Senior MEPs write to Commission urging action on steel industry

31-Oct-2015 @ 8:0

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Commissioner Cecilia Malmstrom
Directorate General for Trade

Commissioner Elzbieta Bienkowska
Directorate General for the Internal Market, Industry, Entrepreneurship and SMEs

                                                                                                                                                                                                          Brussels, 30th October 2015
Dear Commissioners,       


The European steel industry has been facing unprecedented pressures since the financial crash of 2008, with around 25% less consumption of steel in Europe despite modest increases during last year. The slowing demand in Europe has been exacerbated by wider global challenges which are now putting the industry in a perilous position.

You will be aware that job losses within the UK steel industry have been at the forefront of political debate in recent weeks, as thousands of highly skilled workers have faced redundancy across the country, namely at the Redcar steel plant on Teesside and the TATA steel works in Motherwell and Scunthorpe. Steel making is a proud British industry and in the late 1870s led world production, accounting for a 40& share of the market.

The pressures on the industry are founded upon a number of different factors, such as the strength of the British currency and the high cost of energy, while we cannot ignore the fact that the British steel industry is facing unfair international market competition, as exports from China flood the world market at lower prices, often being sold overseas at a loss. This is of course a result of the slowing economic performance of the Chinese economy, where the demand for steel has declined too, leading to a 28% increase in the export of Chinese steel in the first six months of the year, despite production falling by 2% during the same time. Selling at a loss allows Chinese plants to stay open while cutting down stock in their own warehouses.

This overcapacity in an environment of reduced demand is dramatically destabilising the global steel market and the flow of trade, risking European steel manufacturing as a whole which accounts for 330,000 jobs. It is for this reason that we write to you in order that we can safeguard these exceptional skills which are at risk of being lost forever.

While the European Union has a broadly beneficial and dumping-free relationship with China, we must ensure that distortions in this relationship are addressed to maintain a level playing field.

We write to seek assurances that the Commission will take immediate action to shore up support for the European steel industry in the face of Chinese steel dumping. In particular, what actions are the Commission taking to closely monitor anti-dumping duties that have already been placed on China with a view to reviewing them? Has the Commission had direct contact with the Chinese government over this issue so that the situation can be resolved amicably? How does this play into the wider debate on Market Economy Status for China, and could the current steel situation potentially impact upon this?

At the same time, a cap on the compensation governments can provide for the indirect costs of the EU's Emissions Trading Scheme (ETS) - passed through in prices by electricity generators - means steel plants are also paying for 20% of ETS costs associated with electricity they buy. Can the Commission look urgently into means of allowing much faster state aid clearance for energy intensive industries to help offset the additional pressures?

Does the Commission feel that the existing state aid framework is robust enough to cope with the current issues facing the steel sector in the EU? Do member states require improved guidance on what intervention could be permitted?

Finally, the new carbon leakage list is only due to be released in 2018, and the new ETS phase IV entering into force  less than three years later. Do you agree that more time is needed for the steel sector to plan for increased costs under the new ETS regime and avoid any negative impact on Europe's competitiveness?

We would be grateful for your attention to this matter as soon as possible and would welcome the opportunity to discuss this matter with you further, potentially through a wider public debate, in order to address our concerns. We would be open to receiving some proposals for dates should there be potential for this.

Thank you for your urgent consideration.

Yours sincerely

Emma McClarkin MEP
Vicky Ford MEP
Ashley Fox MEP


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