BMWi: How the German Federal Ministry of Economics influences (world) steel policy – Stainless Cappuccino

29 March 2021 – According to the German Federal Ministry of Economics and Energy (BMWi), Germany was the world’s seventh-largest steel producer in 2019, with 39.6 million tons. Of these nearly 40 million tons of steel, 20 million tons were exported in flat steel. With a total turnover of 32.8 billion euros and 84,000 steelmakers directly employed in 2019, it belongs to the basic industry, according to the Federal Ministry.

German: BMWi: Wie das deutsche Bundeswirtschaftsministerium die (Welt-)Stahlpolitik beeinflusst

BMWi calls for extension of EU Safeguard

Federal Economics Minister Peter Altmaier (BMWi), representing the German government, is thus of course also one of the 12 EU member states that, with the support of EUROFER, have written a letter to the EU Commission calling for an extension of the existing EU Safeguard measures.

Old and powerful steel industry with tradition in Germany

The steel industry in Germany has tradition and the employees working there have a lobbying organization in the form of the Industriegewerkschaft Metall (IGM), which is aging and has problems with new blood, but can still bring thousands of people onto the streets if necessary. And the IGM, like the steel companies themselves, is quick to bring the desire for state aid into play, such as most recently a state intervention in the ailing steel division of thyssenkrupp (Source). And where in the end even the state found it too tricky to pump billions of taxpayers’ money into a company that could probably no longer be saved and refrained from doing so (Source).

Steel production in Germany currently without a future

The SPD, with its chairman Norbert Walter-Borjans, has also recognized that steel production in Germany and thus also in Europe currently has no future.

In an article published in October 2020 on the SPD website (Source) and in a guest article hidden behind the paywall of the FAZ, Mr. Walter-Borjans writes: “But let’s not fool ourselves: Conventional steel production will have a hard time in Germany. The quality advantage over China and India will be hard to maintain. There is a great danger that in the foreseeable future even the last production will migrate to where it is cheaper.”

Changes at steel manufacturers only possible with billions in taxes?

If you read on, and there are many points (such as the neoliberal myth) that could certainly be debated, Mr. Walter-Borjans makes a detour here that could easily have been turned around. Mr. Walter-Borjans goes on to write: “The steel industry is therefore virtually predestined for holistic thinking, which sees in targeted state investment support, including direct participation, the opportunity to build up an economy geared to the common good. If the state thus supports transformation on a grand scale, that is defensible.”

But large-scale transformation could also look different. Instead of maintaining old, ailing and no longer sustainable, over-subsidized and thus semi-state-owned steel companies just for the jobs, a transformation could be initiated so that jobs are sensibly relocated to the downstream industry, which is plagued by a shortage of skilled workers and worries about young talent. 

Federal Ministry of Economics publishes steel action plan

Instead, the German Federal Ministry of Economics (BMWi) has published the Steel Action Concept (Source). Published in mid-2020, it is unlikely to have been noted in the second wave in the Corona pandemic that is just picking up speed due to relaxations. The German government has already used such times in the past, when everyone was looking elsewhere, to launch problematic concepts. 

What is the Steel Action Plan about?

Among other things, this concept involves billions in subsidies (at least 30 billion euros in direct subsidies) for the German steel industry in order to finance a change to CO2-neutral steel. Which the multinational steel companies would allegedly not be able to accomplish on their own. Because hardly any of these steel producers are really European anymore.

Demanding fair and free trade – but constantly curtailing free trade for others

While the European Union and the Federal Republic of Germany as an exporting country (Source) are quick to call for free and fair trade, they are also quick to restrict it. If you read the steel action plan, you will quickly find “modern” and “innovative” transformation concepts, such as the desire for further tariffs and levies on steel imports.

The compliant sword of the paid steel lobbyists

If other countries, such as China, India or Indonesia, can produce equivalent or even better steel more cheaply and thus supposedly endanger the European (German) economy, then an anti-dumping procedure, an anti-subsidy procedure or even the Safeguard measures are quickly set in motion in cooperation with the steel manufacturers and EUROFER.

Why is everyone always talking just about EUROFER?

It is practical to have written into the EU regulations that you have to represent at least 25% of the TOTAL European industrial sector affected in order to initiate a procedure (Source). And it is therefore no wonder why hardly any metal processing downstream association is really heard at EU level. Unfortunately, this is not fair and just. But it seems that people prefer to talk only to EUROFER.

