EU launches fresh action on cheap Chinese steel

The Telegraph

European producers have been hurt by cheap Chinese steel imports

The European Union has launched an investigation into whether Chinese producers of certain corrosion resistant steels are selling into Europe at unfairly low prices, in its latest action against cheap Chinese steel imports.
The European Commission has determined that a complaint brought by EU steel makers association Eurofer merits an investigation, the EU's official journal said on Friday.
The EU has imposed duties on a wide range of steel grades after investigations over the past few years to counter what European steel producers say is a flood of steel sold at a loss due to Chinese overcapacity.
Some 5,000 jobs have been axed in the British steel industry in the last year, as it struggles to compete with cheap Chinese imports and high energy costs.
G20 governments recognised in September that steel overcapacity was a serious problem. 

China, the source of 50pc of the world's steel and the largest steel consumer, has said the problem is a global one.
In October, the European Commission set provisional import tariffs of up to 73.7pc for heavy plate steel and up to 22.6pc for hot-rolled steel coming from China. 

Those investigations are set to conclude in April.
In anti-dumping cases, the Commission typically has up to nine months to determine whether there are grounds for imposing provisional duties on a product and then a further six months to determine whether duties should apply as long as five years.

Finally, World Loses Patience With Anti­-Competitive China Trade Practices

China has maliciously dumped products to eliminate not only competitors but also entire industries, as it did in solar panels. 
By Gordon G. Chang

Friday, Shen Danyang, Commerce Ministry spokesman, said Beijing will employ “necessary measures” against World Trade Organization members that do not treat China as a market economy after December 11.
His country, he said, will “resolutely defend its lawful rights and interests against the members who persist with the ‘surrogate country’ approach in their antidumping investigations into Chinese products.”
China is legally entitled to be treated as a market economy for anti­dumping purposes, but many WTO members will not accord it such status.
Today is the 15 anniversary of China joining the global trading body.
Its accession agreement appears to provide that other members are required to grant it MES, market­economy status.
Having such status makes it more difficult to prove that China has, for WTO purposes, “dumped” its products in another country, in other words, sold goods so that their price in the importing market is below the price of those same goods in China.
If China has MES, complaining nations must, for purposes of determining the existence of dumping, use China’s domestic prices when they make the comparison with export prices.
If, however, China does not have such status, complainers can use prices in so­-called surrogate countries, countries other than China.
Prices in those other countries are almost always higher than China’s, making dumping allegations against China relatively easy to prove.
Although technical arguments can be made to the contrary, the better interpretation is that Article 15 of China’s accession protocol automatically grants market ­economy status on the 15th anniversary of its membership.
That is how other nations in fact have read their obligations up to now.
Now, however, China’s trading partners are reading the accession protocol differently.
Japan, last week, and the U.S., before then, have stated they will not grant China market­ economy status.
As Commerce Secretary Penny Pritzker told Chinese officials last month, “it is not ripe for us to change our protocols.”
The European Union is not as direct as Secretary Pritzker.
It has devised a “country­ neutral” rule that permits it to use third­ country prices for anti­dumping purposes to counteract subsidies and other forms of state intervention.
Shen, not surprisingly, said the new EU rules are “disappointing.”
It is, in one sense, disappointing that major trading nations are welshing on their agreements.
If the international community wants China to abide by its trade obligations, other nations should abide by theirs.
As Claude Barfield of the American Enterprise Institute has written, “a deal is a deal and should be honored.”
Yet there are, aside from arguments based on the technical wording of China’s accession protocol, good reasons for other nations to reconsider their deal with China.
As Robert Pittenger, Republican Congressman from North Carolina, wrote on the Fox News Opinion site, “Why should we reward anti­-competitive practices?”
Virtually everybody 15 years ago thought China would evolve into a market economy by now. Almost nobody saw the rise of leaders like Hu Jintao and Xi Jinping, economic nationalists, who sought to close off the Chinese economy.
Xi, in particular, has used Beijing’s resources to bolster state­-owned enterprises as he has pursued his “Chinese dream,” his signature concept contemplating a China dominated by a strong party­-state.
His moves have resulted in many regressive trends including the market playing less of a role in setting prices.
Most observers believe Beijing will take a case to the WTO’s dispute resolution process if some nation does not use China’s own prices in a dumping case.
Chinese officials will feel aggrieved that others are not honoring their promises to China, but they should remember they have routinely violated their WTO obligations and forced others to go through the WTO process, wasting years in the process.
They should also remember the Gordon G. Chang corollary of Confucius’s Golden Rule.
Confucius famously said, “Do unto others as you would have them do unto you,” and I say “Others will do unto you what you have done unto them.” 
China has maliciously dumped products to eliminate not only competitors but also entire industries, as it did in solar panels.
The Wall Street Journal reports that Beijing is now going after the semiconductor and mobile phone sectors.
And don’t forget steel.
China has been “pumping out” more of the product “than the world wants or needs,” and that does not make China look market­-oriented.
The WTO is not a “suicide pact,” and countries are not—and should not—allow China to continue to game the system in such a destructive matter. 

