Steel crisis requires multilateral answers

Written by Reinhard Bütikofer on 7 June 2018 in Opinion
Opinion

It’s important to deal with the problem of overcapacity in the steel industry, but protectionism is not the way forward, says Reinhard Bütikofer.

Reinhard Bütikofer | Photo credit: European Parliament audiovisual


Steel has been a cornerstone of European industry since the beginning of the industrial age. The steel industry was involved in the first efforts to create the modern Europe of integration through the European Coal and Steel Community. Yet steel is not only part of our heritage; it will also play a role in Europe’s industrial future.

While Europe is slowly but surely weaning itself off coal, steel may yet see another renaissance. However, there is one, small pre-condition: in order for Europe’s steel industry to survive and thrive, it needs to adapt to a changed global setting.

Identifying the direction of this adaptation, and the first steps, is not rocket science. The steel industry must analyse and understand its role in the budding ‘green’ transformation of industry, in particular the energy transformation and the circularity of industry; it must develop pertinent markets and it must invest more in promising technologies that make steel production fossil-free or at least continue reducing carbon dioxide emissions.


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Here is an exciting example: The Swedish project consortium HYBRIT (short for hydrogen breakthrough ironmaking technology, supported by SSAB, LKAB and Vattenfall) offers an interesting option for reducing emissions in the iron-making process. The challenge here is the use of blast furnaces which for a long time have been fed by fossil fuels. 

The new approach uses hydrogen (that can be produced from clean electricity) as alternative production element. The by-product of this new steel production would be H2O rather than CO2.

The European Parliament has placed a lot of trust in the European steel sector and helped it fend off some external challenges. We firmly supported the anti-dumping battle against unfair Chinese competition. We were, and still are, convinced that international trade needs to be free, fair and play by the same predictable and jointly-agreed rules. 

While the EU does use multilateral rules to support its industry when confronted with proven unfair trade practices, it is harder to stand up successfully, where global trading rules are suddenly unilaterally suspended. 

In the ongoing trade conflict with US President Donald Trump, a common approach by the European institutions is an absolute imperative on the way forward. If we fall back on attempting to negotiate national package deals with the US, we weaken not only the international order and our European solidarity but also our chances of being successful.

The US government is not wrong in its position that there is a need to address the global problem of overcapacity. However, the way Trump goes about it - by following a nationalist ‘Make America great again’ logic of protecting national production at all costs and by calling steel imports a “threat to national security” - is detrimental to all, is dangerous and is self-defeating. 

We need multilateral answers. These should also allow to establish, once and for all, global production standards that take into account social and environmental conditions in all production sites worldwide.

Steel made in Europe has the capacity to remain an innovative high-quality product that paves the way for a new, state-of-the-art, sustainable production process which global competitors will happily buy into. Protectionist fights to substitute the innovation paradigm by efforts to develop state guarantees for eco-dumping or social dumping would only lead to a dead end. 

To paraphrase Bill Clinton: It’s the high road, stupid, that we have to take, the innovation road.

 

About the author

Reinhard Bütikofer (Greens/EFA, DE) is a member of Parliament’s industry, research and energy committee

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