CBAM: The new star in the sky of market protection measures

The latest weapon in the arsenal of the European Commission and the German government is the Carbon Border Adjustment Measure, or CBAM for short. What was sold to the European population as a measure against dirty products from abroad, turns out on closer inspection to be a new market protection measure.

Fair and free competition or protectionism of oligopolistic structures?

Indeed, fair competition is not being promoted here. After all, European steel producers have to do little themselves to make their steel greener in the end. For example, the dirty European steel manufacturers have been given for free the expensive CO2 certificates for years. And they receive additional funds from taxpayers’ money at national level in the form of direct and indirect subsidies.

Protecting German steel producers at any price?

This is also openly proclaimed in the steel action plan. If the steel producers themselves do not manage to implement the transformation, then they must continue to be protected. With tariffs, levies, free certificates, compensation payments if the certificates become more expensive, and the investment in new equipment paid for by the Federal Republic.

And Germany exports around 20 million tons of flat steel to the world every year. But please let this steel arrive everywhere unhindered. Fair and unrestricted trade. We remember one of the favorite mantras of the German government and the Federal Ministry of Economics.

And why does only the European Union have rights?

Other countries that are still trying to find their place on the world stage and that have not really been taken seriously for decades, however, naturally do not have these rights.

Indonesia, for example, has to lift an export ban on nickel. We reported on this in January. So far, the European Community has bought little or no nickel from Indonesia. So why mess with Indonesia at the WTO?

EU: We don’t want your cheaper products. But give us your cheap raw materials!

When at the same time the media reports that European carmakers want to build at least seven to eight million electric car batteries (Source) per year. Or the Tsingshan Group with a huge nickel deal for e-batteries is shaking up the entire nickel market and causing prices to plummet by a whopping 14%. And if you remember that the Europeans hardly have any raw materials worth mentioning anymore and nickel is on the EU’s raw material risk list, then it quickly becomes clear what this is really all about.

Billions in subsidies for the EU economy are okay?

The same applies to the state-supported Chinese steel manufacturers, who are threatening to finally outstrip the European manufacturers. As Mr. Walter-Borjans had already so aptly stated. And at the same time, just like Mr. Altmaier, the Federal Minister of Economics, he is demanding billions in subsidies for the transformation of German steel manufacturers.

Current WTO regulations are a thorn in the side of the German government?

One’s ears prick up when Federal Minister Altmaier and the new Director General of the World Trade Organization (WTO), Dr. Ngozi Okonjo-Iweala, talk to each other. And the Federal Minister calls a reform of the WTO indispensable (Source).

Calling for an end to Section 232, but at the same time wanting to extend Safeguard?

Or when Mr. Altmaier, as he did this week, talks with the new U.S. Trade Representative Katherine Tai about a long-term solution for U.S. tariffs on steel and aluminum – and the EU Safeguards are not even mentioned in the press release (Source).

WTO rules must be respected – but please only by others

It is also interesting to read that the BMWi, in the person of Federal Minister Peter Altmaier, once again explicitly mentions the medium to long-term reform of the WTO system. That comparable conditions for international competition are to be created. And that compliance with the international rules and regulations is being urged.

Interesting, when with the efforts to extend the EU Safeguard measures one would actually violate WTO regulations. Or with the European CBAM and the unwillingness to abolish the free EU ETS allowances, would violate the WTO’s ban on double subsidies. Not to mention all the German subsidies for the steel industry.

Holistic view of the European (German) economy is missing

In the end, the European Commission, the German government and the German Ministry of Economics are forgetting a very important and much larger factor in their one-sided view: the thousands of companies and millions of employees in the downstream industry who depend on imports of steel and stainless steel. And contribute significantly more to the value chain than the ailing European steel industry, which allows itself to be borne by the EU and its member states. Indeed, we cannot see any real will to transform.

Digitalization missed – but some are just more equal than others

But it’s nice that Mr. Altmaier is allowed to use technologies like Zoom or Skype, which have been mostly banned from the German civil servant, teacher or kindergarten teacher for data protection reasons, along with instant messengers like WhatsApp, during the current crisis. And which would have contributed greatly to communication during the Corona pandemic and digitalization as a whole in Germany. But that fits with Germany’s culture of prohibition, which can be found not only in digitization but also in steel.

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