David Cameron accused of failing UK steel after EU Proposal Rejected

11 February 2016

David Cameron has been accused of failing the British steel industry after the government confirmed it was blocking proposals from other EU members to tackle dumping of cheap product by China.

Sajid Javid, the business secretary, said it would not be right for the EU to scrap regulations known as the “lesser duty rule”, which some countries want to end in order to allow higher tariffs on Chinese steel.

The decision to block the proposals drew fierce criticism from Labour and the remnants of the UK’s steel industry, which has shed 5,000 jobs since last summer.

But Javid said getting rid of the rule would lead to higher prices for UK consumers of steel, as the current arrangements balance the interests of producers and buyers of a product.

“I think when we look at this, a responsible government would look at the impact overall to British industry and British jobs. If duties are applied that are disproportionate, it would have an impact, in Britain and elsewhere, on the consumers of steel as well,” he said.

“There are many British companies ... that would tell you if duties got out of control ... then it would cost them jobs and growth and it would certainly cut their exports.”

He added: “I think to go further, much further, might sort of, in the short term, sound like a way to go to try and protect a certain industry, but we also have to remember that in the UK, as well as manufacturers of steel, there are also companies that consume steel as part of their production process, and the impact that might have on to them.”

Only last week, Javid signed a joint letter from European ministers “to use every means available and take strong action” against China and Russia, which have been accused of dumping cheap steel on the market.

EU tariffs on steel are currently about 9%, compared with the US suggesting tariffs of up to 236% on some products. However, scrapping the lesser duty rule in Brussels could allow duties to be lifted much higher.

Asked about the position, Downing Street said the UK did support some level of higher tariffs as it felt the current levels were “a bit too low” but it opposes scrapping that specific regulation.

“At the end of last month, the commission has set out some higher tariffs of around 9% and we along with the French, Germans and Italians, have said we should go further and that is too low,” Cameron’s official spokesman said. “Actually we were looking for higher tariffs. What the questioner was referring to was the lesser duty rule ... essentially it is whether you have a proportionate response or you lurch towards protectionism. Our concern with some of what is being talked about in the commission is that is protectionism.”

He said there was an “ongoing discussion” about the level of tariffs that the UK would like to see.

A Department for Business, Innovation and Skills spokesman said: “We pushed hard for an investigation into rebar steel dumping and were disappointed at the low tariff level imposed, but the lesser duty rule (LDR) did not stop the commission imposing a higher tariff level.

“This government has gone far further than previous governments in voting in favour of tariffs on steel dumping and leading the charge in the EU for swifter action. We are continuing to push the EU for higher tariffs where the evidence supports this, and modernisation of EU trade defence more generally.”

Gareth Stace, director of UK Steel, said the government’s stance risked killing off British steelmaking altogether, accusing Javid of “leaving the steel industry on its knees”. “Anti-dumping measures in the EU do not currently have the teeth to halt this tsunami of dumped steel,” said Stace.

He said the EU should mimic the US, where extra tariffs to prevent dumping can be imposed far more quickly than in Europe. “The secretary of state for business, innovation and skills, along with other member states wrote to the European commission last week highlighting the potential collapse in the European steel sector unless action is taken now,” said Stace.

“It is therefore galling that the UK government has not taken action itself and has continued to block these changes in the EU – leaving the steel industry on its knees. The government must support the lifting of the lesser duty rule, otherwise steel manufacturing will be lost in the UK and Europe.”

His criticism was echoed by Eurofer, the European steel industry trade body. “It’s very odd that he [Javid] signed a letter saying he wants strong action and then he doesn’t want to use the tools that are already available,” said a spokesman.

He pointed to a steep increase in Chinese steel imports to the EU, up from 4.5m tonnes in 2014 to a projected figure of 7m tonnes for last year.

The glut of steel has seen the price of hot rolled coil in northern Europe – an industry benchmark – slump from €600 per tonne last summer to about €350 per tonne.

Steelworkers’ trade union Community also lashed out at the government. “Yet again the warm words from government ministers about the importance of the steel industry are not matched by action,” said the union’s general secretary, Roy Rickhuss.

“The UK steel industry is facing a crisis and backing more effective trade defence in Europe by ending lesser duty tariffs would be just of one of the measures the government could take to give our industry the chance of a future.

“We’re asking for a level playing field and the opportunity for UK steel producers to compete in a global market but we need the UK government to stand up for steel in Europe and around the world.”

Labour has been pressing ministers to stop China dumping cheap steel on the market at below cost price, effectively making it uneconomic for UK producers.

Nic Dakin, Labour MP for Scunthorpe, challenged Cameron about the UK’s position in prime minister’s questions, accusing him of failing to stand up for the British steel industry.

Cameron avoided the issue of the EU tariffs in his reply, saying: “We have repeatedly stood up for UK steel, including supporting taking anti-dumping measures in the EU.”

Afterwards, Tom Blenkinsop, Labour MP for Middlesbrough South and East Cleveland, said it was “utterly despicable for Cameron to say that in any way shape or form that he is supporting steel if his government is actually blocking attempts at a European level to place tariffs at a far higher rate on steel-dumping nations like China”.

“According to calculations the tariff should be more like 66% not 9%,” he said. “The EU commission wants to change things so we can up this potential tariff from 9% to something higher, and the UK government is most definitely the ringleader amongst EU nations opposing this.”


Source : theguardian.com