EU, China Leaders Agree to Establish Steel "Platform"

14 July 2016

Leaders from the EU and China have agreed to set up a platform for discussing ways to address steel overcapacity – an issue that has been hotly debated in recent months, in light of the sector’s ongoing struggles.

The two-day talks were held from 12-13 July in the Chinese capital city of Beijing. Notably, the meeting comes just weeks following the adoption of a new EU strategy document for the bloc’s relationship with China over the next five years. (See Bridges Weekly, 30 June 2016)

The annual EU-China summit has become a key fixture on the international calendar, bringing together leaders from two of the world’s largest traders for talks on a wide-ranging agenda that often includes topics such as climate change, investment, trade, and human rights.

This year’s gathering included Chinese Premier Li Keqiang, European Council President Donald Tusk, and European Commission President Jean-Claude Juncker, among other top officials. Talks were also scheduled with Chinese President Xi Jinping.

Market economy status, steel “platform”

The ongoing struggles of the global steel sector featured prominently in the two-day discussions, with Juncker characterising the overcapacity issue as a “very serious problem for Europe,” a message he said he conveyed to his counterparts in Beijing.

The EU has already undertaken a series of steps aimed at supporting its domestic sector, which is responsible for 328,000 direct jobs across the bloc, along with 1.3 percent of its GDP. These steps include trade remedy probes into alleged “dumping” and calling upon China to improve its subsidy notifications to the WTO in this area, among others. (See Bridges Weekly, 17 March 2016)

The role of China in the global steel sector has been raised repeatedly by the EU, with the 28-nation claiming that the Asian economy has been responsible for a surge in low-priced imports of the metal, with prices dropping steeply as a result.

China, for its part, maintains that the problem is global in nature, and that there are also limits to the steps it can take at the governmental level.

“This is a difficult subject for us, this is a difficult subject for the Chinese partners, and we agreed this morning to establish a common working group… between China and the European Union to keep alive the debates and the discussions we have related to the steel overproduction,” said Juncker on Wednesday.

The group would be tasked with looking at options for addressing the steel crisis, along with addressing verification and monitoring of steel being shipped abroad. Juncker also expressed an interest in more exact data from all sides regarding the current state of steel trade.

The Chinese premier, for his part, reportedly reiterated Beijing’s own commitment to tackle the issue, saying that his country “want[s] trade between China and Europe to grow on a stable platform.”

Indeed, the issue of industrial overcapacity has now become a regular feature at major international summits, including during this past weekend’s gathering of G-20 trade ministers. (For more on the G-20 discussions, see related story, this edition)

EU officials also confirmed on Wednesday that they have not yet taken a decision on whether to propose changing their anti-dumping regulation to grant China with “market economy status,” despite earlier speculation from trade observers that they might do so at this stage.

Juncker told reporters that the EU’s executive arm is still conducting an impact assessment on the subject, and that for the time being the Commission “has not made up its mind.” Earlier communications from Brussels have indicated plans to announce a decision in the second half of this year. (See Bridges Weekly, 30 June 2016)

The EU’s executive arm will have an “orientation debate” on the subject on 20 July, with Juncker pledging that the bloc would “stick to our international obligations,” in an apparent reference to China’s WTO accession protocol. He added, however, that the issue is “very difficult” for Brussels, and said that after the impact assessment is completed the EU’s executive arm will then weigh its options.

“I don’t want to dramatise this issue, although it could easily by dramatised, but for us there is a clear link between the steel overcapacity of China and the market economy status of China,” he said, adding that this position reflects the “general mood” in the EU bloc.

He also reiterated that the EU will continue to take all necessary measures to defend its steel sector as necessary.

ICTSD reporting; “China vows to curb overcapacity in steel,” DEUTSCHE WELLE, 13 July 2016; “China agrees EU deal to assuage steel dumping concerns,” FINANCIAL TIMES, 13 July 2016.

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