It established that the Chinese government is supporting its steel industry through considerable subsidies, including preferential lending, tax rebates and other financial injections.
These subsidies have allowed the Chinese companies to sell hot rolled flat steel at artificially low prices on the EU market. This unfair competition has been creating a threat of imminent injury for the EU producers, whose profitability had sharply decreased by the end of 2015. In order to remove such threat, the Commission has today decided to impose definitive countervailing duties of up to 35.9%.
Since the adoption of the Commission’s Steel communication of 16 March 2016, the EU has put 12 anti-dumping measures in place, most of which cover products from China. The current decision looks for the first time in our current fight against steel overcapacity at Chinese government subsidies and found many different ways by which the Chinese government unfairly supports its exporters. Accordingly, the Commission decided on a significant rate of countervailing duties.
The Commission is using its available toolbox of trade defence instruments to the full extent possible. In addition, the EU is tackling the root causes of overcapacity in the global steel industry through active involvement in the Global Forum on Steel Excess Capacity launched last December.
The Commission initiated the anti-subsidy investigation on hot-rolled steel (HRF) in May 2016 following a complaint from “Eurofer” – the European Steel Association, acting on behalf of EU steel industry.
HRF steel products are:
- the primary material for the production of various value-added downstream steel products, starting with cold-rolled steel products, and;
- they are used as an industrial input purchased by end users for a variety of applications, including in construction (production of steel tubes), shipbuilding, gas containers, pressure vessels and energy pipelines.
The investigation was initiated on the basis of threat of injury, which means that the complainants allege an imminent change of circumstances, which would create a situation where the subsidised imports would cause injury.
The investigation confirmed the existence of countervailable subsidies and found that Chinese subsidised imports are putting the EU’s steel industry in a vulnerable state. The Commission found also that EU steel producers had a clear potential to recover if the Chinese unfair practices were brought to the end. On that basis, applying the usual procedure defined by EU law, the Commission has decided to impose definitive countervailing duties.
The current investigation is linked to a parallel anti-dumping investigation on imports of the same product originating in the People’s Republic of China. In this parallel case the Commission decided on 6 April 2017 to impose definitive anti-dumping duties ranging between 18.1% and 35.9%. In order to avoid double-counting, the Commission amended the parallel anti-dumping Regulation based on the outcome of the anti-subsidy investigation.
On 7 July 2016 the Commission also initiated an anti-dumping investigation on imports of the same product originating in Brazil, Iran, Russia, Serbia and Ukraine. This investigation is still ongoing. A decision is expected by October 2017.
The EU, as all other WTO members, has trade defence instruments available to restore level playing field for their industry. The use of these instruments in the EU is governed by a strict legal framework and rules.