Friday

16th Nov 2018

EU competition chief lashes out at steel state aid

  • Steel is a 'key industry' for Europe, Vestager said (Photo: European Commission)

The EU Commission has ordered Belgium to recover state aid and opened a probe into Italian aid, in two cases concerning the European steel industry, a sector shaken by growing Chinese competition.

In the first case, the commission estimated that aid granted by the Wallonia region to the Duferco steel group was a distortion of competition and ordered Belgium to recover some €211 million.

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In the second, it said it "will examine whether measures facilitating steel producer Ilva's access to finance for modernising its plant in Taranto give the company an unfair advantage not available to its competitors."

The Taranto plant, which the commission says "could produce as much as Bulgaria, Greece, Hungary, Croatia, Slovenia, Romania, and Luxembourg did together in 2015", is known for being one of the most polluting industrial sites in Europe.

"Today's decision also gives clarity to Italy that it can support the clean-up of the serious pollution problems at the Taranto site, as long as the money is subsequently recovered from the polluter," the commission said.

Anti-dumping

The decision came amid worries in the European steel industry about Chinese competition and the means to face it.

Last week, the college of commissioners started a discussion on whether to grant China market economy status at the World Trade Organisation before the end of the year.

No decision has been taken nor has an opinion been issued, but an EU official said the legal case for not granting China the market economy status e "weak".

If China is granted this status, "most of the EU steel industry may disappear", warned Axel Eggert, the director general of Eurofer, the EU steel industry body.

Eggerts said this made it more difficult for the EU to impose anti-dumping measures to protect the EU steel industry from Chinese companies.

"We do not see any way to maintain a similar level of trade defence measures if China is granted market economy status," he told Reuters news agency.

At a press conference on the Belgian and Italian cases, EU competition commissioner Mergrethe Vestager said that anti-dumping and anti-subsidy measures would be "part of the ongoing work this year and part of the dialogue with China".


"We are very determined to be still able to use anti-dumping and anti-subsidy measures, no matter market economy status or not," she said. "It is for us absolutely crucial to enable fair competition and a level playing field."

'Key industry'

"The dialogue wih China about how to manage overcapacity in steel production is a very urgent dialogue," Vestager also said, reminding that "more than 30 anti-dumping measures are in place, and 6 investigations are going on".

But the EU competition chief also warned European steelmakers that they were "a key industry" and would have to adapt to the global competition.

"The EU steel industry needs to be competitive globally [but] it cannot rely on public funds to survive," she said.

She warned that unlawful aid "distorts competition and it risks to lead to a harmful subsidy race between member states" and that "EU state aid rules don't allow public support for rescuing and restructuring of failing steel makers".

"They do enable EU member states to boost global competitiveness of steel companies, and support steelmakers to make them more competitive in the long run," she said.

More than 360,000 people in 23 member states work in the EU steel industry.

Focus

Divided EU debates China market economy status

The EU Commission will, on Wednesday, debate the sensitive issue of China “market economy status,” with nerves jangling in European industry over cheap Chinese goods.

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