Ministers debate energy-intensive industries in Brussels

Written by Mate Csicsai on 17 February 2016 in EU Monitoring
EU Monitoring

Commissioners, ministers and other senior representatives met on Monday for a high-level conference on energy-intensive industries.

Anna Soubry, Minister of State for Small Business, Industry and Enterprise of the United Kingdom, said that one of the things that particularly struck her was listening to people involved in EIIs, who know what they are talking about. We have heard their real concerns about the future. She claimed that it is the situation in the steel industry that particularly motivates her, and that is mainly what brought us to the conference. Statistics should concern us, she stressed: firstly, it takes 8,5 months in the US from a complaint to the introduction of tariffs, while in EU it takes 15 months on average. It has already improved hugely because of the political will to reform the system and to do the right thing: what is right for industry and the future of the EU. She said she wanted the UK to stay in the EU, but the EU has to reform. It is not just about doing the right thing by companies and workers. She then referred to a “person” demonstrating on the day of the conference that has spent his life getting rid of EU, and is now asking the EU to do more. It is ironic and wrong that he is there. She stressed that we need to change those statistics on order to have a strong EU. 5600 jobs have been lost in the UK with the closure of a plant in the North East, and there are difficulties elsewhere.

The minister then recalled the speech by TATA steel earlier during the conference, which talked about life in the real world, as well as the concerns of the ceramics industry about the rising costs of energy. She thought that the actions taken meant the beginning of making sure that we do the right thing for our industries. We are in real danger of exporting jobs and importing carbon, she argued. We have to strike the right balance, as these are good jobs with highly skilled, motivated workforce: these are jobs we do not want to lose. We have begun to make the difference that we all want just by holding today’s meeting. Industry spoke without fear, and they have been listened to. The minister then noted that the UK government has acted on 4 out of 5 of the requests of the steel industry, and commented that now they need the EU to take action. But we have to be careful with linking the debate to China’s market economy states, as that is something that will be decided in time, while on the steel industry we need action today. Actions on dumping are welcome, they are on the right page, but we have to improve the time it takes, and we need tariffs on the higher end. On electricity prices, she said that that it is again something where we have to be honest about the dangers. Nobody asked for subsidies, just a level playing field, and the EU hears that message, Ms. Soubry concluded.

Emmanuel Macron, Minister of the Economy, Industry and Digital Sector of France, welcomed the discussion on this very interesting topic. He recalled that the idea behind establishing the Coal and Steel Community was to overcome division, and this was a project built on industry. Our capacity to survive is the question here. At stake is the future of industry, which is connected to progress. There are different ideas of modernisation, but the core is the same: it is about European industry. Energy Intensive Industries have a transformation to undertake, and this is connected to our ability to produce in a different way and show that we can fulfil our climate commitments.  It is also a question of level playing field: we need to be swifter and faster in acting, because it is a matter of joint credibility and keeping up with global competition. We are capable of changing behaviours and our mode of production, he stressed, but we need market rules to be respected. He then said he wanted to talk about steel above all. This is a crisis based on several factors: firstly, structural factors, as Europe only accounts for 10% of world production now. Many jobs have been lost in 2008, and there is a global slowdown. There is also a Chinese overcapacity, and it is flooding the markets, while similar things are happening also in Belarus and Russia. At the same time demand is weak. The situation is extremely serious, and we cannot give up, because the stakes are very high. There are social and human factors at stake: 33 000 jobs have been lost in Europe.

Even a new digital market cannot be built without steel, he argued, stressing that if we do not react to these events, we are losing ground to populism. Each country needs to react with reform, and we need to encourage China to reform too, and we have to be firm on that. This is where the elements of our joint action lie. If we take so much time to open investigations as to close them, we will see other sites closing. The minister then recalled that the Competitiveness Council is also looking at the issue. We should not be naïve and not protect our production capacities as everyone else does. The US defends its own interest efficiently and quickly, so we cannot allow ourselves to be victims of these practices either. This is a question of remaining credible, Mr. Macron said.

There are three priorities on the European level:

  1. Speeding up the processes above all. We have to adjust to the US timeline otherwise we will suffer
  2. We have to transmit information more swiftly within the EU on these practices.
  3. And we need to adapt legislation, which means the modernisation of trade defence instruments, which France has always supported. We all need to support that, as we need to have reciprocity instruments to encourage third countries. We also have to make sure that the decisions are taken in a timely manner.

