Opinion Factsheet  

Challenges for the EU's steel sector from the perspective of local and regional authorities

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Opinion Number: CDR 1726/2016
Rapporteur: RIES Isolde
Commission: ECON
Status: Adopted
Date: 15/06/2016
 
To highlight that global overcapacity, periods of low prices, high energy prices, taxes and charges on energy, the upcoming reform of the EU emissions trading scheme, as well as competition-distorting dumping practices by steel producers outside the EU, place an enormous burden on Europe as a steel-producing region. The production of crude steel and worldwide market shares of the European steel sector are in decline, leading to adjustment processes that impact on businesses and employment.
To draw attention to the fact that a European strategy for the future of the steel industry needs to be sensible and constructive. In this regard, it is vital that local and regional authorities are included in voting or decision-making processes and that the respective local circumstances and specialisations of firms are taken into account.
To point out that the overcapacity in the Chinese steel industry is repeatedly giving rise to imports at dumping prices in the EU, which without effective EU trade countermeasures pose a direct and indirect threat to the existence of the entire European steel industry, and to many jobs.
To draw attention to fhe fact that the possible granting of market economy status to the People's Republic of China in December 2016 would make effective anti-dumping measures virtually impossible because the method of calculating dumping margins would then change;
Events

11 May 2016: The rapporteur published an article in The parliament magazine in which she calls for EU to break deadlock over external trade law reforms.
https://www.theparliamentmagazine.eu/articles/opinion/steel-crisis-interview-cor-rapporteur-calls-eu-break-deadlock-over-external-trade

21 June 2016: The rapporteur participated in the panel discussion of a conference on the future of the steel industry in Europe organised by the Brussels office of the Austrian Federal Chamber of Labour.
http://www.akeuropa.eu/de/is-there-a-future-for-the-steel-industry-in-europe-63.html?cmpid=35&newsid=2837

27 October 2016: The rapporteur signs a letter initiated by MEP Edouard Martin (S&D/France) and co-signed by some 35 Members of the European Parliament addressed to Commission President Juncker asking urges that the proposed new non-standard methodology should be firmly founded on the provisions of Section 15 of China’s WTO Accession Protocol which will remain in force after December 2016 and must thus not lead to a de facto granting of MES to China.
http://pes.cor.europa.eu/news/pages/China-market-economy-status.aspx

9 November 2016: The rapporteur participated in the "steel action day", organised by trade unions and works councils, in Brussels.
http://www.eesc.europa.eu/?i=portal.en.group-2-news.40773

The European Commission

In its proposal for a Regulation amending Regulation (EU) 2016/1036 on protection against dumped imports from countries not members of the European Union and Regulation (EU) 2016/1037 on protection against subsidised imports from countries not members of the European Union (COM(2016) 721 final), and the accompanying impact assessment the European Commission addresses a number of the issues raised in the CoR opinion. In general, the European Commission recognises both the need to use a non-standard methodology in anti-dumping and anti-subsidy investigations into Chinese imports and that steel is one of the sectors most at risk from dumped Chinese goods. However, the European Commission does not propose, as did the CoR, that the best way to deal with China's status with in the WTO is not to grant it Market Economy Status (MES). Instead the European Commission proposal introduces a new methodology that aims to be country-neutral. It will apply the same way to all WTO members and will take into account significant distortions in certain countries, due to state influence in the economy.

The European Commission also recognises other issues raised in the opinion such as that while the macro economic impact of trade defence instruments are small, they may be crucial both for certain sectors or regions and that this needs to be considered when designing trade defence instruments. Furthermore, the European Commission also recognises that increased imports from China could lead to increased carbon leakage as Chinese production in general creates more CO2 emissions than production within the EU. However, the European Commission does not go as far as to say that an emission trading scheme at global level is necessary to ensure the competitiveness of European businesses. Finally, as regards the CoR's demand to become a member of the European Commission's High-level group on energy-intensive industries the European Commission has agreed that the CoR will get the status of observer.

