Germany and France call for boosting trade defense

The EU has been struggling for years with British resistance against reforms.

France and Germany joined forces Friday to break down British resistance on overhauling the EU’s trade defense measures, amid a deepening steel crisis and claims that China is not respecting fair trade practices.

EU states are increasingly frustrated with the low retaliatory tariffs imposed against Chinese dumping and the lengthy procedures required to implement such countermeasures.

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In a joint letter, Berlin and Paris “call for provisional [trade defense] measures to be adopted more quickly” as well as undertaking a “balanced modernization” of the so-called lesser-duty rule, which requires the EU to restrict its anti-dumping fines to a level lower than the actual damage might be.

A group of 14 countries — among them the United Kingdom, Austria, Belgium, the Netherlands and Finland — has so far blocked such a modernization, but against the backdrop of the current steel crisis, which has particularly hit the U.K. hard, there was some movement, according to the German secretary of state Matthias Machnig.

“Many countries made positive remarks [on these propositions], also countries that were formerly critical [on changes], particularly the United Kingdom,” he said. London is the most adamant in opposing changes to the current legislation. 

A Belgian government source told POLITICO that his country shifted its position and is now endorsing improvements to trade defense.

The European steel lobby claims that Europe has lost 20 percent of its jobs in the steel sector since 2008 due to heavily subsidized products that force their way into the EU market.

Dutch Trade Minister Lilianne Ploumen told reporters that “we will also look into better applying the existing trade defense measures” but remained wary about changing the lesser-duty rule, which limits the EU’s possibilities to slap painfully high anti-dumping fines on countries like China. “There will be movement, maybe not on the lesser-duty rule, but we are definitely moving forward,” she said.

Among the improvements suggested by Berlin and Paris that might be more palatable to the U.K. and other opposing countries is a widening of the so-called ex-officio procedure, which allows the Commission to launch anti-dumping or anti-subsidies investigations on its own, and not only after a company claims to have been discriminated against. The Franco-German letter says that “recourse to ex-officios should particularly be made in order to protect against possible retaliatory measures by third countries.”

The European Commission in March also proposed modernization measures, which will be part of follow-up discussions that will start “without delay,” Dutch minister Ploumen said.

Also Friday, the European Commission announced that it has launched a new investigation on imports of Chinese hot-rolled flat steel, raising the number of ongoing trade defense investigations in the steel sector to 10, out of which seven are directed at China.

Thirty-seven other anti-dumping and anti-subsidy measures concerning steel products are already in place.