UK Blocks Move To Stem Cheap China Steel

The UK is blocking a European rule change which could help combat the flood of cheap Chinese imports that is crippling the steel industry, Business Secretary Sajid Javid has admitted.

Britain's steel makers are buckling under pressure from the imports as well as other pressures including high energy prices and have shed thousands of jobs in recent months.

But Mr Javid told MPs (BSE: MPSLTD.BO - news) on the Business, Innovation and Skills select committee that the Government would not change its position opposing changes to Europe's "lesser duty" rule, which currently prevents higher tariffs being imposed on Chinese imports.

Industry body UK steel said it was "galling" that Mr Javid was blocking the changes - which could be a "silver bullet" for the problem - despite having written with other member states to the European Commission last week urging action to help the sector.

Mr Javid said: "A responsible Government would look at the impact overall on British industry and British jobs.

"If duties are applied that are disproportionate it would have an impact in Britain and elsewhere on the consumers of steel.

"There are companies in Britain that would tell you that if duties get out of control and were much much higher it would cost them jobs and growth and it would certainly cut their exports."

He said the UK was instead seeking for powers under existing rules to be used more quickly, striking a balance on the right level of duty "required to correct the harm that is being done to the domestic market".

"To go further, much further, might in the short term sound like the way to go to try and protect a certain industry.

"But we also have to remember that in the UK as well as manufacturers of steel there are also companies that consume and steel as part of their production process - and the impact that might happen to them."

Gareth Stace, director of UK Steel, said: "China shows no sign of stemming the tidal wave of steel exports, which it is dumping on the global market. Anti-dumping measures in the EU do not currently have the teeth to halt this tsunami of dumped steel.

"The EU must follow the example of the US, by lifting the Lesser Duty Rule which would increase anti-dumping duty levels and actually make them effective.

"The Secretary of State for Business, Innovation and Skills, along with other member states wrote to the European Commission last week highlighting the potential collapse in the European steel sector unless action is taken now.

"It is therefore galling that the UK Government has not taken action itself and has continued to block these changes in the EU – leaving the steel industry on its knees.

"Government must support the lifting of the Lesser Duty Rule, otherwise steel manufacturing will be lost in the UK and Europe."