Later this month Eurofer is to publish a study on the Chinese steel sector, accusing the Chinese government of illegal subsidies in an attempt to force the European Commission to take trade defence action.
Due on the 24 February, the report is said to contain information on various subsidy schemes operating in China. Going beyond the publicly available statistics and data and presenting unverifiable information contributed by Chinese sources, Eurofer is attempting to demonstrate Chinese steel pricing policy as “predatory” and alert the European Commission of its disastrous impact on the European industry.
The Chinese government have always claimed that its low prices are based on the competitiveness of its steel production. The report is designed to disprove this claim. It is said to provide convincing data highlighting the competitiveness of European steel making, which is a highly mechanised process, in contrast to costly labour-intensive production in China. It is also expected to present data showing that the cost of resources for steel production such as power and water are similar for China and Europe where the resources are not subsidised in China. To that extent, the report will demonstrate that the only explanation of the cheaper price of Chinese steel than European steel is illegal state support.
The report is likely to imply that as a member of the World Trade Organisation, China is bound by the global trade disciplines. It is possible that China may be challenged over its subsidy schemes under the EU Anti-subsidy rules or before the Dispute Settlement Body of the WTO.
The China is currently challenging US anti-subsidy measures on several Chinese imports under WTO DSU rules. Brussels is unlikely to take any action before the WTO DSB rules on that case, the decision of which is expected later this year.
Also, given the falling market demand amid the global economic downturn, which is seriously affecting European steel makers, Eurofer will very likely place increased pressure on the European Commission to obtain the initiation of unilateral trade defence investigations against Chinese imports.