One way or another, they will protect their industries from increasingly predatory behavior.
So what can other countries do?
They may force a renegotiation of the WTO agreement, withdraw from the pact altogether, or simply club China into not complaining.
China’s trade partners, especially those running deficits with Beijing, can do almost anything they want.
Why?
As George Friedman’s Geopolitical Futures tells us, “China must have access to U.S. consumer markets, and Donald Trump knows it.”
The president has already weighed in on the market­ economy issue, saying China is not one.
Moreover, last Thursday he accused the Chinese of “product dumping.”
As he declared at his rally in Des Moines, “They haven’t played by the rules, and I know it’s time they’re going to start.”
“We are playing by the rules and you need to keep your promise,”said Xue Rongjiu of China’s State Council, speaking this month.
“It’s unfair to blame China for your problems, which have resulted from bad management and operations.”
No, Xue, our problems result from your country’s bad behavior. 
As evident in recent days, China’s major export markets have just signaled their patience with Beijing has run out.
Chinese officials can huff and puff, but there is not much they can do when others just refuse to buy their goods.
It’s called a trade war, and other nations are beginning to recognize it exists and are starting to respond.

'We can't continue to allow China to rape our country'

In China-U.S. Trade War, President Trump Would Have Weapons
By KEITH BRADSHER

Is Xi Jinping a rapist?

SHANGHAI — As a candidate, Donald J. Trump aimed some of his most blistering words at China, declaring that “we already have a trade war” and suggesting that “we have the power over China, economic power.”
As president of the United States, Mr. Trump can use trade as a weapon, with the potential to drastically reshape the world’s two largest economies, as well as the companies, industries and workers who depend on their hundreds of billions of dollars in closely linked goods. 

The unsettling reality for Beijing is that Mr. Trump has a variety of ways to get back at China for trade practices that are unfair. 

China sells a large array of goods to the United States that he can aim at for higher tariffs.

The opportunities for China to retaliate would be more limited. 

In the most basic terms, China buys less from the United States.

But China could make some strategic strikes at targets like Boeing, American automakers and American farmers. 

Beijing exerts tight control over China’s airlines, for example, and sometimes steers contracts to Airbus, Boeing’s European rival, when officials feel that Washington is uncooperative.
“Boeing complains, ‘We have been pretty good friends with China. Why are we always a target?’” said He Weiwen, a former Chinese commerce ministry official who is now the co-director of the China-U.S.-E.U. Study Center at the influential China Association of International Trade in Beijing.
Or China could wreak havoc on the vast yet delicate supply chain behind a wide range of products like iPhones and auto parts. 

Six years ago, Chinese restrictions on exports of obscure yet vital minerals led to a global outcry by manufacturers.
Early indications are that trade could take a more prominent place on the White House’s China agenda, which under President Obama was dominated by Beijing’s territorial claims in East Asia and its influence over North Korea.

The night shift at a shoe factory that employs about 15,000 workers in Guangdong Province in southern China. Exports to the United States represent about 4 percent of the Chinese economy.

In a strong signal, Mr. Trump has turned to Dan DiMicco, a longtime steel executive and trade critic, to oversee trade issues during his administration’s transition. 

Mr. DiMicco writes a personal blog, liberally sprinkled with exclamation points, that blames America’s industrial decline on cheating by trade partners, particularly China.
“Hillary Clinton has claimed Trump’s trade policies will start a ‘Trade War’ but what she fails to recognize is we are already in one,” he wrote on his blog last summer. 

“Trump clearly sees it and he will work to put an end to China’s ‘Mercantilist Trade War’! A war it has been waging against us for nearly 2 decades!”
China over the last two days has emphasized that a "healthy" relationship would benefit both sides. 

