UK Steel

Trade defence instruments: the manufacturing perspective

Ian Rodgers

Director, UK Steel

UK Steel

A balanced view…….

The UK (and EU) steel industry has:Defended trade cases abroad (USA,

Canada, Australia, India etc).Used TDIs as producers in the EU.Opposed TDIs as consumers in the EU.

UK Steel

…..requires a balanced approach

Must not lose sight of the international context. EU regulations framed by WTO agreements. Painfully achieved compromise in the Uruguay

Round. Unilateral disarmament doesn’t work. EU already more liberal than most. Reform must not put EU manufacturing in a weaker

position than US, or Russian, or Indian – competitors. Fundamental changes should only be implemented if

they emerge from a balanced Doha agreement.

UK Steel

TDIs counter unfair practices

TDIs (other than safeguards) are the international surrogate for competition law.

General acceptance that state-subsidised production distorts markets and is therefore economically inefficient.

Dumping is discriminatory pricing: Perhaps helped by state-imposed distortions (high

tariffs, input price controls etc), Perhaps resulting from deliberate commercial policies.

Unfair practices affect all players in a market, including other importers.

UK Steel

TDIs “should not be used to counter genuine comparative advantages”

Fully agree. But a company with genuine comparative advantages

has no need to be subsidised or to dump.

UK Steel

TDIs should not be used to frustrate the benefits of offshoring

Again, agreed. But equally, companies who have offshored their

production should not unfairly benefit from dumping or subsidisation.

Suggestion that EU companies importing their own production from overseas should receive special treatment: TDI should be blind to ownership. Foreign-located producers should receive equality of

treatment.

UK Steel

Non-market economies

Previous analyses only apply to market economies. Recent contentious cases were against NMEs. E.g. were Vietnam & China genuinely dumping? No

way of knowing. Commission gives special treatment to economies in

transition – where justified. Beyond that, only recourse is to find best match

analogue country – e.g. one with similar level of development.

Certainly does not merit wholesale revision of the rules.

UK Steel

Community interest

Support need to balance interests of industrial users with Community producers.

Look at overall market situation for both industries, not just the simple impact of extra duties on users’ costs.

Could make it easier to exclude sub-products that are not made in the EU.

UK Steel

Community interest

But an EU company that moves its production aboard, and then dumps, does not merit special treatment: Wrong to discriminate against other foreign producers

on the basis of ownership; Wrong for the EU to encourage offshoring; The fact of becoming subject to EU import laws should

have been a factor taken into account in the original investment decision.

UK Steel

Community interest

Nor should the immediate impact of AD/CV duties on consumer prices be a relevant consideration: The presumption underpinning state aid law is that

subsidies undermine efficient producers, to the long term detriment of consumers;

The presumption in internal investigations into discriminatory pricing is that maintaining diversity of supply is in the long term interest of consumers.

The prime consideration should be the maintenance of a competitive manufacturing base in the EU.

UK Steel

De minimis thresholds

The EU de minimis standard for injury is already tougher than the WTO standard: In the average steel case, the WTO “1% of imports”

standard equates to 0.3% of market share, whereas the EU will only initiate against countries with at least 1% market share.

Could support higher standards for LDCs if these were universally applied.

UK Steel

Shorter timescales

Support earlier provisional measures, bringing us into line with the USA.

Could be achieved by bifurcated process……..

UK Steel

Institutional process

Need to de-politicise. One way would be to take the Council out of the

equation, and put injury and Community interest decisions in the hands of an independent agency.

UK Steel

Conclusion

The EU’s trade defence instruments are an exemplar for the rest of the world.

Scope for more sophisticated economic assessments in Community interest test.

Significant changes should only emerge as part of a multinational agreement.