Brussels urges member states to regulate Chinese steel imports

Steel workers face the European Commission. Brussels, 15 February. [Joel Schalit/Flickr]

The European Commission announced plans on Wednesday (16 March) to speed up trade defence cases against cheap imports from China, and urged member states to stop blocking measures that could set higher duties against dumped and subsidised products.

In proposals specifically targeted to protect the steel sector, the Commission said it would seek to cut the period it takes from the launch of an investigation to the imposition of tariffs, which at nine months the industry says is too long.

Britain, France and Germany are among the countries to have asked the Commission to help the steel industry, which is suffering from an import surge from China in particular and collapsing prices.

Some 4,000 British steel jobs were lost in October 2015 alone, equivalent to about a fifth of the sector’s workforce. The head of Britain’s largest steelmaker, Tata Steel Europe, has said it is impossible to compete with China when Beijing intervenes to prop up loss-making plants.

EU leaders are set to discuss steel briefly during a summit in Brussels on Thursday and Friday.

The executive said it was now for the member states to adopt proposals to update trade defence measures that it put forward in 2013.

“We will take steps to further streamline our procedures but Member States must also act together and urgently adopt our legislative proposal to modernise EU trade defence instruments and make fairer trade a reality,” said Commission Vice-President Jyrki Katainen, responsible for Jobs, Growth, Investment and Competitiveness.

Lesser duty rule

One such measure would be the removal of the so-called lesser duty rule, which limits the tariffs that can be imposed on dumped or unfairly subsidised imports.

This has become a sticking point and a matter of division between EU countries. While France, along with other member states, supported the European Commission’s first proposal in 2013 to limit the lesser duty rule, the United Kingdom has argued against, saying it could harm other parts of the value chain.

Anglo-Dutch alliance resists pressure to impose higher tariffs on China

Backed by Britain, the Dutch presidency of the EU has turned a deaf ear to demands from the European Commission and some member states ― led by France ― to strengthen trade defence instruments against Chinese steel dumping.

In other proposals, the Commission also said it alone might be able to cut the timeframe for tariff imposition to eight from nine months, but would need legislation, and therefore EU member state approval, to bring it down to seven.

This was a rare area on which the industry and environmentalists could agree.

European steelmakers association Eurofer said the United States should be the benchmark, with anti-dumping tariffs applied on average within four-and-a-half months and duties applied up to the maximum level.

For cold-rolled steel products, provisional duties against China were between 13.8 and 16%, compared with a “dumping margin” of up to 59.1% and tariffs applied by the United States earlier this month of some 265%.

Reinhard Buetikofer, industrial spokesman for the Greens in the European Parliament, said EU governments needed to stop writing letters to the Commission and to do their “homework” themselves.

“For too long they have blocked a reform of EU anti-dumping instruments,” he said.

The European steel association, Eurofer, says China has a domestic steel overcapacity of around 400 million tonnes, almost three times the total demand in the EU (155 million tonnes). The overcapacity is largely due to persistent state intervention in the Chinese economy.

The European Commission proposed in April 2013 to limit the use of the so-called "lesser duty rule" as part of a wider package to modernise the EU's trade defence instruments. The ‘lesser duty’ rule keeps the additional tariff within the limit of what is strictly necessary to prevent an injury for EU industry.

Following the Commission’s footsteps, the Parliament adopted its position on the modernisation of the trade defence instruments in April 2014, including the limitation of the lesser duty rule.

When the steel crisis hit Europe, seven member states (Germany, Italy, the United Kingdom, France, Poland, Belgium and Luxembourg) sent a letter urging the Commission “to use every means available and take strong action" to respond to "unfair trade practices".

The initiative avoided entering into the details of the lesser duty rule, as this point was the bone of contention in 2014 to modernise the trade defense instruments as a whole.

The letter only said that the reform of these instruments should “further streamline and expedite the procedures, increase transparency, predictability, effectiveness and enforcement for all economic operators in order to enhance the protection of the European steel industry against unfair practices”.

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