Steel crisis: UK government dismisses China steel tariff fears
2 April 2016
- From the section UK
The government has played down the impact on the British steel industry of new Chinese import tariffs.
China is to impose the tariffs – taxes on imported products – of up to 46.3% on some specialist steel from the EU.
The Department for Business, Innovation and Skills said the duties were “clearly unwelcome”, but were “not expected to have much impact”.
Tata Steel, which is to sell its UK factories, said it was concerned about the wider impact on the market.
The company – and UK government – has previously cited cheap steel imports from China as one of the reasons its UK business is under pressure.
The Chinese ministry of commerce has said imports of grain-oriented flat-rolled electrical steel – a type of high-tech steel made by Tata’s Cogent subsidiary in Newport – will be charged duties ranging from 14.5% to 46.3%.
The US has imposed tariffs of 266% on Chinese steel but Britain blocked efforts at EU level to impose similarly high emergency tariffs.
A government spokesman said the UK had been at the forefront of pressing for European action on unfair steel “dumping” – selling steel very cheaply and regularly at a loss – but it was important for tariffs to be set at the right level, based on clear evidence of unfair trade.
“It is in no one’s interests for there to be an escalation of protectionist tariffs,” he added.
Tata said the type of steel affected by the Chinese tariffs had not been exported “in recent times from our UK operations”, but it was concerned about the knock on effect on other countries looking for alternative markets for their products.
It also highlighted the “ongoing disparities between the high tariffs set by other countries and the low tariffs which continue to be set by the EU”.
Mr Cameron said they needed to work together to tackle “over-capacity”.
Commenting on the Tata situation, he said every effort was being made to save jobs after the company’s decision sell its loss-making UK plants – but he warned there were “no guarantees of success”.
Labour’s deputy leader Tom Watson told the BBC the government had been “on the back foot”, and should have changed procurement rules to ensure a role for British steel in big projects such as HS2.
He said Business Secretary Sajid Javid seemed “harnessed to his ideology” and unable to see a role for temporary state intervention.
Plaid Cymru leader Leanne Wood called the latest news about China imposing tariffs a “joke”.
BBC business correspondent Joe Lynam
In the early 2000s, China was soaking up all the world’s steel and iron ore to build its new cities, and created numerous steel production facilities in their industrial towns. Soon they were making more in one factory in a year, for example, than the entire British steel industry.
But when their construction boom waned, they had too much steel. They couldn’t sell it locally and had to dump it overseas at a cut price. And you cannot compete with dumped steel.
In the future, the UK wants to focus on the production of expensive, specialist steel – but that is the very stuff now facing tariffs of up to 46% in China.
The other difficulty for the UK is that it wants to be one of China’s major trade partners in the future.
For example, the government wants the Chinese to pay for a third of the Hinkley Point nuclear power station in Somerset, which is under way but hasn’t got the final green light yet.
But to get that long term relationship, the UK might need to look away from certain Chinese trade practices.
Tata’s UK business – which directly employs 15,000 workers and supports thousands of others – includes plants in Port Talbot, Rotherham, Corby and Shotton.
Steel production makes up 1% of Britain’s manufacturing output and 0.1% of the country’s economic output.
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This post was written by FSB News