Mainland Chinese Steel Trade Continuously Blamed for Unfairly Damaging EU Industry
19 February 2016
The European steel industry is said to be in deep crisis. It was reported on 25 January 2016 that several thousand jobs were lost in the steel sector during 2015, in combination with large reported losses incurred by European steel producers and the frequent imposition of cost-cutting measures. The EU appears to be pinning the blame on mainland China, accusing the country of subsidising its loss-making steel mills and subsequently damaging the European steel industry with a flood of cheap imports.
According to the EU, mainland China is exporting different kinds of steel products to the EU at prices below the cost of production. Amongst other losses apparently being suffered, mainland China’s alleged unfair dumping practices are said to contribute to the closure of steel plants in several countries.
The European steel industry is estimated to be employing 330,000 people and is at the foundation of much of the EU’s cutting edge innovation. Mainland China produces about half of the world’s 1.6 billion tonnes of steel, and a quarter of the EU’s steel consumption is estimated to originate in mainland China. Industry officials say that the volumes of steel imports from mainland China have doubled in the last 18 months, while the price of certain steel products has dropped by up to 50%.
In response to the alleged dumping practices, EU Trade Commissioner Cecilia Malmström called on Beijing as reported on 4 February 2016 to cut the overcapacity in its steel industry. According to Malmström, the European Commission is frequently confronted with complaints from Eurofer, the European steel association, and individual European producers about unfair Chinese practices, encouraging a tougher response from the EU against so-called dumping of Chinese exports. Malmström has threatened to open new anti-dumping investigations into steel products originating in mainland China, and the evidence shows that this threat has indeed already been put into practice.
Of the 15 EU anti-dumping measures currently in force on a range of steel products, only 3 are not targeted against mainland China. Definitive anti-dumping measures are being imposed on 10 types of steel products originating in mainland China, including steel fasteners, stainless steel seamless pipes and tubes, steel wire ropes and organic coated steel products.
In addition to the 10 definitive anti-dumping measures currently in force, the EU has imposed 2 provisional anti-dumping measures on steel products originating in mainland China. Recently, on 12 February 2016, the Commission published its decision to impose provisional anti-dumping duties of up to 16% on cold-rolled flat steel originating in mainland China. Definitive measures will be announced by 12 August 2016. Moreover, on 29 January 2016, the EU imposed provisional anti-dumping duties of 9.2 to 13% on Chinese imports of high fatigue performance steel concrete reinforcement bars (“rebar”).
Celsa, the sole domestic producer of rebar in the UK, has welcomed the recognition of dumping, but reported that the provisional duties on Chinese imports are significantly below what was expected for (according to it) such a flagrant disregard of fair trading practices. On 29 January 2016, Celsa labelled the imposition of preliminary anti-dumping duties as inadequate, accusing the Commission of “nervousness” when arriving at its decision. The investigation is still ongoing and interested parties have until 23 February 2016 to submit comments on the provisional measures. The imposition of definitive measures, if there are to be any, will have to be published by 29 July 2016.
Moreover, the EU’s battle against Chinese steel imports is far from over. Besides the 12 existing (provisional and definitive) anti-dumping measures, there are other ongoing investigations against Chinese steel products in which measures have not yet been imposed and rumours of upcoming investigations against other Chinese steel products.
With regard to the ongoing investigations, the Commission initiated an anti-dumping proceeding concerning imports of certain stainless steel tube and pipe butt-welding fittings originating in mainland China and Taiwan on 29 October 2015. Potential provisional measures are to be imposed by 29 July 2016. More recently, on 13 February 2016, the Commission published three new anti-dumping investigations against certain seamless pipes and tubes of iron or steel of an external diameter exceeding 406.4 mm; heavy plates of non-alloy or other alloy steel; and hot-rolled flat products of iron, non-alloy or other alloy steel originating in mainland China. These investigations were requested by Eurofer. In addition, rumours are circulating about the Commission’s plans for new anti-dumping proceedings regarding Chinese tubes and pipes without iron or steel welding this month.
Mainland China is, however, reported to be fighting back. It has disagreed with the EU over the European steel crisis, claiming that blaming it for alleged unfair dumping practices is simply wrong. Rather, mainland China contends that the surge in Chinese-origin steel exports and decline in Chinese prices reflect a rise in demand and the strong competitiveness of its industry. In response to the Commission’s anti-dumping duties and investigations, the Chinese government has invited the EU to take its claims of alleged steel dumping to the WTO, stating that it is willing to discuss these matters “in good faith” with WTO Members, “to create a fair, just and predictable international market environment”.
Additionally, Chinese companies are offering resistance by appealing EU regulations on the imposition of anti-dumping duties. On 20 November 2015, the Chinese producer Shanxi Taigang Stainless Steel appealed the imposition of definitive anti-dumping duties on imports of stainless steel cold-rolled flat products originating in mainland China and Taiwan. This appeal was published in the EU’s Official Journal on 1 February 2016. Shanxi Taigang relies on several pleas in law, predominantly claiming that the Commission infringed the Basic Anti-Dumping Regulation by selecting the United States as the appropriate analogue country and by failing to make required adjustments to normal value.
Simultaneous with the recent EU anti-dumping duties and investigations concerning Chinese-origin steel products, mainland China is pushing for “market economy status” recognition at the WTO from December 2016 onwards. Critics argue that treating mainland China as a market economy would reduce the EU’s ability to impose anti-dumping duties on subsidised Chinese goods, leading to a further deterioration of the European industry. Those in favour of granting mainland China market economy status say that doing so would give European companies easier access to the country’s vast market and would cause Europeans to benefit from cheaper Chinese imports. The EU is still in a monumental debate over this, but has promised to protect its industry, even if the new trade status were to be granted.
- Raw Materials
- Mainland China