Steel Crisis Interview: CoR rapporteur calls for EU to break deadlock over external trade law reforms

Written by Isolde Ries on 11 May 2016 in Opinion
Opinion

The EU should make bolder use of its trade defence instruments to mitigate the dangers affecting the European steel industry, argues Isolde Ries.

While it remains in the EU, it has been argued that the UK government can do little to tackle the dumping of cheap steel or unfair state aid rules that hurt British steel. Do you agree and, if so, do you think that this reinforces the argument for Brexit?

Firstly, I think it is important to point out that the EU steel sector has played and continues to play a central role in European integration. With 330,000 workers and 500 production sites across 23 member states, it is one of the cornerstones of prosperity, value creation, employment and innovation in Europe.

Local and regional development will inevitably be directly and indirectly affected by future developments in the steel industry. It is therefore extremely important for us to ensure that political, legal and economic strains in this sector do not lead to severe consequences on the ground. For a number of regions in Europe, a competitive and sustainable steel industry is an essential precondition for economic recovery, re-industrialisation and growth.

However, The European steel industry has been experiencing great difficulties. The UK has been hit hard by this, but almost all the other member states have also been affected to some extent. Imported steel is flooding into European markets. Global overcapacity, low prices, emissions trading reform and the dumping by steel producers from outside the EU represent enormous challenges for Europe as a steel-producing region. The EU institutions and member states must work together to overcome these difficulties.


RELATED CONTENT


In the context of external trade law, the European Commission's anti-dumping and anti-subsidy measures must be implemented swiftly and effectively. The assessment and decision-making phases need to be substantially shortened and there is also a considerable need for discussion on anti-dumping duty rates. If the EU were to tighten up its trade defence instruments, this would have a positive impact on the UK steel industry.

I do not believe that the UK would be able to negotiate better foreign trade terms on its own than it would with the help of its EU partners. The fundamental question that the current British government must answer is whether it prefers cheap imports or steel which is produced locally and in an industrially and ecologically more sustainable way.

As a staunch pro-European, I would personally be very saddened if the UK were to leave the EU. I do believe, however, that there is little point in linking this politically vital issue to the specific action needed in the steel sector.

 

The UK can take some short term measures to support the steel industry until the immediate crisis is over. Will the EU allow the UK flexibility in the measures they are allowed to use, and do they risk sanctions on a similar scale to those experienced by Belgium (Duferco) and Italy (Ilva)?

EU state aid rules make it possible for member states to grant state aid to fund measures to enhance global competitiveness – i.e. areas such as research and development and training and further education – and energy-intensive companies. However, it cannot be used to rescue or restructure steel manufacturers. The UK, too, will ultimately have to navigate these legal and practical tensions as it tackles painful adjustments in its steel sector. The Commission must in turn make bold use of its trade defence instruments in order to prevent, or at least mitigate, dangerous developments in the European steel industry. To achieve this, however, it needs the support of the member states.

 

Does the recent announcement by Beijing of tariffs of up to 46 per cent on steel imported from the EU to China affect the EU's attitude towards China's WTO market economy status accession?

In early April, the Chinese Ministry of Commerce in Beijing placed punitive tariffs of up to 46.3 per cent on electrical steel from the EU, South Korea and Japan. China has hitherto imported relatively small quantities of electrical steel, for use in generators and transformers in its energy industry, for example.

The EU will have to decide by late 2016 whether or not to grant China market economy status at the end of 2016. China's demand for the status is based on the expiration of a clause in its 2001 WTO accession protocol.

It is a matter of legal dispute whether this expiration has binding consequences. If China were to be granted market economy status, EU anti-dumping measures would certainly become substantially more complicated due to the different calculation methods. The recognition of China as a market economy should therefore be contingent upon the fulfilment of the technical criteria defined by the EU itself.

Furthermore, the Commission should involve all participants in its decision-making process from an early stage and seek to reach an agreement with other major industrial WTO Member States.

 

Does the EU have sufficient trade defence instruments to ensure protection against Chinese dumping? If so, what do you propose? Additionally, is there a need for more common European resolve in this matter?

In mid-March, the Commission presented the communication "Steel: Preserving sustainable jobs and growth in Europe", which I consider to make a constructive contribution and wholeheartedly support. The suggested removal of the "lesser-duty rule", at least in certain circumstances, is long overdue, since to date it has led in practice to much lower punitive tariffs than in other WTO member states.

The remarks in the Commission's communication on fundamentally modernising EU trade defence instruments are illuminating. As early as 2013, the Commission submitted proposals that included restricting the application of the "lesser-duty rule". The proposals were adopted at first reading by the European Parliament, but were blocked by several member states.

The Brussels-based steel sector association Eurofer is currently urging member states to come to an agreement on debating and adopting the external trade law reform package in the near future. In my opinion, it is high time that member states took steps to pave the way for implementation.

 

Should the Commission be ready to register imports of steel products which threaten domestic steel production and, where dumping is found to be occurring, should it impose retrospective duties?

The Commission communication that I mentioned also includes plans to introduce a prior surveillance system in the steel sector based on automatic import licences. According to the Commission's proposals, this early warning system should provide a timely indication if imports are beginning to have a negative economic impact on EU steel producers.

Even the best warning system is useless, however, if there are no tools in place to remedy the issue. We must therefore focus on the practical interplay between the early warning system and more effective/faster anti-dumping and anti-subsidy measures.

About the author

Isolde Ries (PES/Germany), is the Committee of the Regions' rapporteur on the opinion on Steel: Preserving sustainable jobs and growth in Europe and First Vice-President of the Saarland Regional Parliament

Interested in this content?

Sign up to our free daily email bulletins.

 

Share this page

Tags

Categories

Related Partner Content

PM+: Delaying China market economy status vital for EU's competitiveness
5 November 2015

If Europe wants to avoid becoming China's dumping ground, then it must postpone granting China market economy status, argue Milan Nitzschke and Laurent Ruessmann.

EU needs connectivity to reach SDGs
23 October 2017

Europe needs connectivity if it is to reach its sustainable development goals, writes Charles Ding.

How to employ energy-efficient urban regeneration? A FosterREG response
3 May 2017

Urban regeneration is not an easy task, but when sustainable energy is involved, it becomes more complicated. FosterREG shows how to overcome difficulties, says Paweł Nowakowski.