By Viktoria Dendrinou
BRUSSELS--Representatives from Europe's struggling steel
industry will take to the streets of Brussels on Monday in an
attempt to stop the European Union from granting market-economy
status to China later this year, a move that would make it harder
for European companies to protect themselves from cheap Chinese
exports.
The protest by workers and employers follows a stark warning
from some of the EU's largest governments that the bloc's steel
sector faces a significant and impending risk of collapse. It is
also likely to fuel a debate over Europe's response to claims that
China is selling steel at below-market prices at a time when the
steel industry world-wide is reeling from overcapacity.
The dissent underscores the opposition the 28-country bloc could
face in formally designating China as a market economy, a move that
will fundamentally change its relationship with its second-largest
trading partner.
If the EU recognizes China as a market economy, it would make it
more difficult for Europe to impose tariffs on Chinese goods.
Beijing claims that a 2001 agreement allowing it to join the
World Trade Organization means it should receive market-economy
status by December 2016.
However, European industries say Beijing uses government
subsidies to boost exports and undercut overseas competition. They
say China's economy is still controlled by the state and
governments must take that into consideration when weighing up
whether or not to award it market status.
"If China were to be granted market economy status by the EU,
this would further undermine the effectiveness of the EU's
trade-defense instruments," Axel Eggert, Director General of
European steel association Eurofer, which is helping to organize
the march, said Friday.
Monday's protest comes as Europe's steel industry suffers from
overcapacity that has led to thousands of job losses in recent
months.
Steel imports from China, the world's largest steel producer, to
the EU have more than doubled over the past two years while the
bloc's demand languishes below levels seen before the 2008
financial crisis. EU steel prices have fallen roughly 40% over the
past two years.
"In Europe we have a massive import crisis that has been caused
by the Chinese. That's why the EU should be using its
trade-protection instruments against the dumped Chinese steel
imports in a way that has the quickest impact," said Hans Jürgen
Kerkhoff, the president of the German steel association. The
association expects some 1,500 German steelworkers to participate
in Monday's protest.
The organizers expect around 5,000 people from 17 countries to
attend Monday's march.
In a sign of growing concern about the steel sector, earlier
this month ministers from seven EU governments, including France,
Germany and the U.K., sent a letter to the European Commission, the
EU's executive arm, urging it to step up its action to protect the
region's industry from unfair trade.
"The European Commission is very aware of the situation of the
steel sector," said Lucia Caudet, the commission's spokeswoman for
industry, but added that industry's challenges go beyond trade
issues. "What we see is a complete change in the industrial
landscape, driven by digitization and the need for energy
efficiency."
Ms. Caudet said the commission is applying the instruments at
its disposal to ensure a level-playing field.
In recent weeks, the bloc has taken more measures to protect
steelmakers from unfair trade, opening three investigations into
allegations of unfair trade practices by Chinese manufacturers and
slapping tariffs on two types of steel imports from China.
The EU has 37 trade defense measures in place on imports of
steel products--16 of which concern China directly.
In the U.S., Commerce Secretary Penny Pritzker told The Wall
Street Journal last month that her department is weighing more
antidumping cases than at any time in 15 years. She said two-thirds
were steel cases "a vast majority of which involve China."
On the issue of market economy, the commission is looking at
three options: granting China the coveted status; not granting it
and keeping anti-dumping measures in place; or pursuing a third
way--that would designate China a market economy while introducing
some mitigating measures.
Officials say the commission prefers the third option, but
industries warn that mitigating measures will do little to offset
the resulting economic damage that would affect manufacturing
sectors.
A study for the commission estimates that if China is treated as
a market economy, the long-term job losses in the EU, without
mitigating measures, would range between 63,600 and 211,000. A
study for Aegis Europe, a group of some 30 European industries,
puts the figure at as many as 1.7 to 3.5 million at-risk EU
jobs.
Still, supporters say granting China market economy status could
open the door for Beijing to inject more money into Europe's
stagnant economy, a move that would boost infrastructure investment
and jobs.
Any proposal to designate China a market economy must also be
approved by the European Parliament and EU governments, which are
divided on the benefits of trade with Beijing. Nations from
Europe's south, such as Italy, support a tougher stance while the
others such as the U.K. and Nordic countries are more likely to
support the proposal.
For now the commission says it is assessing the economic
consequences before taking a view, and will officially revisit the
issue in the summer.
Write to Viktoria Dendrinou at viktoria.dendrinou@wsj.com
(END) Dow Jones Newswires
February 14, 2016 07:09 ET (12:09 GMT)
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