Breathing life into the european steel sector

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Breathing life into the european steel sector

From global overcapacity to unfair trading practices to high energy costs, the European steel sector is facing some very serious problems. Indeed, although the sector represents 1.3% of EU GDP and is an important source of direct and indirect employment, its competitive position on the global steel market has been deteriorating in recent years. In an attempt to enable the industry to regain its former status, the European Commission had now put forward a package of measures to address these challenges with the support of both the Member States and the EU institutions.

Excess production is one of the main issues facing the EU – in spite of diminishing demand resulting from the 2014 economic slowdown in China and other emerging economies, spare production capacity has significantly increased, to the extent that overcapacity in China in 2015 was estimated at more than double the EU’s annual production. This excess production has led to an increase in exports and caused an unprecedented depression of steel prices across the globe; the market price of some steel products has decreased by an enormous 40%.

The Commission has already imposed a large number of measures to offset the detrimental effect of dumping, with 37 anti-dumping and anti-subsidy measures in place on steel products including 16 on steel imports from China. In addition to accelerating the adoption of anti-dumping measures, the Commission is now calling upon Member States to increase their support, in particular through the swift adoption of the 2013 proposal to modernise trade defence instruments. Moreover, the Commission will put forward a proposal for a prior surveillance system, a mechanism to be employed when import trends may threaten EU producers.

In parallel, the Commission is planning to – and in some cases has already begun – tackle the underlying causes of overcapacity at bilateral and multilateral level. It has already held meetings with Japan and China and is also planning to discuss the issue with the EU’s other main partners as well as at the OECD and the WTO. The Commission has now indicated that it will increase these international efforts.

Commenting on the publication, Commission Vice- President Jyrki Katainen, responsible for Jobs, Growth, Investment and Competitiveness, reiterated the importance of the measures being put forward:

“We must do more to help the steel sector and other energy-intensive industries adapt, innovate and compete on the basis of quality, cutting-edge technology, efficient production and a highly skilled workforce. We now have a record level of antidumping measures on steel products in place and the Commission is determined to restore a global level playing field. We will take steps to further streamline our procedures but Member States must also act together and urgently adopt our legislative proposal to modernise EU trade defence instruments and make fairer trade a reality.”

As mentioned by Katainen, innovation in areas such as energy efficiency or carbon capture and utilisation is a further important element in guaranteeing the long-term future competitiveness of energy-intensive industries such as the steel sector. In addition to demanding support from Member States, the Commission is therefore also encouraging industry to take advantage of the funding opportunities available, notably via the European Fund for Strategic Investments, the EU Structural and Investment Funds and Horizon 2020, for such development.

The Commission has repeatedly stated its belief that the challenges facing the EU steel sector can be overcome but has insisted on the need for cooperation from all those involved. In a sign of the importance it attaches to the matter, it has already indicated that it will put forward further measures if this proposal proves insufficient. It would appear that the Commission really is willing to go all out to protect this industry; it remains to be seen whether that will be enough.

Filippo Giuffrida Répaci

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