Steel Industry Action: 11th February 2016

The Minister for Small Business, Industry and Enterprise (Anna Soubry)
Ahead of Monday’s high-level stakeholder conference on energy intensive industries, which follows on from November’s EU extraordinary Competitiveness Council on steel, I wanted to update Parliament on the UK’s contribution to EU-level action on steel.

The main area in which the EU can make meaningful change is with regard to unfair trade practices. Given the global scale of the challenge facing the steel industry, the Government, working with UK Steel and other stakeholders, have made every effort to ensure a speedy and effective EU-level response.

The Government have pressed hard for EU action to tackle unfair trade practices, wherever they has seen them. For example, the Government in July and November last year voted in favour of antidumping measures on wire rod and separately on steel pipes. It was also the UK last year that lobbied successfully in support of calls from industry, for an EU investigation into cheap imports of reinforcing steel bar (“rebar”).

It was the UK that called for and secured an emergency meeting of the EU Competitiveness Council in November which agreed on the need for swifter action on steel dumping. And, in recognition of the immediate risks posed to EU and UK industry by a surge in imports, the Commission this year has acted swiftly to announce registration of imports on both rebar and cold-rolled steel. To assist industry in bringing forward complaints, we have also intensified our discussions with the steel industry, including at the international comparisons working group chaired by me, to provide help with ongoing and forthcoming individual unfair trade cases.

On 5 February, the UK also sent a joint letter with France, Germany, Italy, Poland, Belgium, and Luxembourg to the European Commission to call for further support for the UK and EU steel industry. This letter has subsequently been endorsed by Spain and Slovakia. It called for:

making full and timely use of all trade defence instruments to tackle unfair trade;

ensuring that the upcoming negotiations on the European emissions trading system focus on preventing carbon leakage and the relocation of production and jobs outside the EU; and

exploring other ways to avoid the downturn of the European steel industry and guarantee its long-term and sustainable development.

The Government are strongly in favour of effective trade defences to tackle unfair trade practices. We have asked the Commission to improve the speed by which anti-dumping and anti-subsidy investigations are conducted, and we have written to DG Trade suggesting areas where investigation timeframes might be shortened. This would enable quicker action where the evidence points to unfair trade practices by international competitors.

The UK has long been a proponent of modernising the EU’s trade defence instruments—the rules covering protection for the EU against dumping and subsidised imports and other unfair trade practices—to make them more efficient, effective and transparent. But modernisation must also balance user and producer interests. Certain ​proposals brought forward by the Commission in 2012, including the proposal to abolish the lesser duty rule, did not strike this balance.

The lesser duty rule sets the import tariff in anti-dumping cases to the lower of either the level of dumping or the level of actual injury caused. This rule means that the EU imposes duties that are sufficient to protect EU industry from injury or, where the dumping level is lower, to eliminate the dumping. This ensures duties are proportionate to the harm caused, and effectively redress the injury to the producing industry, without inflicting disproportionate costs on importers and consumers.

That said, the Government strongly believe that the tariffs set in individual trade investigations must reflect an accurate estimate of the harm caused. In January the Commission announced provisional anti-dumping duties—ranging from 9.2% to 13%—on reinforcing steel bar (“rebar”). Though welcoming the duties, we shared the concerns of UK industry that these duties were lower than needed to protect them fully from the harm caused by unfair trade, and the Secretary of State raised his concerns with EU Trade Commissioner Malmström. We will continue to work with industry to press its case over the next six months while the Commission carries out its investigation, before confirming the final level of duties by July.

Many of the problems facing the UK and EU steel industries are global ones which, to be addressed, require engagement with the world’s steel producing nations, in particular China. On 29 January, the EU Trade Commissioner wrote to the Chinese Minister of Commerce to urge China to curb overcapacity in its steel industry. While welcoming current plans to cut steel production, EU Commissioner Malmström said that these would need to be translated into concrete action. The UK welcomes this dialogue between the Commissioner and the Chinese and is keen to see it continue. We will also continue to raise these issues bilaterally with the Chinese.

In order to ensure a level playing field across the EU, the Government have asked the Commission to be extremely vigilant and respond quickly wherever there are suspicions of wrong-doing. On 20 January the European Commission opened a formal investigation into Italian Government support for steel producer Ilva, Europe’s largest steel plant. That same day, the European Commission also ordered Belgium to recover €211 million from several steel companies within the Duferco groups, after finding that this distorted competition in breach of state aid rules.

Finally, the Government look forward to Monday’s EU high-level stakeholders’ conference on energy intensive industries. This builds on the outcomes of the November 2015 extraordinary Competitiveness Council meeting on steel. The conference will bring together stakeholders from the steel industry, other energy intensive industries, trade unions, representatives from member state Governments and the EU Commission. The UK has worked closely with stakeholders and the Commission to ensure that discussions will focus on addressing the serious issues facing the steel industry. The UK Government, represented by me, will be speaking alongside European Ministers. We will use this opportunity to maintain the pressure on the Commission to make progress in the areas covered in our joint letter of 5 February.