25 April 2024 – Several WTO members have recently criticised the current EU Safeguard Review on certain steel products, in some cases sharply. And the German ifo Business Climate Index points to significantly more optimism in the economy – for the third month in a row.
ifo Business Climate: more optimism in the economy
The mood in the German economy improved again in April: the ifo Business Climate Index rose by 1.5 points on the previous month to 89.4 points. The companies surveyed from all sectors assessed the current situation and future prospects better than the market had expected on average. This was also the third consecutive rise in the index, which in the past has often signalled an economic turnaround. The previous day, the purchasing managers’ indices had already given a better-than-expected economic picture.
WTO members sharply criticise EU Safeguard Review
According to media reports last Monday, several WTO members criticised the current EU Safeguard Review, in some cases strongly. Not only is a further extension unjustified, but an extension beyond 2024 is also not in line with WTO rules.
Much disagreement also within the EU
The demand by several EU member states to extend the safeguard measure to certain steel products beyond 2024 has also led to a great deal of incomprehension within the European Union, particularly among steel consumers.
EU steel producers must adapt external communication
Evidence of years of communicative misconduct and deception on the part of EU steel producers and their lobby organisation EUROFER, which had been presented by the Gerber Group in the proceedings, has now led to a hectic adjustment in the external communication of some domestic producers.
Hidden EU subsidies are becoming a problem
As we had predicted, the hidden EU subsidies and thus also the EU Carbon Border Tax CBAM are becoming a problem for the EU economic area.
In countervailing duty proceedings initiated by the United States in February 2024, indirect subsidies through the European Emissions Trading System (ETS) now appear to be at issue for the first time. On Tuesday, EU member state Germany felt compelled to criticise the US proceedings before the WTO via the Union. And that the ETS should not be the target of US proceedings.
Billions of euros in ETS certificates given for free
Since 2005, producers that emit a large proportion of CO2 emissions in the EU have received billions in subsidies in the form of free ETS certificates so as not to suffer any economic disadvantages as a result of the measure. This has effectively prevented any CO2 reduction in the EU since then.
It should therefore already be clear that not only the ETS but also CBAM will be a massive burden on the entire EU economic area and the parties involved in the medium term.
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