Is the UK calling for EU duties for Chinese steel?

Published: 22nd Jul 2016

In brief

Claim

The UK is lobbying to reduce EU duties on Chinese steel.

Conclusion

The UK has objected to raising duties on Chinese steel in the past, and is thought to be a supporter of China being granted ‘Market Economy Status’ which may result in lower duties in the future. At present it backs the duties currently imposed by the EU.

This article has been corrected.

Leanne Wood AM: "The United States imposes a 265% import tariff on Chinese steel to the United States and your government officials are lobbying the European Commission to reduce tariffs on Chinese steel.”

Stephen Crabb MP: "You got a round of applause there by saying something that is completely untrue. UK Government ministers have been there in Europe arguing for tariffs on imported Chinese rebar steel, that will help sell steel in Cardiff, tariffs on other steel products coming in. You are completely wrong."

BBC Question Time, 11 February 2016

Since Tata Steel announced its decision to sell its remaining steel plants in the UK, many have been quick to blame the decline of the British steel industry on China’s ‘dumping’ of cheap exports on the European market, and say the government has failed to act against it.

Britain has objected to the European Commission’s proposals to raise the duty imposed on Chinese steel imports. That’s been indicated by the Business Secretary and a Council memo, although we don’t know the precise position taken by the government at the European Council.

"European Commission"

The Commission proposes new laws, and is also the EU’s bureaucracy that implements the laws that have been enacted. Commissioners, who have normally been national politicians, are nominated by their government, but must advance the overall EU interest and not that of any one country.

The Commission currently imposes a number of ‘anti-dumping duties’ which vary depending on the product, and the government has supported the imposition of a “duty that is [set at the rate] required to correct the harm.”

What is dumping?

China is being accused of dumping its steel products on the EU, selling them for less than they are worth. That makes it harder for steel producers here to compete. Anti-dumping duties raise the price of imported steel to help protect local producers.

The EU is responsible for setting these duties on behalf of all member states, including the UK.

The EU has been investigating accusations that China is dumping steel in the European market since 2008, and has imposed an anti-dumping duty set by the “lesser duty rule”.

This rule means that duties can’t exceed the level needed to repair the harm done to European industry by the unfair dumping practices. In other words, the duties aren’t supposed to give an industry an advantage, only repair any damage done.

The rate is currently set at between 9% and 13% for rebar steel and 13% to 25% for cold-rolled steel which is what Ms Wood was referring to. The duties will vary for other types.

EU duties are lower than US equivalents

The duties currently imposed by the EU upon Chinese steel imports are lower than those set in some other countries.

Leanne Wood is correct to say that the United States imposed an anti-dumping duty of about 265% in March, although this applies specifically to cold-rolled steel from China. This rate was confirmed in May.

The US applied anti-dumping duties of between 6% and 31% to steel originating from British factories at the same time.

European Commission plans to raise duties haven’t been supported by Britain

In 2013, the European Commission submitted plans intended to discourage what it called certain “unfair trading practices”. These would allow the EU to impose higher import duties in cases where it believes a government is subsidising exports in a way that undermines a raw materials industry in Europe, such as steel.

Britain has been accused by both trade bodies and other European officials of blocking these reforms.

"European Council"

This is the place where EU heads of state or government meet at least four times each year, but more often if necessary. It plays a major role in setting the EU’s overall agenda and is the EU’s ultimate political authority. It was the European Council that decided to accept David Cameron’s renegotiation package.

We don’t know the precise position taken by British ministers in European Council discussions—these usually take place in private. We do know that the UK signed up to a memo sent to the committee tasked with overseeing the reforms, calling for the status quo to be maintained.

This would have kept in place limits on the tariffs the EU can impose through the lesser duty rule’.

Business Secretary Sajid Javid has also said the government doesn’t wish to see “disproportionate” duties introduced, arguing that this could have a negative impact on companies which use, rather than manufacture, steel in the UK.

British objections to the reform of anti-dumping measures are nothing new. The EU dropped a similar attempt to change European law on the matter in 2008, with then-EU Trade Commissioner Peter Mandelson stating that he didn’t want “to bring forward proposals prematurely that would exacerbate differences among member states”.

One analysis by the Swedish Board of Trade of votes at the Council showed that the Ministers from the previous Labour government voted strongly against the reforms, while other steel-producing nations such as France, Italy and Spain voted overwhelmingly in favour.

Britain is not (yet) calling for a reduction in anti-dumping duties

While the UK might have objected to proposals to reform the lesser duty rule, it can point to other efforts it has made to protect the UK steel industry from dumping.

In February Mr Javid was a signatory to a letter calling from the Commission to make “full and timely use of the full range of EU trade policy instruments to tackle unfair trade, including anti subsidy measures, to ensure a global level playing field.”

The Business Secretary also told Parliament that he believed that “the tools that are required are already there but they just seem to be slow when they are being used [by the Commission].”

He also called for the application of “the duty that is required to correct the harm that is being done to the domestic market”. Critics point out that the current lesser duty rule isn’t able to deliver on this promise. In one example the Commission’s estimated dumping rate is up to 66%, but the duties are only up to 13%.

While the UK government isn’t currently calling for lower duties to be imposed on Chinese imports, this doesn’t necessarily mean that Leanne Wood is wrong.

Britain is thought to be a supporter of China’s quest to be granted ‘Market Economy Status’ by the EU, a move which if it were successful, could result in a lowering of anti-dumping duties.

Correction (22 July 2016)

We originally said that the rates on Chinese steel ranged from 9% to 16%, depending on the type of steel. There are actually cases with larger rates than these. We’ve updated the piece to cover these cases and specify the types of steel being talked about.


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