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The EU is planning to announce anti-subsidy investigations against Chinese steelmakers at a summit with the US this month as they further develop a common front against Beijing.
Brussels had agreed to join Washington’s efforts to shield industries from cheap competition, two officials with knowledge of the move told the Financial Times. Washington had asked Brussels to move against Chinese steel producers in return for avoiding the reimposition of tariffs on EU steel imposed by president Donald Trump in 2018, the officials said.
The EU had taken retaliatory action with levies on US products such as bourbon whiskey and Harley-Davidson motorbikes but both sides suspended measures in 2021 as they collaborated on a sustainable steel initiative designed to limit Chinese imports.
The EU officials said they understood the need for president Joe Biden to protect steelworker jobs in swing states such as Pennsylvania and Ohio to prevent Trump winning an election rematch next year.
The EU move would be the second case against China in as many months, after it announced a probe into Chinese-made electric vehicles. Brussels is also considering an inquiry into the wind turbine sector. These investigations, which are expected to last up to a year, could lead to the imposition of tariffs.
At their October 20 meeting, the two sides are expected to announce a Global Arrangement on Sustainable Steel and Aluminium (GSA) curbing exports of Chinese metal which have been flooding the world market and putting pressure on their own producers, officials said. It will be open to other countries such as the UK and Japan if they agree to also implement tariffs on China.
The EU and US will also sign a political agreement to keep their own dispute on ice while they continue talks on a second part of the GSA, the decarbonisation of steel and aluminium making.
Over the past two years of talks, the EU has refused to copy the US decision to use national security grounds to slap tariffs of 25 per cent on steel and 10 per cent on aluminium after the World Trade Organization ruled the move breached international law.
But Brussels has agreed to levy WTO-compatible duties if its investigation proves that China’s subsidies are unfair. The US and the EU paused their dispute two years ago pending a resolution.
Figures from the OECD, the Paris-based international organisation, show global steelmaking capacity reached record levels in 2022. Excess capacity is at record highs too, with just 75 per cent utilised.
China has accounted for a quarter of the capacity increase, and it is also opening plants elsewhere in Asia.
Brussels already has imposed antidumping duties on about 10 categories of Chinese steel imports, covering around half the products in the Section 232 measures. It also put quotas in place for many steel products after the US action.
The EU steel industry said they were ineffective.
Axel Eggert, director-general of Eurofer, which represents the sector, said: “Traditional trade defence instruments are not able to tackle this. We have used them for 50 years and it hasn’t worked. Global excess capacity is fuelled by governments. We need a new tool.”
The European Commission declined to comment.
Separately, Brussels is introducing a carbon border adjustment mechanism, which will tax imports including steel according to how much carbon they emit. The US has no national carbon pricing system and wants to create a bespoke system for calculating emissions.
The CBAM entered into force this week but it will not start charging importers until 2026.
Source: Economy - ft.com
