UK raises planned steel import limits to soothe businesses' cost concerns

By Alistair Smout and Sam Tabahriti

LONDON, June 25 (Reuters) - Britain on Thursday said it would allow more tariff-free imports of steel than previously planned when it introduces new measures to protect its domestic industry next month, after businesses said initial government proposals were too restrictive.

Steelmakers have struggled to survive in the birthplace of the Industrial Revolution after decades of decline driven by deindustrialisation and, more recently, high energy costs and a glut of cheap steel from countries like China.

Ministers have warned of an existential threat to Britain's steel industry unless protections are renewed and enhanced, but businesses had urged the government to limit the increase in costs from the new measure for steel users.

Setting out final details of the new measure, first announced in March to replace a safeguard that expires on June 30, Britain said imports allowed under tariff-free quotas would be cut by 51%, rather than the 60% previously proposed.

Imports above the quota will face a 50% tariff, unchanged from the prior proposal and increased from 25% under the expiring safeguard.

The overall quota volume would be about 3.2 million tons, around 21% higher than previously proposed, and 11 steel products where there is no British production would not have any tariffs applied.

Trade minister Chris Bryant said the measures would be reviewed after a year to ensure the balance was right.

The British Chambers of Commerce cautiously welcomed the changes, saying they took better account of the needs of users further down the steel supply chain who would have otherwise faced large additional import costs from July 1.

"If the pain is still felt to be too severe (we) will be seeking further action on changes to the quotas and an extension to easements," said William Bain, the BCC's head of trade policy.

Industry group UK Steel welcomed a "much stronger trade regime" but said certain areas had been left exposed to heavily subsidised imports.

Britain said it had agreed a coordinated approach with the European Union, which has also acted to protect its producers, to prevent harming manufacturers and preserve existing highly interconnected supply chains.

An EU Commission spokesperson said the EU would "remain in close and regular contact with the UK on this issue."

(Reporting by Sam Tabahriti and Alistair Smout; additional reporting by Philip Blenkinsop in Brussels. Editing by William James and Mark Potter)