Is China "dumping steel"?

It appears that the EU is back on the anti-dumping trail.

Definition:

"Intended to discourage importation and sale of foreign-made goods at prices substantially below domestic prices for the same items."

China has undoubtedly been guilty of such practices in the past. This article signals the EU's intention to keep the EU's growing trade gap under close observation. Tensions are sure to rise in the coming months. Any hint of a recession in the EU and you will see a deluge of politicians screaming for more protection.

Given that this dumping case means we can all buy cheaper cars it does not make it an easy one to negotiate. The bottom line is that it is all about jobs - who are the winners and who are the losers (and crucially which group is the largest).

This is only the beginning.

EU probe into dumping claim [FT]

The European Union is set to launch an investigation into whether China is dumping underpriced steel, in the latest sign of increasing trade tensions.

Brussels diplomats said that national government trade officials would discuss today a recommendation from the European Commission, the bloc's executive arm, to probe imports of hot-dipped galvanised steel from China, used for car bodies.

Eurofer, which groups EU steel producers, complained formally in October that its members had lost sales to cheap steel from China after its domestic market became saturated.

Imports of the metal from China hit €1bn this year, double last year's figure, grabbing a bigger share of a €16bn (£11.5bn) market.

The Commission has nine months from the date it begins any probe to conclude if the industry has been harmed and recommend interim punitive measures, usually tariffs or quotas. Peter Mandelson, the EU trade commissioner, recently warned China publicly that the rapid expansion of its steel exports, fuelled by subsidies, could trigger such moves.

In a statement Eurofer said: "Exports of the products concerned have inundated the EU market. Massive volumes have been dumped on the EU market at dumping margins of up to 40 per cent. EU domestic prices have been undercut by up to 25 per cent."

This had led to capacity being underused, putting jobs at risk, it said.

Mr Mandelson faces a tricky political balancing act over the issue. Car companies, which employ far more workers, welcome the low prices Chinese imports create.

Anti-dumping measures must be backed, or at least not be opposed by, a majority of the 27 member states, which tend to split according to whether their companies benefit from the duties.

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