Trade defence instruments: the manufacturing perspective

1. Trade defence instruments: the manufacturing perspective Ian Rodgers Director, UK Steel

2. A balanced view……. • The UK (and EU) steel industry has: • Defended trade cases abroad (USA, Canada, Australia, India etc). • Used TDIs as producers in the EU. • Opposed TDIs as consumers in the EU.

3. …..requires a balanced approach • Must not lose sight of the international context. • EU regulations framed by WTO agreements. • Painfully achieved compromise in the Uruguay Round. • Unilateral disarmament doesn’t work. • EU already more liberal than most. • Reform must not put EU manufacturing in a weaker position than US, or Russian, or Indian – competitors. • Fundamental changes should only be implemented if they emerge from a balanced Doha agreement.

4. TDIs counter unfair practices • TDIs (other than safeguards) are the international surrogate for competition law. • General acceptance that state-subsidised production distorts markets and is therefore economically inefficient. • Dumping is discriminatory pricing: • Perhaps helped by state-imposed distortions (high tariffs, input price controls etc), • Perhaps resulting from deliberate commercial policies. • Unfair practices affect all players in a market, including other importers.

5. TDIs “should not be used to counter genuine comparative advantages” • Fully agree. • But a company with genuine comparative advantages has no need to be subsidised or to dump.

6. TDIs should not be used to frustrate the benefits of offshoring • Again, agreed. • But equally, companies who have offshored their production should not unfairly benefit from dumping or subsidisation. • Suggestion that EU companies importing their own production from overseas should receive special treatment: • TDI should be blind to ownership. • Foreign-located producers should receive equality of treatment.

7. Non-market economies • Previous analyses only apply to market economies. • Recent contentious cases were against NMEs. • E.g. were Vietnam & China genuinely dumping? No way of knowing. • Commission gives special treatment to economies in transition – where justified. • Beyond that, only recourse is to find best match analogue country – e.g. one with similar level of development. • Certainly does not merit wholesale revision of the rules.

8. Community interest • Support need to balance interests of industrial users with Community producers. • Look at overall market situation for both industries, not just the simple impact of extra duties on users’ costs. • Could make it easier to exclude sub-products that are not made in the EU.

9. Community interest • But an EU company that moves its production aboard, and then dumps, does not merit special treatment: • Wrong to discriminate against other foreign producers on the basis of ownership; • Wrong for the EU to encourage offshoring; • The fact of becoming subject to EU import laws should have been a factor taken into account in the original investment decision.

10. Community interest • Nor should the immediate impact of AD/CV duties on consumer prices be a relevant consideration: • The presumption underpinning state aid law is that subsidies undermine efficient producers, to the long term detriment of consumers; • The presumption in internal investigations into discriminatory pricing is that maintaining diversity of supply is in the long term interest of consumers. • The prime consideration should be the maintenance of a competitive manufacturing base in the EU.

11. De minimis thresholds • The EU de minimis standard for injury is already tougher than the WTO standard: • In the average steel case, the WTO “1% of imports” standard equates to 0.3% of market share, whereas the EU will only initiate against countries with at least 1% market share. • Could support higher standards for LDCs if these were universally applied.

12. Shorter timescales • Support earlier provisional measures, bringing us into line with the USA. • Could be achieved by bifurcated process……..

13. Institutional process • Need to de-politicise. • One way would be to take the Council out of the equation, and put injury and Community interest decisions in the hands of an independent agency.

14. Conclusion • The EU’s trade defence instruments are an exemplar for the rest of the world. • Scope for more sophisticated economic assessments in Community interest test. • Significant changes should only emerge as part of a multinational agreement.