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Government plays down Chinese steel tariffs effect on UK companies

Published 02/04/2016

Workers at Tata Steel in Port Talbot
Workers at Tata Steel in Port Talbot

The Government has sought to play down the effect of the latest Chinese steel tariffs on UK firms amid growing fear of a damaging trade war with Beijing.

Ministers have been under pressure to act after the Chinese ministry of commerce announced on Friday that it was imposing levies of up to 46% on some types of specialist steels imported from the European Union, South Korea, and Japan.

The move deepened anger among trade unions and MPs following news that Tata Steel was to sell off its loss-making UK assets - largely due to the "dumping" of cheap Chinese steel on world markets - threatening the loss of up to 40,000 British jobs.

In a bid to cool the situation, the Department for Business, Innovation and Skills insisted that Britain actually exported "very little" of grain-oriented flat-rolled steel covered by the new Chinese tariffs.

"Tata themselves have confirmed that they have not exported this type of steel to China in recent times from their UK operations," a spokesman said.

However Gareth Stace, the director of the industry body UK Steel, warned that the knock-on effects of imposing the new levy on South Korea and Japan could still cause problems for British producers.

"That means that Japan and Korea don't have that export market now so where will they ship their grain-oriented electrical steel?" he told Sky News.

"They might ship it here to the UK, to Europe, so therefore we might see the indirect effect being much more significant than the direct effect of this tit-for-tat trade war that we're seeing from China."

He called on the Government to step in with direct financial support for the industry in order to show potential buyers of Tata's UK plants - including Port Talbot in South Wales - that the sector had a long-term future.

"We need reassurance that the Government is prepared to temporarily step in to support our sector financially, directly, and even push the boundaries of the very narrow and tight European state aid rules that the steel industry is governed by," he said.

"The Government is looking for a buyer for Tata Steel. It needs to give the confidence to any of those buyers that the UK steel sector has a future."

The calls for Government intervention were backed by Labour leader Jeremy Corbyn who said workers at the threatened plants were facing an "appalling" situation.

"We have such incredible skills to manufacture steel in this country," he said in a speech to party activists in Weymouth.

"Is the industry to be closed down simply because a global corporation decides that that is the way forward and the inability to control dumped steel imports means the industry is totally undermined as a result of it?"

"Or is the responsibility of government to actually do something about it to protect industry in this country?

"I think it is the responsibility of government to intervene to ensure that we do have a steel industry in this country."

Downing Street said David Cameron raised the problems of global over-production of steel with China's president Xi Jinping during an international nuclear security summit in Washington.

"The Prime Minister raised concerns about the global steel industry, said we needed to work together to tackle the challenges with over-capacity and that G20 could be a good forum to address it later in the year," a Government source said.

But with the Government already facing accusations that it blocked moves by the EU to raise tariffs on Chinese steel, it did not go far enough for opposition parties, with Labour calling on Business Secretary Sajid Javid to change his position.

In a letter to Mr Javid, shadow business secretary Angela Eagle said: "If the Government and other EU members states now accept that steel making in Europe is in 'emergency measures', then it would be possible to apply 'safeguards' to effectively halt the flood of imports into the EU."

Liberal Democrat leader Tim Farron said the UK steel industry was now paying the price for Chancellor George Osborne's determination to woo Beijing at any price.

"The Chancellor has made a 'better relationship' with China, a cornerstone of his economic policy. Now the consequences of that decision are being felt by steel workers," he said.

"Rather than standing up for China in the EU, by blocking higher tariffs on their steel, he should be standing up to China on behalf of the UK steel industry."

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From Belfast Telegraph