An EU action plan to help Europe’s struggling steel industry to be announced on Wednesday is expected to include a proposal to levy punitive tariffs on subsidised Chinese imports, a move the UK government will oppose.
Axel Eggert, director general of the European Steel Association (Eurofer), said the situation for Europe’s steel industry was now critical. The UK is one of the hardest-hit countries, he added, with the strong pound and relatively high energy prices raising the cost of British steel.
The industry in Europe blames the crisis on state-owned steel companies in China – and to a lesser extent Russia and Belarus – that benefit from loans and subsidies that allow them to produce below cost. As a result, EU producers have not benefited from Europe’s rising demand for steel as the car industry and construction sectors rebound out of recession.
“You have an increase in EU steel demand and a drop in prices. This is not normal,” Eggert said. “This is a very clear sign of massive trade distortions.”
The European commission agrees. It estimates that China produces 325m tonnes of excess steel a year, more than double Europe’s annual production.
“The European steel industry is facing a number of serious challenges, fuelled by global overcapacity, a dramatic increase of exports and an unprecedented wave of unfair trading practices,” states the draft action plan seen by the Guardian.
The commission says it has passed “a record level of trade defence measures”, pointing to 37 cases in which extra tariffs have been charged on dumped goods. But it says more needs to be done.
Last month, ministers from Europe’s biggest steel-producing countries, including the UK, Germany and France, called on the commission to “use every means available” to help the industry against the “impending risk of collapse”.
Behind this show of unity, the EU countries are divided on how powerful Europe’s trade defences should be. The main point of contention is the lesser-duty rule, an arcane formula for calculating extra tariffs levied on goods produced below market prices.
Although not compulsory under World Trade Organisation guidelines, the EU has chosen to abide by the lesser-duty rule, which restricts punitive tariffs on dumped goods. For example, whereas the EU sets a tariff of up to 16% on dumped Chinese cold-rolled steel – a high-value product used to make car parts, household appliances and furniture – the US fixed duties at 266%.
Source: the guardian