As regards climate policy, the minister pointed out that our competitors are not subject to the same requirements as European companies, and he called for a 100% free quota for industries at risk of carbon leakage. We need to follow a policy to boost competitiveness in each country. We need real R&D and innovation policy, and we need to open up new markets that allow greater competitiveness. The digital revolution is a very important step to head down our path, he argued. The European integration’s foundation was based on the steel industry and we should remember that: we are talking about strategic sectors. It is an important decision we are facing economically, socially and politically. Finally, he concluded by stressing the need for greater solidarity.

Henk Kamp, Minister of Economic Affairs of the Netherlands, said he just returned from North Rhine-Westphalia, where innovation has enabled industry in to remain competitive and the preferred supplier of many major manufacturers. EIIs remain a driver of growth, and they invest large amounts of money in innovation which raises productivity. They directly employ 7 million people, and much more indirectly. They are a vital first point in the value chain in many sectors, the minister stressed. Energy-intensive industries are having a hard time amidst growing international competition, while there is also growing pressure from the public and authorities to increase sustainability, because it is necessary. The challenges will require innovation, sustainability and new models, but at the same time companies must not fail due to unfair competition. However, even in level playing field, companies will have to adapt products and processes.

The minister then turned to the steel sector, noting that there is a deepening crisis, and that it has lost half of its market share since 2001 and 20% of its workforce since 2009. We need to work together, as Member States alone cannot deal with issues like global overcapacity, low prices and competition from cheap Chinese steel. We have to step up the implementation of the Steel Action Plan: the plan is there, but it needs to be implemented. Mr. Kamp then informed that the November 9 extraordinary Competitiveness Council meeting discussed the issue too. He then laid out three actions needed to ready industries for the future:

We need to level the playing field in the steel market. The Presidency is very pleased that the Commission announced last week that it intends to take even more actions. It takes longer in Europe to introduce new measures than in the US, he recalled. Europe benefits from open markets, so it is important that anti-dumping measures carefully weigh all interests involved, but where the process can be faster, it has to be faster. On China’s MES, he said that it has the right to market economy status, but we have to take the last decision. The informal meeting of the trade Council on the 2 nd of February discussed measures to soften the impact of this move. At the same time, other sectors and consumers must not suffer from trade defence measures, so the Presidency is pleased that the Commission will conduct a robust impact assessment before the decision.

The second pillar is an improved ETS: we can improve competitiveness by improving this system. Tightening it up must not lead carbon leakage. The Paris Agreement lays the basis for a more level playing field as other parts of the world will now have to do more, he argued, and pledged that the Presidency will work towards a well-functioning ETS that helps achieving reduction targets while provides guarantees for businesses

Thirdly, we have to encourage more private investment in innovation, which is crucial to remain viable in the long run. There are opportunities in digitation and sustainability, but companies need to take the initiative and invest, and it is up to us to convince them to do this in Europe and not elsewhere. European funding schemes are open to projects, the minister noted. 

Mr. Kamp then informed that the a Presidency conference will be organised on industrial processes in Amsterdam, and the Slovak Presidency will hold one on reindustrialisation in Bratislava. We are in the middle of the 4th industrial resolution, he claimed. From the previous ones, industry emerged more competitive and more in line with what consumers want, and the speaker claimed to be sure that this time is no exception.

We are taking steps on several fronts, he argued, pointing out that steel is on the agenda for the February 29th Competitiveness Council meeting, while anti-dumping will be discussed in the Foreign Affairs Council, so we are gaining ground.

Elżbieta Bieńkowska, Commissioner for the Internal Market, Industry, Entrepreneurship and SMEs delivered the concluding remarks of the conference, stressing that the Commission hears the concerns and difficulties. She spoke about the challenges faced by EIIs in terms of climate change, innovation and skills, as well as the roles policy-makers and industry can play in tackling these. Her complete speech can be accessed here . When talking about the review of China’s Market Economy Status, the Commissioner diverted from her script and commented that she personally had a lot of concerns and doubts about China being a market economy, and stressed that she is committed to protection against unfair trade. 

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About the author

Mate is a consultant at Dods EU Monitoring

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