David Cameron is being urged by UK steel employers and unions to join forces with world leaders at the G20 summit to warn the Chinese president, Xi Jinping, to stop dumping cheap steel on Europe, or lose access to European markets.
The call on Cameron to get tough comes in the wake of a mass of steel plant closures across Europe, the US and Mexico in part caused by China flooding markets with its own subsidised steel and so helping to drive down its global price.
The European Union has some leverage over the Chinese since Xi is desperate to be given market economy status, a declaration that would open even more European markets to China.
Much of the G20 summit in Antalya, southern Turkey, including the opening Sunday evening dinner, is likely to be taken up with a clash between the US and Russia over Syria, and world migration. But the G20 is the world leaders’ premier economic forum, and Caroline Atkinson, Barack Obama’s adviser on international economics and the chief US summit planner, has said one goal for the summit must be to boost world demand.
China will host the G20 next year, and its role in boosting demand will be critical, but UK steel interests are hoping Cameron will make common cause with other EU nations to challenge China at this summit.
The Trades Union Congress (TUC) general secretary, Frances O’Grady, formally wrote to Cameron asking him to raise the issue of steel dumping with the Chinese at the summit and to tell Xi that “dumping underpriced Chinese steel on to the world market will significantly reduce UK support for China’s ambition of achieving market economy status under World Trade Organisation (WTO) rules.” The request has the support of UK Steel, the employers’ body.
China claims that under WTO rules it should be granted market economy status next year, a move that would make it harder still for the EU to impose retaliatory tariffs on cheap Chinese imports.
O’Grady points out in her letter to Cameron: “The mothballing and closing of plants in Motherwell, Redcar, Scunthorpe and the West Midlands in recent weeks threatens one in six of all UK steel jobs. The West Midlands Economic Forum has argued that in the Midlands alone these closures threaten a further 52,000 job losses in manufacturing over the next five years.
But she adds: “The European steel industry has lost a fifth of its jobs since 2009, while demand remains 25% below levels before the 2007-08 financial crisis, as Europe has felt the force of Chinese steel, which is believed to be sold at below the cost of production. If that is correct, it is illegal under WTO rules, and I urge you to ensure that the Chinese president understands that there must be consequences. Market economy status would allow China to manipulate the price of even more goods, and undercut existing producers across the G20 economies.”
She told the Guardian: “If China is given market economy status without playing fair on steel prices, the crisis will go from bad to worse.
“The government must now show that our growing relationship with China is not a one-way street. If you want to join the club, you have to play by the rules – so the prime minister must tell president Xi that if China continues to manipulate prices it will affect UK support for its MES bid.”
The initiative has been welcomed by the director of UK Steel, Gareth Stace, who told the Guardian: “It is appropriate for Cameron to raise this issue with the Chinese president at the G20. The Chinese actions are having a serious impact on steel-producing nations right across the world and there is very little evidence that they are complying with WTO rules.”
UK Steel believes the British are beginning to take a more proactive line to defend European steel from dumping, but fears that if China achieves market economy status as expected next year, the impact will be devastating.
The first G20 summit was held in 2008 amid fears that a spreading financial crisis could trigger a worldwide depression, and there is growing concern of a further recession next year, with slowdowns in Russia, China and Brazil.
The nations meeting in Turkey account for 85% of global output, and will be holding their discussions within 300 miles of the battleground of Syria.
There are 2 million mainly Syrian refugees inside Turkey, and the recently re-elected Turkish president, Recep Tayyip Erdoğan, a fierce opponent of Syria’s president, Bashar al-Assad, and the recent Russian military intervention, has been pushing for no-fly zones and safe havens within Syria. The US regarded the plan as impractical, but has been stung by the surprise Russian decision to use its air power to defend Assad. Russia has been pushing a rival eight-point peace plan that is silent on the future of Assad.
Obama and his state secretary, John Kerry, are seeking regional agreement for elections inside Syria within 18 months leading to a new regime replacing Assad. The rival peace plans will be debated in Vienna on Saturday before the world leaders meet in Turkey to discuss progress.
The G20 will also consider how Turkey can be helped further to stem the flow of refugees from its borders to Greece, and then further into the EU.
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