The countries of the Gulf Cooperation Council are proposing a 31% safeguard tariff on imports of flat-rolled products of iron or non-alloy steel, they said in a filing published by the World Trade Organization on Thursday.
The tariff would last for three years, falling to 28% in the second year and 25% in the third.
WTO members are normally limited in their use of tariffs, but they can impose safeguard tariffs temporarily if a particular industry is hit by a sudden, damaging and unforeseen surge in imports. The tariffs can be imposed by the GCC, but other WTO members can dispute them.
The GCC's Bureau of Technical Secretariat for Anti-Injurious Practices in International Trade began investigating the case for safeguard tariffs a year ago, after a complaint from Universal Metal Coating Company Ltd. The investigation showed steel companies in the GCC countries - Saudi Arabia, Oman, Kuwait, Bahrain, Qatar and the United Arab Emirates - had suffered "serious injury" from a boom in imports between 2012 and 2015, the GCC said.
Production by domestic companies fell 21% and sales dropped 27%, the GCC said. Their share of the GCC market halved and their inventories more than doubled, prompting them to cut 23% of their workforce.
The GCC filing said the case for safeguard tariffs was justified because of unforeseen factors, including an increase in Chinese steel output, global oversupply, a contraction in demand, and the fall in many currencies against the dollar.
An economic slowdown in China had also prompted countries with excess supply to switch their exports to GCC states, which - unlike many other WTO members - had not taken steps to protect their domestic industries from the supply surge.
The tariff will come into effect once a ministerial committee signs off on it and their decision is published in the GCC's official gazette.
The safeguard tariff will not apply to a large group of developing countries that supply less than 3% of the GCC's imports individually and less than 9% collectively.