Time for action on steel, not more summits

On Monday 9 November European Union trade and business ministers met in Brussels to discuss a common European response to the crisis hitting the steel sector. This ‘steel summit’ took place exactly four weeks after it was announced that steel production in Redcar would end, leaving 2,200 jobless across Teesside.

European steelworks have been under growing pressure in recent years as imports of cheap steel from China skyrocketed. Massive state subsidies have led the country to produce far more steel than it needs. In fact, China now produces more steel than all other countries in the world put together. As a result prices have dropped dramatically and Chinese steel is now sold below production price in the EU, a practice known as dumping that is prohibited under international and EU trade rules.

After spending months blaming the EU for all the ills of UK steel, the UK government was finally compelled to shelve its EU referendum agenda for a moment and seek the support of its European counterparts. What it got was a clear rebuttal of its main excuse for inaction. In calling for making the best use of EU state aid rules to address the crisis, EU trade and business ministers confirmed what Labour has been arguing all along: the UK government is perfectly able to step in and invest to save steelworks on the brink of collapse without contravening EU rules.

But when it comes to the EU’s direct responsibilities the meeting was unfortunately far less fruitful, as the only concrete decision taken at the steel summit was to convene a second ‘steel summit’. Holding meetings after meetings without taking concrete action will not be of much use for the steelworkers whose jobs are on the line. The EU must act now to beef up its protection against unfair competition.

The ministers hinted at deploying in full the EU’s existing trade defence instruments. Some steel products are currently protected, with the commission levying large anti-dumping duties on goods coming from China. But the commission’s approach has been piecemeal, targeting only specific products such as ‘cold-rolled flat products’ or ‘welded tubes and pipes’, and not always very timely with anti-dumping investigations typically taking months or even years before duties are actually imposed.

Overall, there is an urgent need to reform the EU’s trade defence instruments. Such a reform was adopted by the European parliament in 2014 but it needs the EU ministers’ approval to be implemented. The reform would raise anti-dumping tariffs, give trade unions the right to initiate dumping investigations and introduce protection against social and environmental dumping. It has been blocked by EU ministers for 18 months.

Empty gesturing has already cost the UK thousands of jobs, and Monday’s meeting was sadly another missed opportunity to stop gesturing and start acting to resolve the crisis. The UK government has the ability to do to so, whether in providing much needed aid to ailing businesses or in legislating together with the other EU countries to build new protections against unfair competition.

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Jude Kirton-Darling is a member of the European parliament for north-east England. She tweets @Jude_KD

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Comments: 8...

  1. On November 11, 2015 at 3:04 pm AB responded with... #

    The State Aid rules are very clear. No rescue or restructuring aid can be given to steel manufacturers. The position has been the same throughout our membership of the EU. Aid can be given to retrain and support redundant workers and to guarantee their redundancy payments and back pay- this has already been announced by the government. Had it been possible to have done anything to rescue SSI it would equally have been possible for the last Labour government to have rescued the Redcar works when Tata Steel mothballed it in 2008. The only funding which was possible then was to support continuing use of the lab and testing facilities there for R&D purposes and even that had to be carefully negotiated and structured (I advised the public funders on that at the time- believe me, we’d have loved to have done more).

    https://botzarelli.wordpress.com/2015/10/20/steel-yourself/

    It doesn’t help anyone to hold out the prospect of aid being given to rescue SSI or any other steel works which are insolvent because it can’t be done. Even where aid is given ostensibly for other purposes, such as the Italian renationalisation of Ilva to enable it to remedy breaches in environmental law, it will be subject to investigation and the presumption is strongly against allowing aid. To have kept SSI capable of trading would have involved subsidising it so that it could sell at $300 a tonne when it needed prices of $500 a tonne to trade profitably. In context, the amount needed to keep all our now insolvent steel manufacturers going would be not far short of the amount which was intended to be saved by tax credit cuts.

    It would also help if the correct definition of dumping were used, particularly by MEPs. Dumping involves the selling of a product abroad at lower prices than charged domestically.

