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  May 24th, 2016 | Written by

European Commission Launches New Investigation on Chinese Steel Imports

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  • EC steel action was motivated by threat that continuing Chinese imports might cause damage to EU industry.
  • The steel sector in the EU is responsible for 1.3 percent of EU GDP.
  • The EU is the second steel producer in the world after China, producing 170 million tons of crude steel per year.

The European Commission (EC) has launched a new anti-subsidy investigation on imports of Chinese hot-rolled flat steel, on which an anti-dumping investigation is already ongoing since February.

In both cases, the commission decided to act early, according to a statement from the EU body, “motivated by the threat that continuation of imports under current conditions might cause economic damage to the EU industry.”

It was the EU steel industry that presented the complaint to the commission which triggered the investigation.

This “threat of injury” mechanism is an exceptional procedural approach that allows the commission to take action without having to wait for the proof of actual injury. The new procedure, the commission said, is part of its commitment “to make full use of the available trade defense instruments to restore fair trading conditions for the European steel sector.”

The steel sector in the EU has an annual revenues of $187 billion and is responsible for 1.3 percent of EU GDP. The industry provides 328 000 direct jobs and an even greater number of indirect and dependent jobs.

The European Union is the second steel producer in the world after China, producing on average 170 million tons of crude steel per year.

According to a recent EC report, the economic slowdown in China and the spare steel production capacity that produced has led to “a dramatic increase of exports, the destabilization of global steel markets and depression of steel prices world-wide.” Steel imports from China to the EU have surged in the last three years and market prices for some steel products have dropped by 40 percent.

The imposition of trade restrictions and other trade barriers by third countries has shifted “the burden of global overcapacity disproportionately towards European producers,” according to the EC.

The challenges of the steel sector, the report said, goes beyond trade issues to include the long-term competitiveness of the industry and its ability to develop breakthrough technologies in areas such as energy efficiency.

The commission now has up to nine months to establish whether conditions to impose provisional countervailing duties are met. With its recent decision there are now 10 ongoing trade defense investigations on steel products, in addition to the 37 anti-dumping and anti-subsidy measures already in place. Seven of these investigations and 15 of these measures concern steel products originating from China.