Today, the EU imposed anti-subsidy duties on imports of stainless steel cold-rolled flat products originating in Indonesia and also India. With Indonesia at the forefront, the EU is countering the highly trade-distorting export restrictions on key raw materials – linked also to Chinese financing.Source: TRADE DEFENCE | Brussels, 16 March 2022
Anti-subsidy duties not unexpected, but justification highly political
On 16 March 2022, the EU announced that it will impose anti-subsidy duties on imports of cold-rolled stainless steel from India and Indonesia. These are market protection duties of more than 40% that will be imposed cumulatively on Indian and Indonesian stainless steel.
The EC’s anti-subsidy duties decision was not unexpected and we had already warned several times in 2021 that the Commission intended to assert itself with regard to stainless steel imports from India and Indonesia.
EU market protection measures only of a political nature?
The justification that this is primarily intended to punish Indonesia and China because they cause trade distortions in raw materials shows that anti-subsidy duties and anti-dumping measures in Europe are more political in nature than really economically justified. This could already be seen in the calculation error in the justification for the Safeguard extension, which was secretly swept under the carpet and Safeguard was subsequently extended anyway.
Double standards of the European Commission
Once again, the double standards of the European Commission are evident. On the one hand, steel from Russia and Belarus is heroically banned due to the Ukraine conflict, thus showing how strong its own sanctions are.
Sanctions only where they do not hurt the EU
On the other hand, imports from Russia, especially from the energy and raw materials sector, are explicitly excluded from the sanctions package. Steel hurts Russia, but not the European Union. The EU has the second largest overcapacity in steel production in the world and steel can therefore easily be procured elsewhere.
No energy, no raw materials – Europe is left with nothing
The European Union, on the other hand, has not enough energy or raw materials. Sanctions would therefore hurt the EU itself. In the opinion of the EC, the Russian government would rather hurt the people in Ukraine for a little longer. This is nothing new, by the way, and the EU already pushed through the sanctions package against Russia in 2014 because of the annexation of Crimea. At the time, it was said that the EU did not want to damage itself economically, especially with regard to gas and raw material supplies.
EC furious with Indonesia over nickel export ban
At the same time, the EC is boasting that it is consistently taking action against state-subsidised imports from India and Indonesia because Indonesia in particular no longer wants to supply them with nickel. Behind this, of course, is the Chinese state – because it wants all the nickel for itself.
Anti-subsidy duties as payback for export restrictions
The interesting thing is that the European Commission does not actually want to counter stainless steel exports with the anti-subsidy duties, but the Indonesian government’s export ban on nickel. A dispute that has already been escalated to the World Trade Organisation. In addition, the Indonesian government is apparently planning further export restrictions on raw materials.
EU dependent on raw material imports
Here, too, the big problem is that the EU has no raw materials, especially nickel. And that is currently the fuel for the green transformation in Europe – without nickel it won’t work. Which is why nickel has already been excluded from the sanctions against Russia. This shows Europe’s misery with regard to its dependence on raw materials. If the EU wants to become independent of Russian energy exports, it needs Russian raw materials. What a paradox.
Strong trade distortions due to export ban
The EC cites severe trade distortions, while it is tightening its import barrier of the Carbon Border Tax CBAM (which, coincidentally, explicitly excludes the raw materials it does not have itself – see e.g. Direct Reduced Iron (DRI) and dirtily produced hydrogen) and, incidentally, has ensured the survival of its own steel industry with deliberately oversized free emission certificates.
Green transformation? EU simply shifts pollution to non-EU countries.
At the same time, the largest EU energy importer, Germany, for example, is working on having hydrogen produced all over the world. No matter what the quality, the main thing is that there is plenty of natural gas and salt water for the production of H2 on the foreign doorstep. It’s just important not to let its own North Sea tidal flats and the Baltic Sea with the millions of tonnes of unusable and highly toxic brine from the desalination plants go to waste.
Didn’t seem to occur to the new German Green Vice-Chancellor and Federal Minister of Economics Robert Habeck when he took over this environmental mess from his predecessor ex-Federal Minister of Economics Peter Altmaier.
For in his report “Opening balance for climate protection“, Mr Habeck also overlooked or deliberately concealed what is probably the most important factor in the production of hydrogen: Water. Water that is no longer infinitely available in Europe and Germany. Desalination plants do not look good in the green environmental balance sheet, as they consume enormous amounts of energy (which is already lacking) and produce the millions of tonnes of brine mentioned above.
Magnesium crisis as a template
In the summer and autumn of 2021, China had to cut back on magnesium production. Europe has not produced its own magnesium for years, as its own industry preferred to buy its magnesium in China. The domestic producers didn’t stand a chance. More than 90% of the magnesium for the European market comes from China – a clear dependency without much alternatives.
Magnesium terribly dirty to produce
And even if magnesium could be mined and produced in Europe, they refrain from doing so. Mass production of magnesium would not be good for Europe’s CO2 balance, as almost 27 tonnes of CO2 are produced for one tonne of magnesium. Moreover, the costs would probably be far too high – after all, there are non-EU countries that can help to improve the European CO2 balance.
And since raw materials do not occur in CBAM, for example, the EU can much better point the green finger at foreign manufacturers about how dirty their production is.
EU ETS certificates as hidden steel subsidies
The German steel giant Thyssenkrupp alone has apparently received more than 1.3 billion euros in hidden subsidies over the years in addition to the free emission allowances. EU steelmakers together more than 16 billion euros. And that, as written, is just the proceeds from the surplus allowances.
Free ETS certificates also after 2026?
The association of European steel producers, Eurofer, is lobbying hard to ensure that the ETS certificates continue to be issued free of charge and in increased numbers to steel producers after 2026. The higher the price of ETS certificates rises, the more the steel producers receive as a handsome plus at the back end.
CBAM also goes back to an initiative of Eurofer. Only after the free ETS certificates were to be cancelled did they frantically row back and now try to obtain them in combination with CBAM.
Surplus ETS certificates mean a flood of money for EU steel producers
Whereas in December 2009 the price was still around 11 euros per ETS certificate, by January 2022 it had increased almost ninefold. This also means hidden EU subsidies through surplus ETS certificates. Money that the EU steel producers naturally do not want to do without and that they certainly do not want to pay themselves.
EU export ban on steel scrap
The EU’s own proposal for a raw material export ban on metal and steel scrap is also unceremoniously wrapped up in the dress of a new EU waste regulation. It is always about keeping up appearances. The EU does not want to burden the Third World with its waste, but its OSCE friends can of course continue to have it and everyone who is not mean to the EU.
EU significantly distorts trade flows itself
Finally, it only remains to say that the European Commission has dropped the mask with the justification for the anti-subsidy duties on Indian and Indonesian stainless steel exports. This is all about politics and free access to raw materials. It is no longer about whether something is morally or economically justified. In the end, the European Union itself ensures that trade flows are distorted – be it through anti-dumping or anti-subsidy duties or CBAM – and goods and raw materials end up in other markets instead of with the industries and companies in the EU where they are urgently needed.
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