Excessive EU market protection at the expense of security of supply?
Excessive EU market protection at the expense of security of supply?

7 February 2024 – A completely different take on two annoying market protection procedures by the European Commission. A scenario in which the security of supply of the entire EU would be at risk and security in the EU is being dangerously jeopardized on the basis of irresponsible lobbying.

A completely different take on two annoying market protection proceedings by the European Commission.

While Brussels is reluctant to make final decisions on sanctions on Russian aluminum, it prefers to offend close strategic and important economic partners with existing and ongoing anti-dumping and anti-subsidy measures, which are currently being extended to stainless steel from Indonesia via Taiwan, Turkey and Vietnam with two anti-circumvention proceedings, for example.

A brief background on theses market protection measures:

In the midst of a war and on the basis of a Black Swan event, EU stainless steel producers are trying to enforce two market protection measures against three friendly and economically closely linked countries.

One of these countries, Turkey, is even a NATO and OECD member. Vietnam is one of the EU’s most important trading partners in Asia. And Europe is Taiwan’s fourth most important trading partner after China, the USA and Japan.

Türkiye:

“Türkiye is the EU’s 7th biggest trade partner, representing 3.3% of the EU’s total trade in goods with the world (imports and exports combined) in 2022.”

Source: EU trade relations with Türkiye

Taiwan:

“EU exports to Taiwan of semi-finished products, machinery and transport equipment confirm the EU’s position as an important industrial supplier for Taiwan’s industry.”

Source: EU trade relations with Taiwan

Vietnam:

“It is the EU’s second-most important ASEAN partner for trade in goods and services combined (after Singapore)”

Source: EU trade relations with Vietnam

Scenario: What could happen – if the EU continues to offend important partners

Let us now take a look at the EU and the major stainless steel corporations and consider the danger of a possible war of aggression by Russia, which is currently being hyped up by politicians and the media.

Assumption: Loss of a Finnish stainless steel mill due to a hostile act

With the expansion of NATO and the new member state Finland, and thus an additional 1,500 km of NATO border between Finland and Russia, the European Union has also gained some new/old stomach aches. Just a few kilometers behind the border with Russia and on European territory, Europe’s largest stainless steel manufacturer has set up its production facilities. Suppose this stainless steel mill were to be permanently damaged or even destroyed in the event of sabotage or an act of war. This would significantly disrupt the security of supply of stainless steel in Europe.

Examples of sabotage in recent years

The attacks on the Nord Stream pipelines at the end of September 2022 and the destroyed submarine cables off France just one month later, or the accident involving a ship’s anchor on the Baltic Sea pipeline off Finland in October 2023, have impressively demonstrated in several cases what such acts of sabotage or accidental accidents can trigger. We have not even mentioned the many attacks by Russian hackers on EU infrastructure, political institutions and the economy.

The loss of Europe’s largest stainless steel producer could therefore easily lead to serious upheavals that could trigger an unexpected chain reaction. The other domestic plants would not be able to compensate for the loss of the Finnish manufacturer.

Will friends and allies still be available in such a case?

If the EU’s friends, allies and most important trading partners have in the meantime sought new customers or even harbor a little resentment against the EU – e.g. due to existing market protection measures and those that are currently being decided – such a scenario could take on unforeseen proportions for the EU economy. The Critical Raw Material Act and CBAM won’t help.

EU market protection: Disproportionate form of lobbying?

And all this in the end only because some lobbyists and decision-makers want to line their own pockets and have instrumentalized a commodity price in two market protection investigations that got out of control in 2022 and has since fallen below the 2021 level.

Editor’s note: Whether such a scenario could actually occur, i.e. that an EU stainless steel producer would become the victim of an act of sabotage or war by a state hostile to the EU, is not something we can or want to decide here.

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