EU plans to protect steel industry could spark trade war

14-Dec-2015 @ 8:0

Ashley Fox Ashley Fox

Emma McClarkin Emma McClarkin

Amjad Bashir Amjad Bashir

New proposals to protect the European steel industry from imports are possibly illegal, would almost certainly not work and risk provoking a trade war with China.

Unless last minute changes are made, Conservative MEPs will on Wednesday vote against a report to the European Parliament proposing to introduce a complex system of border measures on imported steel, aluminium and other base metals based on the amount of carbon emitted during their production.

This is intended to push up the cost of imports from countries such as China, which have flooded the European market and contributed to the closure of steel plants in several countries, including the UK, where redundancies have recently been announced in Redcar, Scunthorpe and Motherwell.

But Conservatives argue that the measures would be impossible to implement, may be illegal under World Trade Organisation rules and are likely to prompt strong retaliation from China, potentially hitting UK businesses and exports across a range of sectors.

Instead they are urging the European Commission to explore the use of existing anti-dumping measures and follow the United States in establishing a steel dialogue with China.

"We are extremely concerned at the current situation in the steel industry and there is much in this report that we welcome, such as its focus on the impact of high energy prices on competitiveness, the supply of raw materials and the negative impacts of unfair international trade," said the Conservatives' Industry spokesman Ashley Fox.

"However, we need urgent action not irresponsible, unrealistic and ideological proposals like this carbon mechanism plan that have zero chance of becoming law and which would not even help the industry. No-one else in the world is pursuing this approach and the steel industry itself does not support it, recognising the negative effect it could have on trade.

"The US has begun steps to protect its steel industry through anti-dumping measures and that is what the EU should do if China is proven to be breaking trade rules."

International Trade spokesman Emma McClarkin warned of the potential consequences of attempting to introduce an adjustable carbon tariff at Europe's borders.

She said: "This is not the right way to protect the UK's steel industry. It may breach WTO rules and provoke all manner of protectionist retaliation from China, having serious consequences for other jobs elsewhere in the UK.

"The European Commission should be closely monitoring anti-dumping duties that have already been placed on China with a view that these could be increased should China be proven to be dumping. At the same time it ought to make direct contact with the Chinese government over this issue so that the situation may be resolved amicably.

"We expect China to play by the rules and Europe must practice what it preaches, ensuring that it uses the proper channels to combat China's unfair trading practices."

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