Or why the European Union has run out of other arguments
European Commission President Ursula von der Leyen sent a “progress report” to the European Council of Heads of State and Government on April 21, according to an article in Politico magazine. This report is about the progress that has just been made with regard to the Comprehensive Agreement on Investment with China.
Or not. At least that seems to be the o-tone of this report.
EU argument: Chinese steel overcapacity
What’s exciting about this is that this report seems to be beating up on the overcapacity in the Chinese steel industry. And steel is a popular political issue in the European Union, whether their view of the global situation is correct or not. It goes down well with voters when evil Chinese steel can be mentioned in the same breath as Russian natural gas.
EU and China paint different pictures of the situation
We have been observing the Asian and in particular the Chinese steel market for years. But also the European market protection measures and their origins. It should be well known by now that some of the figures used here cannot/should not be put into perspective or are simply swept under the carpet by stakeholders because they paint a completely different picture.
Current developments on the steel market not taken into account
The European institutions seem to have completely ignored the current developments on the international steel market. There is a global shortage of steel products and yet China is shutting down steel mills in more and more provinces.
And as already emphasized: It just goes down well and has a high public profile when you can bash Chinese steel.
That’s why the two paragraphs in the Politico article that deal with government subsidies and overcapacity are also sheer mockery.
What does the EU report on steel say, according to Politico?
An associated problem is overcapacity. “The pandemic-related crisis has further exacerbated the problem, as Chinese steel production continued to increase,” the report stated. “The EU is also concerned about other sectors that may already now or in the future suffer from overcapacity as a result of subsidization in China, for instance aluminum or high-tech sectors such as certain types of semi-conductors.”politico.eu
EU steel consumers hit by steel shortage
In Europe and the United States, steel consumers have been crying out for help for months, and the EU report still only echoes the voices of the lobbyists of the major aluminum and steel producers. Which in turn only proves that officials in the European Union have no interest whatsoever in talking to consumers of aluminum and steel products. A democratic impertinence – China is accused of taking an authoritarian turn. In Europe, you can’t even talk to your elected representatives.
Steel prices in Europe up 130%
Overcapacity? European steelmakers have not nominally cut capacity since 2017, according to OECD data. And by all accounts, Europeans continue to keep capacity artificially small in the current crisis. Which has led to an increase in steel prices in Europe of more than 130% since mid-2020. As a result, European end users are either simply running out of money or are unable to buy even a ton of European steel despite extreme price increases. Some steelmakers are not even making sales anymore, market sources tell us.
Good subsidies vs. bad subsidies
On the topic of Beijing unfairly pouring state cash into industry through subsidies, the EU said China “has so far not engaged on substance, claiming that the mandate of the [EU-China working group on WTO reform] was limited to exchange of information but not negotiations.”politico.eu
It is always frustrating to read how the European Union puts subsidies on the wall and tries to hide them in the same breath. Ban on palm oil from Asia? Have European citizens been told that this is not so much about environmental concerns. But to protect the domestic and over-subsidized rapeseed oil industry? In general, palm oil is much more efficient to produce than domestic rapeseed oil.
Or that the polluters in the European steel mills have been given the environmental certificates for CO2 for many years? So that they can still be competitive at all.
The forthcoming European transformation to CO2 neutrality is therefore also being financed to a large extent by subsidies. In Germany, the steel manufacturers even get up to 95% – if they can’t do it on their own. And who is crying out the loudest for subsidies and who will not lift a finger without a euro from the EU? Exactly. The European steel industry. Which even in the crisis year 2020 proudly bragged about what fantastic annual results it had achieved.
Why are the EU arguments always the same?
It’s a shame that we always have to feel compelled to respond to strange statements and decisions by the European Union.
It would be nice not to have to ask the question in the morning editorial meeting: Are the members of the European institutions simply uninformed, disinterested or do they have other advantages from having to present the same arguments and wrong figures over and over again? Is it laziness? Are there financial interests behind it? Or is it simply incompetence?
Do we think everything is great? No. Of course we don’t.
There are guaranteed to be problems with China. No question about it. Europeans like to see Chinese and Asians as aliens. That’s how different their cultural origins are. But like the Chinese, we Europeans have them too. And we don’t even want to go into detail about that.
But please, Ms. von der Leyen, make sure that every person and every company in the European Union has the same basic democratic conditions. Because this condition is not being met at the moment – especially with regard to steel and aluminum. Or where did you get the figures in your report?
Critical questions seek critical answers
And when we ask critical questions, we always hope for critical answers. We are wrong in our presentation? We have overlooked something in our consideration? Or do you know something that we should include in this article or even take a critical look at?
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Disclaimer: Many things here represent our opinion. Others are information from the Internet. We can therefore never claim to be correct or complete. And never base a business decision solely on the news you receive from us.