EU Slaps Duty On Chinese Steel Imports

by Ulrika Lomas, Tax-News.com, Brussels

03 August 2009

European Union member states have approved a European Commission proposal to impose punitive tariffs on the import of steel pipes from China.

The decision has been taken in a bid to protect the European steel industry against a glut of cheap imports from China and is in retaliation to “unfair” Chinese export taxes on raw materials, which enables Chinese steel manufacturers to produce steel much more cheaply than their European competitors.

It is believed that the duties will range from around 18% to 40% and will apply to seamless steel pipes, which are a major competent in the construction, automotive and oil industries. The duties will be in place for five years and will apply from August once the decision to apply them has been rubber stamped by the European Council, the EU’s governing body.

The EU began imposing temporary duties on imports of certain Chinese seamless pipes in April at rates of between 15% and 25%. The decision to impose more wide-ranging duties on Chinese steel pipes is an indication of rising trade tensions between the EU, the United States and China as governments attempt to shore up economies through a mixture of trade-distorting tax breaks and subsidies.

In June, EU member states agreed to support a European Commission proposal to impose an anti-dumping duty of 24% on imports of wire rod from China. The measure is applicable for five years as from the beginning of August 2009 and was welcomed by the European Confederation of Iron and Steel Industries, Eurofer, which said that the duties sent a “clear message that unfair trade practices are not tolerated by Europe.”

Last month, the EU and the US announced that they were making a formal complaint to the World Trade Organization (WTO) over Chinese export tariffs and quotas in respect of up to 20 categories of raw material – mainly metals and chemicals. The EU has been complaining directly to China for almost two years over the export tariffs and the chemical sector is especially upset with a 120% export tariff on yellow phosphorous, which is a crucial ingredient in many products from fire extinguishers to detergents. In recent months, the EU has also filed anti-dumping complaints against China over products ranging from footwear to steel fasteners.

China had agreed to reduce export taxes and quotas on raw materials when it joined the WTO in 2001. However, it has also enjoyed a vast trade surplus with the EU and the US in that time. For example, in 2008, China exported well over half-a-million tonnes of seamless steel pipes to the EU, compared to just 35,000 tonnes in 2005. Since 2001, Chinese exports to the EU have leapt from USD67bn to USD357bn last year.

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