Wednesday

16th Jan 2019

EU seen as both saviour and culprit of UK steel crisis

  • Port Talbot steel plant in Wales, reportedly losing around £1 million per day (Photo: Justin)

'Brussels' is being seen as both the cause, and a possible solution to Britain's steel crisis.

On Thursday (31 March), the European Steel Association, a Brussels-based lobby group, called on the European Union to raise anti-dumping tariffs to make Chinese imports less competitive.

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  • Cameron: 'no guarantees of success' (Photo: Chatham House)

That same day, a British eurosceptic member of the European Parliament Nigel Farage said that only if Britain votes to leave the EU in a referendum later this spring can the UK's steel industry and the around 20,000 jobs it supports be saved.

With less than three months to go to the 23 June in/out referendum, all political debate in the UK quickly develops a European angle.

Politicians and media ask the question: would this situation be better or worse if the UK had not been a member of the 28-country bloc?

The same is now happening in the debate about the future of Britain's steel sector, which is under pressure after multinational Tata Steel decided it would move out of the UK.

The decision is linked to cheap Chinese imports and global overproduction, which are causing heavy losses. Some estimates say the Tata plant at Port Talbot is losing around £1 million per day.

Business Insider UK finance editor Lianna Brinded, who called steel prices in Europe “ridiculously low”, summarised Britain's steel problem in three short sentences: “Our steel is too expensive. There is too much of it. And no one wants to buy it.”

Some are now arguing that if the UK had not been a member of the EU, it could have nationalised the plants or given them state aid.

EU countries have strict conditions which allow them to bail out different sectors. It is currently being debated what the UK government would be allowed to do, but an European Commission spokesman on Thursday did not want to speculate.

To those campaigning for the UK to leave, the answer is clear.

“If we vote to remain on June 23 it is the end of the steel industry in this country. Simple as that,” said Farage.

One of the country's eurosceptic newspapers, the Daily Mail, took a similar view.

“If our steel industry - which still employs 25,000 people directly and many more indirectly - is to survive, there’s a strong case for a higher tariff, at least in the short term,” the tabloid wrote in an editorial on Wednesday.

“But of course we can’t raise it. We have surrendered that power to Brussels.”

However, this week it also emerged that the UK government is still actively lobbying against a possible European measure that could have raised the level of tariffs on Chinese steel.

A 2013 EU commission proposal would have scrapped the self-restraining “lesser duty” rule, which affects the way anti-dumping tariffs are calculated.

But the UK has been one of the EU member states blocking the lifting of that rule, effectively holding off the option to increase tariffs, British media reported.

“The UK is the ringleader in a blocking minority of member states that is preventing a European Commission proposal on the modernisation of Europe’s trade defence instruments,” the head of the European Steel Association Axel Eggert told the Financial Times.

A spokesman for another steel lobby group, Eurofer, told Huffington Post UK scrapping the rule would make “a huge difference”.

“We can’t really understand why they can’t do whatever it takes to fix the system. They had the opportunity,” he said about the UK government.

For his part, UK prime minister David Cameron has promised the government is doing everything it can, but also noted that he does not think nationalisation “is the right answer”.

“We're going to work very hard with the company to do everything we can, but it is a difficult situation, there can be no guarantees of success because of the problems that the steel industry faces worldwide,” he said on Thursday.

Analysis

EU's Article 50: the rules for Brexit

Article 50 of the Lisbon Treaty contains the rules that a member state wishing to leave the EU must follow. But it has never been used and leaves many unanswered questions on Brexit.

Cameron: No second chance after Brexit vote

David Cameron has set out the EU-UK deal in the House of Commons, taking aim at his Tory rival Boris Johnson who suggested that after a No vote the UK could get a better deal.

EU still divided on Chinese steel

Despite growing political pressure, trade ministers at a meeting Friday are not expected to reinforce EU trade defense against Chinese dumping.

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