APPENDIX 14
Memorandum by UK Steel
1. UK Steel, a division of EEF, is the trade
association for the UK steel industry. It represents all the country's
steelmaking companies, and a large proportion of downstream processing
companies.
2. The UK steel industry's annual exports
to non-EU countries are worth some £1.3 billion. Imports
from non-EU countries amount to some £0.9 billion per year.
Global trade in steel is worth £85 billion[29].
The non-agricultural market access talks are therefore of particular
importance to the sector.
3. For several decades, steel products and
steelmaking raw materials have been the subject of frequent unfair
trade cases and trade disputes. Thus the other area of importance
to the sector is the rules negotiations.
OVERVIEW
4. Although the sector's specific objectives
for the DDA are relatively limited, a successful conclusion to
the round is nevertheless of vital importance to an industry whose
products are so heavily traded. The Uruguay Round made substantial
advances—notably in establishing a meaningful and binding
disputes settlement procedure capable of producing real results.
This has had an important impact on helping curb the worst protectionist
impulses of several of the EU's trading partners, most notably
in the steel trade dispute sparked by the USA's imposing safeguard
tariffs in 2002.
5. Failure to achieve a successful conclusion
to the round would undermine the credibility of the WTO and risk
putting into reverse the process of multilateral trade liberalisation.
Thus more is at stake than just the issues under negotiation.
6. As the Committee recognises, the key
to breaking the deadlock—particularly on NAMA—lies
with the EU and USA making concessions on agricultural market
access and subsidies. It is clear that the Commission currently
has little room for manoeuvre. The UK Presidency must exert strong
leadership to ensure that the Commission goes to Hong Kong armed
with a mandate capable of delivering agreement.
7. EU and US concessions on agriculture
will also of course have a direct impact on relieving world poverty.
Like many other business organisations, we remain concerned at
the strongly expressed, and frequently ill-informed, views of
those NGOs who seem to prefer wrecking the WTO to the achievement
of substantial trade liberalisation. Some of these NGOs are frequently
unrepresentative of the countries they purport to speak for. While
UK Steel recognises the need for special and differential treatment—particularly
for the least developed countries—we nevertheless believe
that global trade liberalisation can be a key contributor to the
elimination of poverty. In this context it is important to bear
constantly in mind that the high trade barriers maintained by
many developing countries have as great an impact on stultifying
trade between developing countries as they do on "North-South"
trade. A successful conclusion to the NAMA negotiations would
provide a stimulus to "South-South" trade and help drive
economic development in those countries.
NON-AGRICULTURAL
MARKET ACCESS
8. Negotiations on a multilateral steel
agreement (MSA) to eliminate subsidies and other barriers to trade
formed a part of the Uruguay Round talks. During the Round, the
EU steel industry indicated it could accept the complete elimination
of tariffs on steel as an integral part of an MSA. In the event
the MSA negotiations collapsed, but trade negotiators nevertheless
went ahead with zero-for-zero tariffs for steel covering only
a very limited number of countries. Major steel producing nations
(including Brazil, Russia, China and India) continue to maintain
tariffs—frequently at very high levels—whereas a handful
of others (notably the EU, USA, Canada, Japan and Republic of
Korea) now have zero import tariffs. Our principal objective for
NAMA is therefore the extension of the country coverage of the
zero-for-zero steel agreement.
9. Beyond that, the steel sector supports
a formula approach that produces greater cuts in higher tariffs.
Removing tariff peaks would be a particularly welcome outcome
from the round.
10. It is also vital to ensure that all
tariff reductions agreed in NAMA are then bound. During the 2002-03
global steel trade dispute, some countries increased their trade
protection by raising tariffs from relatively low applied levels
to far higher bound levels.
11. UK Steel is however concerned that the
Commission's proposal to achieve accelerated trade liberalisation
for a list of environmental goods is fundamentally flawed. While
we understand and support the motivation, we are concerned that
implementation would be extremely complex and potentially discriminatory,
introducing the concept of "good" and "bad"
goods into the tariff schedule. A steel pipe used in a water treatment
plant may be no different from one used in other machinery; structural
steel used to construct a wind turbine no different from that
in other structures. One concern is that, if implemented, this
approach could be at odds with the fundamental WTO principle that
"like" products be treated alike. Liberalisation of
trade in environmental goods is best achieved through a successful
conclusion to NAMA delivering meaningful reductions in tariffs
and non-tariff barriers on industrial goods in general.
RULES
12. Steel is frequently the subject of unfair
trade complaints and investigations—notably in the USA,
but also increasingly in developing countries such as India. The
EU steel industry also occasionally uses the EU's own trade rules
to seek protection from unfairly traded imports.
13. Unfortunately, countries apply WTO disciplines
in varying ways. The US steel industry for example can obtain
far faster and far more effective protection from dumped imports
than is available within the EU. This is itself in effect a distortion
of trade. Sometimes it results from infringements by governments
of the WTO agreement (and the Commission has been very supportive
in pursuing WTO dispute resolution proceedings where this has
been the case). More frequently, however, it is simply that the
WTO agreement itself allows too much scope for different interpretations.
14. The UK steel industry therefore welcomes
attempts to use the DDA to secure greater harmonisation of the
way in which the anti-dumping agreement is applied, rather than
change the fundamental principles underlying this agreement. The
EU in these negotiations is in the happy position of lying midway
between the extremes of the USA which opposes any change to the
agreement, and the so-called "friends of anti-dumping reform"
who seek wholesale revisions. In these circumstances, we believe
the Commission's strategy of initially allowing other parties
to be the demandeurs, and then subsequently establishing itself
as the leader of the group seeking a middle-way compromise, has
been sensible.
STEEL SUBSIDIES
15. At the Cancún Ministerial, note
was taken of talks taking place under OECD auspices to agree international
disciplines on steel subsidies. If an agreement were to emerge
from these talks, it would be incorporated into the eventual DDA
agreement.
16. The OECD talks have continued in the
intervening period, but are making little headway. Although an
ardent supporter of international steel subsidy disciplines in
principle, UK Steel now believes that the differences between
the parties are so great that it will not be possible to reach
an agreement that serves the UK industry's interests.
17. The participating governments are due
to take stock of progress in January. Unless there has been substantial
movement by other parties by that time, UK Steel favours a decision
to terminate the talks.
28 September 2005
29 All data cited relate to 2004. The global steel
trade figure excludes intra-EU trade, worth a further £48
billion. Back
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