The EU’s top trade official has called on Beijing to cut overcapacity in its steel industry, promising new measures to support European mills threatened by a flood of Chinese imports. Cecilia Malmström, trade commissioner, told her Chinese opposite number she would open three new antidumping investigations into steel products originating from China. Her letter to Gao Hucheng, Beijing’s commerce minister, comes at a time of deepening crisis for the European steel industry, which has lost more than a quarter of its workforce since 2009. Last month Tata Steel, the biggest steelmaker in Britain, announced that it was cutting more than 1,000 jobs. EU pushes China to cut back steel sector added that more probes were likely because the commission was swamped by EU producers’ complaints about allegedly unfair Chinese practices.
“In the wake of a worrying trend, I urge you to take all appropriate measures to curb steel overcapacity and other causes aggravating the situation,” she said in the letter, seen by the Financial Times. Ms Malmström’s tone is likely to alarm Beijing, because it covets recognition as a market economy within the World Trade Organisation at the end of this year The European Commission has delayed its own proposal to grant China such recognition until the summer in the wake of intense opposition from some EU manufacturers. The commission is now carrying out an impact assessment of the move.
A marketeconomy designation by the EU would be likely to win political favour in Beijing and smooth the way for investments in both jurisdictions. But it would also make it far harder for countries to retaliate against alleged Chinese dumping with countervailing tariffs. Ms Malmström’s letter noted that Chinese exports of steel surged more than 50 per cent last year. She added that price drops of 50 per cent for certain products went “way beyond” the decrease in raw material and energy prices.
Source: FT