On Thursday, Lu Kang, a spokesman for China’s Foreign Ministry, said, “It is in the common interests of both countries to develop a long-term, stable and prosperous trading relationship, and any American politician would take a policy in the interest of his country and the American people.”
Mr. Trump’s views veer widely from the free-trade positions of the Republican Party in recent years and signal a return to the more patriotic positions of the Reagan administration.

Since President Ronald Reagan, Republican and Democratic administrations have been reluctant to confront countries that were subsidizing or dumping exports, because of a risk of damaging diplomatic relations.
“This is the kind of stuff you learn in law school, and in the early days of your law career,” said Alan H. Price, a longtime lawyer for the American steel and aluminum industries at Wiley Rein.
When used, the measures were sometimes deemed ineffective.
In one rare example, President Obama used his powers to impose tariffs of up to 35 percent on imports of Chinese tires soon after he took office. 

The tariffs prompted China to impose steep tariffs on American chicken meat and automotive products. 

Both countries complained to the World Trade Organization, which mostly sided with the United States.
The case resulted in the United States producing more tires, but imports from other countries rose even faster. 

And the Obama administration later became more cautious about challenging China with trade restrictions.
Any trade actions by Mr. Trump would face limits.
This year, he mentioned imposing a tariff of 45 percent on all imports from China. 

But he later avoided specifics — and he has limited power to do so anyway. 

The law allows him to impose tariffs of no more than 15 percent, and for as long as 150 days, on all imports, unless a national emergency is declared. 

Other laws allow him to impose tariffs on targeted goods.
Should Mr. Trump want to signal an aggressive stance quickly, he could move against imports of steel and aluminum from China. 

The Obama administration has been preparing to file a World Trade Organization case against China over claims that it subsidized aluminum exports. 

And the United States, Japan and the European Union already complain that Chinese government subsidies have produced a bloated domestic steel industry that they say dumps millions of tons of excess goods on world markets each year.

Donald J. Trump: 'We can't continue to allow China to rape our country'

China is more vulnerable given the sheer amount of stuff it sells to America.
For more than a decade, China has consistently exported about $4 worth of goods to the United States for each $1 of goods that it imports.
Exports to the United States represent about 4 percent of the Chinese economy; American exports to China are only about two-thirds of 1 percent of the United States economy.
“We don’t have many things in the toolbox for retaliation, because we export more than we import,” said Mr. He, the former Chinese commerce ministry official.
Still, China could inflict pain on sensitive areas that provide American jobs, like Boeing’s jetliners.
Boeing declined to comment except to say, “We congratulate President-elect Trump and newly elected members of Congress and look forward to working with them to make sure we continue to grow the global economy and protect our people.”
General Motors and Ford Motor consider China a big contributor to sales.
They mostly manufacture in China to supply the domestic market.
But much of the design and engineering work is still done in the United States.
China could hurt the automakers by adopting domestic policies that help their big European rivals, notably Volkswagen and Mercedes-Benz.
Other American companies may be less opposed to trade limits than in the past.
Some American companies have been struggling to sell in China.
Beijing has steered contracts to Chinese telecommunications companies after Edward Snowden’s revelations about American intelligence gathering in China.
And Chinese state-owned enterprises have shifted much of their investment banking business from Wall Street to homegrown rivals.
American farmers have welcomed Chinese purchases, but it is unclear how badly they could be hurt by any trade action.
Chicken meat, soybeans, corn and other foodstuffs are commodities traded in world markets, and farmers are often able to sell elsewhere.
Chinese goods have long helped keep prices down for Americans.
But Chinese exports play a shrinking role in holding down prices as labor costs rise in China and as rivals like Indonesia, Vietnam and India expand manufacturing.
China’s biggest potential weapon is to disrupt the supply chains of multinationals by halting exports of crucial materials or components. 
But that could damage China’s reputation as a reliable supplier.
“I don’t think we will go that far at the moment, because there is a lot of room to negotiate,” Mr. He said.
“If we are forced too much, nothing can be excluded.”

Nation of Cheaters

Europe proposed a way to assess whether Chinese manufacturers are exporting at unfairly low prices.
by Reuters

China is disappointed that the European Union hasn’t completely recognized its market economy status, commerce ministry spokesman Shen Danyang said on Thursday in a sign that Beijing will continue to press the EU to relax its anti-dumping rules.
The EU and many of China’s other trading partners have been debating whether to grant China “market economy status” (MES) from mid-December, which Beijing says is its right 15 years after it joined the World Trade Organization. 