    • On November 11, 2015 at 5:09 pm Judith Kirton-Darling responded with... #

      Thanks for your comments. It is worth reading the Presidency conclusions from Monday evening’s ministerial on steel in which trade and industry ministers call for exactly what we have been saying that they should be allowed “To make best use of the possibilities given under the revised State Aid
      rules to support Energy Intensive Industries in R&D&I, training,
      environment, employment and ETS costs.” The Italian Ilva plant is only one example of how other governments have intervened. The French response to the threat to Florange has not been challenged nor has the Belgian NLMK-Sogepa. It is now too late for SSI at Redcar but the UK government can step up to support other sites using the built in flexibility in the rules. http://www.consilium.europa.eu/en/press/press-releases/2015/11/09-compet-presidency-conclusions/

      • On November 12, 2015 at 11:27 am AB responded with... #

        And thanks for coming back below the line to respond.

        But, R&D&I, training, environment, employment costs weren’t the reason for SSI going under (and UK schemes for aid under these heads already exist). There already is a UK scheme to compensate for ETS costs (up to 85% of the increase in cost) but I don’t know whether this was applied for by SSI or other steel manufacturers.Given the £1bn SSI invested in reopening Redcar I’d be inclined to believe that it did everything it possibly could to avoid shutting down and I’m not sure I’ve seen any complaint by SSI that it didn’t receive sufficient assistance from the government.

        Are there specific points on how that scheme can be made more generous which are consistent with the underlying legal framework? It looks to be offering aid up to the limit available in the Commission’s rules. Would having provided such aid have saved SSI in any case?

        https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/422602/BIS_15_284_Compensation_for_the_indirect_costs_of_EU_Emissions_Trading_System_and_the_Carbon_Price_Support_mechanism_from_2015.pdf

        Of course, if there are other steel works for whom these are significant issues, help with which would enable them to bear the drop in global steel prices and competition from imports these should be used. But I’m not sure that the Presidency conclusions on State Aid go beyond restating the rules as they are or show that in fact there was more that could have been done by the UK government within those rules.

        The French response to Arcelor Mittal’s plan to shut Florange was to threaten nationalisation. Arcelor Mittal then invested in order to avoid that. Obviously there was no aid involved. There might have been had France actually nationalised it. NLMK-Sogepa involves the state minority shareholder investing on the same terms as the private majority shareholder – again there is no aid where state investment is on the same terms that a private investor would consider to be commercially viable. These are quite different from the UK cases where it seems that the private investors could not justify keeping the facilities going so there could be no question of investing alongside them on a 50:50 basis and where nationalisation would presumptively involve subsidy because private operators were unable to justify continued operation on economic grounds.

  2. On November 12, 2015 at 3:29 am Oliver Healey responded with... #

    In rebuilding the industrial base of the country the steelworks need to be modernised through investment in personnel and machinery. The running down of productive sectors of the economy can not be permitted to continue in this country. The closure of Steelworks should be stopped if we cant prioritise our own workers and industries then how are we able to compete with low wage costs in the Far East. It is time that we stopped Foreign Governments swamping our country with their inferior and cheap products. We need to stop this economic internationalism and defend our own workers. If Import Taxes were imposed upon Foreign Imports the revenue raised could be used to modernise the industries being protected. We need to stand up to EU dictation and say we shall support our industries and end the rip off merchants charter of Free Trade. Free Trade was an essential element in providing adequate food supplies for the UK during the industrial revolution and beyond. But it should never be permitted in such things that we can produce here at home.
    I believe its time for economic nationalism I trust readers will agree….

  3. On November 13, 2015 at 6:39 am doranj responded with... #

    On Tuesday, I was at a public meeting in Stockton on the future for jobs and enterprise after the SSI closure. I raised the concept adopted by the United Steelworkers in North America. They have a partnership with Mondragon, the Spanish workers’ co-operative corporation. Together they have created “union co-ops” in which workplace democracy, collective bargaining, and shared prosperity are built into how the business works. Here’s my report: https://thedarlingtonsun.wordpress.com/2015/11/12/stockton-becomes-a-republik/

  4. On November 13, 2015 at 4:54 pm GeoffBeacon responded with... #

    The good news is steel closures will cut UK carbon emissions in time for Paris! See dontlooknow.org

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