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Ministers accused of failing to protect steel industry from cheap imports

Published 10/02/2016

Tata Steel announced 1,000 job losses in Port Talbot and Llanwern last month
Tata Steel announced 1,000 job losses in Port Talbot and Llanwern last month

Steel manufacturers and unions have accused ministers of failing to protect the industry from cheap Chinese imports by blocking EU plans for tougher anti-dumping action.

Executives from Tata Steel - which has blamed competition from cheap Chinese imports for the loss of 1,000 jobs in South Wales - said that the EU's use of the so-called "lesser duty" penalty in dumping cases puts Britain at a disadvantage compared to countries like the US, which impose harsher tariffs.

They were backed at a House of Commons hearing by Community union general secretary Roy Rickhuss, who said the scrapping of the lesser duty tariff "has to happen", and Labour MP Stephen Kinnock, who said a move to US-style higher tariffs would be "absolutely a huge step in the right direction for the British steel industry".

Mr Kinnock quoted from a briefing note by trade body UK Steel which said: "The EU must follow the example of the US by lifting the lesser duty rule, which would increase anti-dumping duty levels and make them effective. It is galling that the UK Government hasn't taken action and has continued to block these changes in the EU, leaving the British steel industry on its knees."

Bosses and unions are due to march alongside one another in Brussels on Monday to demand more EU support for the industry, including the lifting of the tariff rule.

But Downing Street said that the move might amount to protectionism, and Business Secretary Sajid Javid warned that a move to higher tariffs could harm British companies which consume steel.

He told the House of Commons Business Committee: "There are companies in Britain that would tell you that if duties got out of control, were much, much higher, that it would cost them jobs and growth and would certainly cut their exports to the people who are using their products across Europe and elsewhere."

While lifting the lesser duty rule might "in the short term sound like a way to go to try and protect a certain industry", Mr Javid said: "We also have to remember that in the UK that as well as manufacturers of steel there are also companies that consume steel as part of their production process and the impact that might happen to them."

He insisted that the UK was "one of the most vocal and proactive" in making sure that the EU takes action on dumping and wanted existing rules to be applied more swiftly, telling the committee: "We believe the tools are already there but they just seem to be slow when they are being used."

Tim Morris, head of public affairs at Tata Steel Europe, told the Commons Welsh Affairs Committee: "Tata Steel, in line very much with the rest of the European steel industry, has significant issues with the lesser duty rule framework. We believe it is over-theoretical, and nine times out of 10 it produces a lower penalty rate than the alternative method.

"That's a problem for us because it does less to discourage imports into Europe in the first place. It is straightforward to load steel on a boat and ship it around the world. If you are in a region where you have consistently less robust trade defence, guess where the boatload of steel is going to go?

"Whatever the theoretical purity of a particular approach is, we have some substantial questions about its application in practice and we worry about what its effect could be on the global playing field between countries like the US and us."

Mr Rickhuss told the committee: "We are confused about the announcements coming out today about not wanting to support the scrapping of this lesser duty tariff, because clearly that has to happen."

David Cameron was challenged at Prime Minister's Questions in the Commons by Scunthorpe MP Nic Dakin, who told him Mr Javid had "confirmed that the Government will not support the European Commission in raising tariffs on dumped steel from countries such as China" and demanded to know: "Why will the UK Government not stand up for UK steel?"

The PM answered: "We have repeatedly stood up for UK steel, including by supporting anti-dumping measures in the EU, but that is not enough.

"We need to get behind public procurement for steel, and that is what we are doing. We need to get behind reducing energy bills for steel, and that is what we are doing. We need to support communities ... that have seen job losses, and that is exactly what we are doing. We recognise what a vital part of Britain's industrial base the steel industry is, and that is why we are backing it."

A Downing Street spokesman said the EU was faced with a choice between whether "we make a proportionate response or lurch towards protectionism".

He added: "Our concern is that they may be moving towards protectionism rather than having a proportionate response."

The lesser duty rule was dismissed as "a red herring" by business minister Anna Soubry, who told the Welsh Affairs Committee that tariffs should be considered on a case-by-case basis. She cited a recent case in which Britain abstained in a vote in order to save jobs at a steel-consuming UK company which faced increased costs if the higher rates of tariff were applied.

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