The United States has said China has not done enough to qualify.
The European Commission proposed on Wednesday a new way to assess whether Chinese manufacturers are exporting products, such as steel, at unfairly low prices.
China said it interpreted the proposal as canceling China’s “non-market economy status” but was disappointed the European Commission had introduced the “significant distortions” clause, Shen told a regular press briefing.
The proposal in general sets the normal reference value in dumping cases involving WTO members to domestic prices.
However, in the event of “significant distortions” affecting domestic prices, investigators can instead use international benchmark prices, the EU proposed.
The proposal “doesn’t completely nullify (China’s) ‘surrogate country’ status, it merely allows the status quo to covertly continue,” Shen said.
The new standard should be “fair, reasonable, transparent and should not just be a new form of discrimination,” he added.
EU trade ministers are expected to discuss the new anti-dumping measures at a meeting on Friday along with other plans to modernize the EU’s trade defense arsenal.

Steel War - The Union Strikes Back

EU imposes import duties of up to 73.7% on cheap Chinese steel
By Graham Ruddick

A worker examines rolls of steel at a plant in Taiyuan, China. 

The European Union has slapped tariffs of up to 73.7% on Chinese steel after manufacturers were forced to cut jobs due falling prices and demand for the material amid an influx of cheap imports from China.
Thousand of job have already been lost in the steel industry in Britain in the last year with thousands more at risk as the sector remains under pressure. 

Industry leaders have blamed the squeeze on the sector on China’s dumping of cheap steel in Europe as it struggles to find buyers for its products domestically.
The EU has agreed to impose import duties of between 13.2% and 22.6% on Chinese hot-rolled steel, which is used in pipelines and gas containers, and 65.1% and 73.7% on heavy plates, which are used in civil engineering projects.
The state of the steel industry became part of the debate about Britain’s future in the EU before the referendum in June, with Brexiters claiming that the country would be better able to protect workers and introduce tariffs on Chinese imports if it voted to leave.
UK Steel, the industry trade body, welcomed the speed at which the new EU tariffs had been introduced but warned that the levy on hot-rolled steel was not high enough, which could hurt Port Talbot, the biggest steelworks in Britain.
Dominic King, head of policy and external affairs at UK Steel, said: “The speed at which tariffs have been imposed on dumped steel from China by the EU is very welcome. However, while we hope the tariffs for heavy plate are robust enough to ensure free and fair trade, the proposed levels for hot-rolled steel are not high enough, which might encourage China to continue dumping it on to the EU market.”
David Martin, Labour MEP for Scotland, said the tariffs may be “too little too late” for the UK industry.
Martin, the international trade spokesman for the Socialist and Democrats group in the European parliament, said: “The [European] commission has recognised that Chinese dumping is having a real, damaging effect on EU steel producers and the communities supported by them.
“However, whilst the tariffs on heavy-plate steel are at a workable level, the duties on hot-rolled steel – a crucial product of Tata Steel’s Port Talbot plant – won’t deter Chinese steelmakers from further dumping. I sincerely hope these duties will be revised upwards at a later date.
“What is pleasing is that this procedure was concluded five weeks ahead of schedule – finally the commission is waking up to the urgency of this situation. Whether it is too little, too late for UK steel, only time will tell.”

The Tata steelworks in Port Talbot. 

The future of Port Talbot and Tata Steel’s 11,000 UK staff remains unclear as the Indian company considers a merger with German group ThyssenKrupp and tries to negotiate a rescue package with the UK government.
Trade union leaders hit out at Tata Steel on Friday over its failure to sell off its speciality steels business in Yorkshire and County Durham. 

Tata Steel put the business up for sale in the summer as it desperately tried to stem the losses in its UK business.
The speciality steels arm employs more than 2,000 people in Sheffield, Rotherham and Hartlepool. Roy Rickhuss, general secretary of steelworkers union Community, said the business was of “huge importance” to the area.
He added: “When Tata announced that they wanted to sell the business, we called on them to act as a responsible seller. The continued lack of information about that process and the worry this has caused amongst their loyal workforce is highly irresponsible.
“Speciality steels has every chance of a bright, profitable future, but this will only be possible if Tata ensure a new owner is able to invest in the business and build a positive relationship with the workforce.
“The months of uncertainty and delays must end today. Tata must come clean about the state of the sales process and fully involve the trade unions in helping to build a new future for this vital industry and its highly skilled workers.”