It’s official! The European Commission will impose countervailing duties on Chinese steel goods after thirteen months of in-depth investigation. These duties can reach up to 35.9% for hot-rolled flat steel, which is used for assembling ships, tubes, energy pipelines and gas containers. Brussels had concluded last year that Chinese practices were unfair to European competitors and had already imposed provisory anti-dumping measures. Now they are going to be definitive, applicable for five years. They entered into force on June 10.
Cecilia Malmström, EU Trade Commissioner, stated that:
We are continuing to act, when necessary, against unfair trading conditions in the steel sector, and against foreign dumping. With today’s decision, we take another instrument from our trade defense toolbox, to shield our industry from damaging effects of unfair foreign subsidies. I hope our decision and the discussions in the Global Forum dedicated to the problem of steel overcapacity will eventually convince China to remove its unfair schemes to ensure a level playing field for all steel producers.
The measure aims to halt cheap steel goods that flooded the continent due to Chinese overproduction combined with low rate credit from Asian banks. It should be noted that China is currently the largest producer and consumer of steel. China should not be perceived as some sort of escape goat. The EU has also launched investigations into hot-rolled steel imports from Brazil, Iran, Russia, Serbia, and Ukraine.
These actions must satisfy members of Eurofer, the European Steel Association, such as ArcelorMittal, Tata Steel, and ThyssenKrupp. This organization was responsible for presenting the complaint to regional authorities that led to the investigation in March 2016.
The most affected Chinese companies are Benxi Group, Hesteel Group, Jiangsu Shagang and Shougang Group. These enterprises represent 68% of the total imports of steel goods to the EU.
The imbroglio might jeopardize the unity between the EU and China right after the American announcement to leave the Paris agreement. China’s Commerce Ministry disagreed with the decision, mentioning that Chinese steel exports to the EU actually decreased last year. The Asian country might implement new measures to protect the economic interests of the companies aforementioned.