Diplomats at the European Commission have been accused of caving in to Chinese demands to water down their estimates of Chinese steel overproduction, leaving the door open for the Chinese to flood world markets with cheap steel. It comes just months after thousands of jobs in the British steel industry were lost, thanks in large part to undercutting by cheap Chinese imports.
A series of draft proposals on protection measures for the European steel industry show that estimates for Chinese overproduction – a key factor in proving that firms are unfairly “dumping” their product abroad – have been watered down by some 20 per cent.
Speaking on the condition of anonymity, an EU official has revealed that the downwards revisions, from 400 million tonnes to 350 million and then to 325 million, were the result of pressure from Beijing, leading to accusations that Brussels has sold the European steel industry “down the river.”
“The figures were revised after China challenged our data,” the official told Euractiv following negotiations in Beijing last week.
China produces nearly half of the world’s 1.6 billion tonnes of steel per annum, and is expected to export a record 100 million tonnes of steel this year. At the same time, global steel prices are at the lowest for a decade, thanks to poor growth in demand and oversupply.
The crisis came to a head in Britain last autumn, when Caparo Industries announced the closure of its plant in Redcar with the loss of 2,200 jobs with a further 1,700 jobs at risk, followed a month later by Tata Steel announcing 1,170 redundancies at its Scunthorpe and Lanarkshire plants.
According to the Trades Union Congress, that meant that one in six of all British steelworkers was facing redundancy at the end of last year.
British workers at the time reported on the poor quality of the Chinese steel, which they say is often made by melting down ball-bearings and other scrap metal leaving the product weak and liable to snap or degrade.
High energy costs imposed by both the European Commission and Westminster thanks to their obsession with climate change were also blamed.
European governments, meanwhile, accused China of selling steel off at less than cost price. Ministers representing seven member states – Germany, Italy, the United Kingdom, France, Poland, Belgium and Luxembourg – wrote to the Commission in February this year to demand that it does more to protect the European steel industry against unfair practices and “recognise the importance of free but fair trade to the European economy, to producers and to consumers.”
“We should not wait until the damage from unfair practices becomes irreversible for our industry,” the ministers wrote.
“The European Union cannot remain passive when rising job losses and steelwork closures show that there is a significant and impending risk of collapse in the European steel sector.”
The Commission has planned a package of measures designed to counter the doubling of Chinese imports in three years, including higher anti-dumping duties than those already in place, a “prior surveillance system on steel products,” a faster system of tariffs on cheap imports and a protection mechanism which would trigger if imports rise sharply.
But campaigners say the watering down of overproduction figures at China’s request belies the true level of interest in Brussels at protecting Britain’s steelworks.
“Steelworkers in the UK were promised real, serious action against export dumping to save their jobs and preserve a strategic industry, but they’ve been sold down the river by anonymous Eurocrats who think their cosy relationship with Communist Party apparatchiks in Beijing is more important,” said Leave.EU spokesman Jack Montgomery.
“It’s clear that if we want to save our steel industry we need to leave the EU and take back powers to conduct our own trade policy and make our own decisions about providing state aid from Brussels.”
A European Commission spokeswoman declined to comment specifically on the drafts but said: “As matter of principle … this kind of data is not subject to any kind of negotiation. We do not check, consult or discuss our internal documents with any third parties. Instead they are based on publicly available figures.”