France, Germany urge tighter trade defence in face of China steel

[BRUSSELS] France and Germany urged fellow EU members on Friday to tighten trade defences to protect the bloc's companies against floods of cheap imports, such as the recent surge of steel products from China.

The European Commission, which initiates EU legislation, proposed an overhaul of the EU's trade defence system in 2013, but failed to secure the required approval from EU member states.

But recent concern over China's steel overcapacity has persuaded some EU members, including Germany, that EU industry needs more protection.

Cheap Chinese steel exports are cited as one reason for Tata Steel's decision to sell its British steel operations. The European Commission now has seven ongoing investigations into Chinese steel imports after opening a new case into alleged subsidies for hot-rolled flat steel on Friday.

In a joint paper put before EU trade ministers at a meeting in Brussels on Friday, France and Germany said investigations should be sped up, allowing duties to be imposed after seven months, from nine months now, and there should be a greater ability to apply tariffs retrospectively.

The two countries said that the trade defence update was particularly relevant given that the EU needs to decide by December whether to grant China "market economy status" (MES), which Beijing says is its right 15 years after joining the World Trade Organization.

EU legislators overwhelmingly rejected granting the status until China reforms its economy.

MES would make it harder to impose anti-dumping duties on Chinese goods sold at knock-down prices because it would change the method for determining a fair price.

France and Germany said the EU should look into whether it could continue to treat China as a special case if its producers could not prove they are operating under market conditions.

The two also propose restricting the use of the "lesser duty rule" which limits the tariffs the bloc can set. However some EU members, including Britain, believe this rule should remain.

Lilianne Ploumen, the Dutch trade minister who chaired Friday's meeting, confirmed that ministers had discussed how to modernise the EU's trade defence instruments to counter unfair competition and dumping and sought an acceleration of preparatory work. "We might not move on the lesser duty rule, but move we will," she told reporters.

REUTERS