Finally, the opinion therefore urges the Commission, when studying the economic and social impact of market economy status for China, to await the opinions of the economic stakeholders affected and to seek close coordination with other key WTO members such as the United States before making its decision on market economy status;

THE EUROPEAN COMMITTEE OF THE REGIONS



- firmly stresses that the future development of the steel industry has a direct and indirect impact on local and regional development and that a competitive and sustainable steel industry is a prerequisite for economic recovery and growth in numerous regions across Europe;

- considers it essential to establish an emission trading scheme at global level to ensure the competitiveness of European businesses and avoid carbon leakage by preventing further increases of the allowances to be auctioned; underlines that the Commission's proposal for a directive to enhance cost-effective emission reductions and low-carbon investments needs to be substantially revised in the subsequent stages of the legislative process to guarantee the international competitiveness of the European steel industry;

- recognises the serious threats to the European steel industry posed by the lack of a level playing field, unfair foreign trading practices employed by firms and the unequal trade policies of non-EU countries;

- believes, therefore, that the EU's external trade policy, including its trade defence instruments, is an essential means of safeguarding the global competitiveness of Europe's steel industry;

- calls on the EU Institutions to authorise the Commission to use a non-standard methodology in anti-dumping and anti-subsidy investigations into Chinese imports under Section 15 of the China WTO Accession Protocol until China meets all five EU criteria required to quality as a market economy. Moreover points out with great concern that the possible granting of market economy status to the People's Republic of China in December 2016 would make effective anti-dumping measures virtually impossible because the method of calculating dumping margins would then change. Highlights at the same time that there is no requirement that WTO members automatically grant China MES in 2016.

Importance

High
Medium
Low
 

China's WTO status

On 11 December China will have been a member of the World Trade Organization (WTO) for 15 years and this means the expiry of some provisions in China’s Protocol of Accession to the WTO. According to China, it from this date to be considered as a “market economy,” which would mean that the EU will find it harder to impose its current duty levels on Chinese goods. The EU is therefore pressured to create a new arsenal of trade defences, as requested in the CoR opinion (see proposal foreseen for 9 November) .

 
11 Dec
 

European Commission proposal to amend the EU antidumping

European Commission presented a Communication on the reinforcement of the EU's Trade Defence Instrument, including the next steps to deal in a balanced way with the expiry of some provisions in China’s Protocol of
Accession to the World Trade Organisation
(WTO): Proposal to amend the EU antidumping
legislation

 
09 Nov
 

Letter to Juncker on trade defence instruments

The rapporteur has (together with MEPs, representatives of labour union as well as industry) sent a letter to the European Commission President Jean-Claude Juncker asking that the Commission include the following elements in its forthcoming legislative proposal on trade defence instruments:
-A clear link between the trigger of the new “non-standard” anti-dumping methodology and the EU’s market economy criteria: the use of Chinese prices and costs as a basis for calculating dumping should depend on China’s and Chinese producers’ complete fulfilment of the EU’s five criteria as established by EU law and practice

  • Non-reversal of the burden of proof: it should remain up to China and Chinese exporters to prove that they operate under normal market economy conditions
  • Non-discrimination between economic sectors: the new methodology should be actionable equally by all industrial sectors and EU producers affected by injurious dumping.

 
26 Oct
 

Commission Communication "Towards a robust trade policy for the EU in the interest of jobs and growth

In its Communication the European Commission announces its plans to propose a new method for calculating dumping on imports from countries where there are market distortions, or where the state has a pervasive influence on the economy (this concerns specifically, but not only, China).
The European Commission also announces that it will not grant 'market economy status' to any country but ensure that the EU's trade defence instruments are adapted to face the new challenges and legal and economic realities, while maintaining an equivalent level of protection.

 
19 Oct
 

Meeting with EP rapporteur Martin

The rapporteur met with Edouard Martin, the rapporteur for the EP resolution on a sustainable European industry of base metals.

 
14 Jun
 

Meeting with Commission Director Cozigou

The rapporteur met with Mr Gwenole Cozigou, director at DG GROW, reposible for EU steel policy.

 
14 Jun
 

Franco-German initiative for more effective trade defence initiatives in the steel sector.

At the foreign affairs council on 13 May 2016, France and Germany joined forces and put forward an initiative aimed at unblocking the council and allowing for more effective trade defence initiatives in the steel sector.

 
13 May
 

Article in FORUM weekly

Current situation in the steel sector

 
29 Apr
 

Saarbrücker Zeitung

Newspaper article in Saarbrücker Zeitung

 
12 Apr