Steel Summit calls for tougher action on Chinese imports

16 February 2016

Britain’s crisis-hit steel industry looks unlikely to get any relief from imports of subsidised Chinese steel flooding the European markets, despite a high-powered summit to tackle the problem.

Industry chiefs and government ministers are currently meeting with European Commission officials in Brussels to demand tougher action to stop Beijing-backed steel makers from dumping their products here.

They want the Commission to hit imports of Chinese steel with higher trade tariffs, saying the current duties are too low to act as a deterrent and that Brussels is too slow at introducing the tariffs.

Steel makers also want the EU to block China’s attempts to gain market economy status with the World Trade Organisation until it stops dumping steel.

Gareth Stace, director of industry body UK Steel, is at the event and said that swift action needs to be taken to “halt the ever rising flood of Chinese imports”.

 “We are calling on the UK Government to spearhead the action to get tariffs introduce faster, the whole European steel industry is united on this issue,” he said.

The Commission argues that it is already using trade tariffs to block imports. It announced three new anti-dumping investigations last week and has more than 30 measures in place so far to try to combat subsidised steel imports.

But opening the summit, Jyrki Katainen, competitiveness commissioner, warned “there is not one silver bullet or medicine to swallow to keep our position as a continent of competitive industry”.

Sources at the summit said they felt there was little likelihood of the industry winning fast action to ease the pressure, which in the UK alone has resulted in 5,000 job losses in the past year. Some of the biggest losses have come at Tata’s plants in Port Talbot and Scunthrope, and SSI’s blast furnace in Redcar.

Karl Koehler, chief executive of Tata Steel Europe, said the Commission’s efforts so far to fight unfair competition have been “slow and half-hearted”.

 He added: “The steel industry is in a fierce fight for its future. Huge global overcapacity and unfair trade practices – mainly by China and Russia – have pushed steel prices to historically low levels.

“The dumping of steel below its cost of production will continue as long as our regional, national and European leaders fail to introduce trade defence protections quickly and effectively.”

One of the industry’s key complaints is that the trade tariffs that have been imposed are too low.

Steelmakers say that an EU investigation found that imports of Chinese “rebar” steel are subsidised by 66pc, yet the Commission’s so-called “Lesser Duty Rate” (LDR) tariff system meant the import tax was just 13pc – providing no deterrent for the Chinese to stop selling into the European market.

Mr Stace said: “Scrapping the LDR is the only way we can have a real defence against subsidised imports. The US has no such rules and they do not have a problem with Chinese imports.”

The UK is unwilling to campaign for the LDR to be scrapped, with Business Secretary Sajid Javid last week telling a Westminster select committee he would not fight against them when challenged on the issue.

Mr Javid’s department said the Commission could have imposed a higher tariff but “used a flawed methology” to calculate the penalty.

“We were disappointed at the low tariff level imposed, but this was not the result of the LDR,” said a spokesman for the Department for Business, Innovation and Skills. “The Commission already has the necessary powers to put in place tariffs at the right level.”

 The summit also saw thousands of steel workers march on the Commission’s headquarters to demand action and call for China not to be granted market economy status.

“The UK and Europe cannot afford to lose their steelmaking capacity, so our government and the Commission desperately need to start defending the industry,” said Roy Rickhuss, general secretary of steel workers’ union Community, calling on Brussels to block China gaining the coveted status.

“Delays in heeding our warnings and acting to end Europe’s steel crisis will only leave thousands more jobs under threat and put the future of a vital, strategic industry at risk, with devastating consequences for steel communities around Europe.”

An EC trade spokesman said the recently opened anti-dumping investigations were "completely unrelated" to China's market economy status. Asked why the Commission does not take anti-dumping measures into account when looking at the country's market status, the spokesman added: "The discussion on whether China is a market economy is not a philosophical discussion. This is a specific discussion in a very specific and strict framework of the anti-dumping legislation of the European Union"


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