BRUSSELS (Reuters) -The European Commission proposed on Tuesday cutting tariff-free steel import quotas by almost half and a 50% duty for excess shipments in a bid to preserve viable steelmaking in the European Union.

Due to rising imports and U.S. tariffs, EU steel producers are operating at only 67% of capacity and the new measures, in line with those reported by Reuters last week, are designed to push that up towards 80%.

EU steel is currently protected by safeguards that cap imports of 26 steel grades, with 25% tariffs above those limits. However, they have steadily risen each year despite declining demand and, under World Trade Organization rules, must expire in mid-2026.

The Commission is now proposing a tariff-free import volume of 18.3 metric tons a year, down 47% from 2024 quotas, and a doubling of the out-of-quota duty to 50%, in line with Canada and the United States, though the latter's tariffs apply from the very first ton.

The Commission said the quota volumes would match imports from 2013, when it says overcapacity began. The measures, which will require approval by EU governments and the European Parliament, will also require importers to show proof of the origin of their steel.

Axel Eggert, director general of European steel association Eurofer, said the measures would cut imports to a 15% market share and were the vital step the industry was seeking, potentially saving hundreds of thousands of jobs.

The bloc will also need to enter negotiations with WTO partners, the outcome of which could be tariff-free allocations. Only European Economic Area countries Iceland, Liechtenstein and Norway will be exempt.

The top exporters of steel to the EU in 2024 were Turkey, India, South Korea, Vietnam, China, Taiwan and Ukraine.

The new system could help secure a deal with the United States to replace 50% U.S. tariffs with a quota system, as outlined in the U.S.-EU deal at the end of July.

The EU hopes like-minded partners will cooperate to address overcapacity, which could involve ring-fencing their respective production from China in particular.

(Reporting by Philip Blenkinsop; Editing by Emelia Sithole-Matarise)