EU urges China to cut steel overcapacity; Beijing says let’s meet at WTO

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The European Union has urged China to take steps to reduce overcapacity in its steel sector, as falling global prices and higher exports by the world’s biggest steelmaker is raising concerns across countries battling to save their domestic industry.

A top EU trade official wrote to China’s minister of commerce, warning it would open three new anti-cumping investigations on steel imports from China. The EU is in the midst of trying to figure out whether it lower trade barriers against China. The recommendations are expected later this year.

European steel makers such as ArcelorMittal and Tata Steel have blamed cheap imports from China as the main cause behind their poor performance. While ArcelorMittal is mothballing at least one plant, Tata have announced more than 1,000 job cuts in the United Kingdom.

The EU is expected to open at least three investigations this month into Chinese steel dumping as steel prices on the continent have hit a 12-yaer low.

China, which makes half the world’s steel and exported a record 112 million tonnes last year, said it has taken concrete steps to reduce overcapacity.

After a string of measures to cut steel overcapacity, China has seen a marked progress at considerable costs with the capacity growth having been curbed, Xinhua news agency quoted the Ministry of Commerce as saying.

China’s cabinet announced last week that steel production capacity will be reduced by 100-150 million tonnes over the next five years after a reduction of more than 90 million tonnes between 2011 and 2015.

As steel overcapacity is a common problem across the world and requires a joint effort, China is willing to engage in discussion on the subject with members of the World trade Organization (WTO), the ministry said.

It urged WTO members to stop using a “surrogate country system” on China’s exports. The system allows importers to use costs of production in the third country to calculate the normal value of exports from a non-market country.

Under the “surrogate country system,” importers use costs of production in a third country to calculate the normal value of exports from a non-market economy.

 

 

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