David Martin MEP is calling on the European Commission and EU ministers to block full Market Economy Status (MES) for China unless it stops dumping cheap steel on to the market.
As readers of the Caithness Courier are most likely aware, the European steel sector is in crisis. Sites are closing and thousands of well paid, highly-skilled jobs are being lost. While the steel industry believes this is the result of a combination of factors, there is no doubt that the greatest of these is a global steel market saturated with overcapacity and prices being driven down to unsustainable levels. Since September 2015 over 270 skilled jobs in the steel industry have been lost in Scotland, as well as many more UK and EU-wide. Across Europe there are over 40,000 fewer jobs in the steel industry compared to 2007.
After several decades of dramatic growth, the economy of China, the world's biggest steel producer, is experiencing a slowdown. With less demand in their own country, Chinese producers have been looking further afield for export markets, such as the EU, and this is resulting in the "dumping" of their steel products. This means selling them at less than the cost of production, and is considered unfair competition. The EU and China have already clashed over the alleged dumping of products such as wine and solar panels. Other sectors at risk include aluminium, bicycles, ceramics, glass, car parts and paper.
A key issue in understanding world trade with China is its ‘Market Economy Status’. In 2001, although welcomed as a member of the World Trade Organisation (WTO), China was considered to be a 'non-market economy’ because of the way that the Chinese government interfered in their economy. The pricing of their goods just could not be trusted. This status was set to last for fifteen years and in November this year is up for reassessment. The granting of this status will mean trading nations will be less able to demand legal protection from further dumping. Much more work needs to be done on the impact of this change of status.
The Socialists & Democrats (S&D) Group in the European Parliament, for which I am the spokesperson for trade, earlier this month (March) adopted a positon paper sending a strong signal to the European Commission and Council of Ministers that whilst there may be economic benefits of greater co-operation with China, the world's largest trading nation, Europe must not be a soft touch. A united Europe should not be afraid to use the all the tools at its disposal to protect its industries. Our Group are demanding real engagement from the Commission to reassure European industry and workers that the EU will be properly equipped to deal with global overcapacity and the dumping on our market of Chinese goods after the end of this year.
The EU has the ability to protect our economy against this unfair trade. This is why it is extremely disappointing to see our own UK government blocking any strengthening of current EU trade defence instruments. It is not protectionist to want adequate protection from unfair competition and we urgently need updated trade defence instruments to ensure this.