem may be required upon application.  
 
19. We thus request the European Union to clarify the following:  
 
19.1  Does the European Union require the provision of information about customs 
classification of imported products at 10 -digit level? If it is not the case, please explain 
what is the required level of TARIC codes detail under Article 2.6(c)(2) of the 
Regulation.  
 
19.2  How the exporters can proceed with the application when the contract has been 
signed but the exact TARIC codes of the delivered pro ducts are not known yet?  
 
19.3  Why the information on 6 -digit level does not suffice for “collect[ing] advanced 
statistical information on the intention to "import"?  
 
EU reply to 19.1 – 19.2 and 19.3: The TARIC code, at 10 -digit level, is an essential el ement to 
be included in the surveillance document since it gives the most detailed information regarding the 
description of the product that will be imported. A 6 -digit level would be inaccurate as it does not G/LIC/Q/EU/2  
 
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  give such detailed level of information. Since  the application requires that type of information, it 
can only be made once the importer knows the TARIC code in question. If it is not known when the 
contract has been signed, the request for license would have to be done at a later stage, e.g. 
based on the pro forma invoice which can also serve as a commercial evidence of the intention to 
import, as foreseen by Regulation (EU) 2016/670.  
 
5 DISCARD OF NORMAL COMMERCIAL PRACTICE: OPTIONS FOR “+/ - 5%” ARE ONLY 
ALLOWED  
20. We point out that Article 3.1 of the Regulation (EU) 2016/670 limits price options by 5% and 
allows the quantity to exceed the declared figures by 5%. We note in this respect that Article 1.8 
of the Agreement on Import Licensing Procedures states that “[l]icensed imports shall not be 
refused for minor variations in value, quantity or weight… consistent with normal commercial 
practice ” (emphasis added).  
 
21. We would therefore ask the European Union to respond to the following questions:  
 
21.1  Why the European Union allows only “+/ - 5%” options, although shipments varying by 
“+/- 10%” from the contracted volumes constitute a normal commercial practice in 
steel trade?  
 
21.2  Why the European Union allows the total quantity of import to exceed the quantity 
given in the surveillance documen t by less than 5%?  
 
21.3  What happens when the price or quantity of products subject to release for free 
circulation in the European Union deviate for more than 5% from the figures given in 
the surveillance document?  
 
EU reply to 21.1 – 21.2 – 21.3:  the  issue is not whether these deviations constitute a normal 
commercial practice in steel trade, but rather a simple application of the relevant rules by which, 
for the purpose of the surveillance system, a deviation of less than 5% is considered acceptable.  If 
the deviation is more than 5%, a new surveillance document should be requested for the actually 
quantities.  
 
21.4  If the release for free circulation in the European Union is not granted due to 
deviations in price or quantity, can the importer resubmi t its application in order to 
obtain a rectified surveillance document? If the answer is positive, please clarify how 
long will it take to get a new license and what quantities should be declared in the 
application – the whole amount of shipped products su bject to customs clearance or 
the difference between the actual amount shipped and the one given in the 
surveillance document issued previously?  
 
EU reply: Any request for a surveillance document should correspond to the details of the relevant 
customs cl earance, i.e. the whole amount of the products that need to be customs cleared. New 
licences are issued within a maximum period of 5 working days.  
 
6 GRANTING IMPORT PERMISSIONS WITHIN 5 DAYS  
22. Sometimes the delivery of steel from the Russian plants to  the European consumers occupy 
not more than 2 -3 days, especially when automobile transport is used. Given this, we have been 
informed that in some cases the approval of requests for licenses takes longer than the period 
necessary to delivery of products.  
 
23. We note that Article 2.3 of the Regulation (EU) 2016/670 establishes a 5 -day period for 
issuance of the surveillance document.  
 
24. In this respect, we would be grateful if the European Union responded to the following 
questions:  
 
24.1 How does the  European Union ensure that prior surveillance system does not create 
adverse effects on short -term deliveries of steel?  
 G/LIC/Q/EU/2  
 
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  24.2  What kind of circumstances (for example, difficulties of administrative or other nature) 
make impossible for the EU to shorten the 5 -day period of application approval and to 
establish, for example, a 2 or 3 -day period, especially given that the measure’s stated 
objective is a mere “collect[ion] [of] advanced statistical information on the intention 
to import”?  
 
EU reply to 24.1 -24.2:  Surveillance documents are issued within 5 working days of presentation 
of an application. This is in line with Art. 2.2.a.iii) of the Import Licensing Agreement, requiring 
that a document shall be issued within 10 working days.  
 
While in general EU  Member State's authorities are able to issue the document even faster, e.g. in 
2-3 days, it would not be realistic to impose such shorter deadlines to the issuing authorities given 
the high number of requests that any EU Member State may have to handle at  the same time in 
case of periods with significant importing activities.  
 
In the EU's view, this requirement together with the exemptions as described under p. 12 above 
guarantees  demonstrate that the measure is administrated in a manner to have not rest ricting 
effects on imports, in accordance with Art. 2.a) of the Import Licensing Agreement.  
 
7 ADDITIONAL QUESTIONS  
25. What is the anticipated role of the measure in the initiation and carrying out of trade defense 
investigations and, in particular, in i mposition of preliminary safeguard measures?  
 
EU reply: The primary goal of the prior surveillance is to collect early statistical information, 
already on the intention to import. And, as already mentioned above, the information gathered 
with surveillance  could give an early warning to the EU and call for closer monitoring in certain 
sectors of the steel industry.  However, any trade defence investigation initiated by the EU is 
always based on the official and actual import statistics of the EU (Eurostat) a nd not on the 
intention to import.  
 
26. Does the European Union share the information collected through prior surveillance procedures 
with domestic metallurgical companies, for example, in order to help them prepare their 
applications for trade defense  investigations or for whatever other reasons?  
 
EU reply: Information on the prior surveillance procedure is publicly available on DG TRADE's 
Système Intégré de Gestion de Licenses ("SIGL") available at the following webpage:  
 
http://trade.ec.europa.eu/doclib/cfm/doclib_section.cfm?sec=197  
 
The information is updated on a monthly basis.  
 
 
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