British steel industry sacrificed to curry favour with China

[Mistigri]

What do we think of this?

Interesting take on the matter in the Telegraph, suggesting that the UK has been using its EU veto to prevent the EU from taking anti-dumping measures against China. The price of a special relationship with China may be 40,000 British jobs.

www.telegraph.co.uk/business/2016/03/30/britain-sacrifices-steel-industry-to-curry-favour-with-china/

It's infuriating that sucessive governments will not protect manufacturing in this country. Once these industries and the skills are lost, they are lost for a very, very long time. We are reliant on the French and the Chinese to rebuild our Nuclear power plants, and we are reliant on who knows who for our gas and oil supply. It seems any old dictator will do, as long as they are providing us with cheap oil. British steel is of a higher quality than Chinese steel, yet, once our steel plants have shut down and the skills lost, it wont matter if Chinese steel becomes more expensive, they will be the only ones making it, so they can charge what they want. It's very worrying for defence and self suficiency of us as a country.

Lets hope for a longlasting world peace cos otherwise we'll be screwed

Thats true Bombadier
I remember my Grandad telling me how short of commodities this Country was at the start of WW11.

It's all part of Cameron's plan to convince us that we are a weak, insignificant country that can't defend itself - therefore making us follow Cameron's recommendation to stay in the EU to be "safer, stronger, better".

It's so transparent it hurts

I imagine that the last thing Cameron would have wanted, in the run up to a critical referendum, was a crisis of this sort. That's just paranoia.

If anything, this is harmful for the remain side, because Cameron has now made three serious missteps in quick succession (IDS, academisation, and now steel) and he is fighting fire on all sides. If he's not careful, the referendum risks becoming, effectively, a vote for or against an inceasingly unpopular Tory leadership.

I imagine that the last thing Cameron would have wanted, in the run up to a critical referendum, was a crisis of this sort
Precisely

I agree. It's probably the last thing he wants. The Brexit campaign will use this as a way the EU are stopping us from imposing higher tariffs on Chinese steel, ignoring the veto on tariffs the U K government has imposed. Apparently other EU countries have tried to get round the low tariffs by paying subsidies. Our government will hand written by until the industry goes under.

The EC said in January that 'EU state aid rules do not allow public support for the rescue and restructuring of companies in difficulty in the steel sector'

The EC said in January that 'EU state aid rules do not allow public support for the rescue and restructuring of companies in difficulty in the steel sector'

The EU's position is clear - state subsidies are anti-competitive, but it will support measures that enable european steel companies to improve efficiency and compete on a level playing field, including anti-dumping tariffs (which the UK has vetoed, remember), and assistance with energy costs and R&D.

There's a debate to be had about whether this position is correct, but none of this is new, nor is it at odds with the policies of any of the major UK parties, none of which is in favour of nationalisation of heavy industry. It will be hilarious if people who usually support parties espousing free market policies suddenly develop a taste for state ownership! Next you'll have me believing that Corbyn can win the next election!

The Brexit campaign will use this as a way the EU are stopping us from imposing higher tariffs on Chinese steel, ignoring the veto on tariffs the U K government has imposed

I think we need to ask why our government is arguing against raising punitive tariffs on Chinese steel. Also, now that China is exporting jobs to 'cheaper' countries, like North Korea, what happens to those Chines workers who moved thousands of miles to get better paid work a la Tebbit 'get on your bike'?

It's telling that nationalisation is not ok for a major and strategic industry like steel but is vital for RBS and Lloyds. The former adds value to a a commodity, the latter, well, it just exists and under a capitalist system it would fall. Unfortunately we don't have a capitalist economy any more. Our economy only works for those with the lobbying cash and access to those who make the rules. The system is rigged against you and me and must change to one that works for the majority. What we have now is crapitalism, where the shit doesn't sink (or stink), it is commodified and profitised and re-hypothecated to the nth degree so we don't know what shit is anymore as it's become too complicated to understand.

Meanwhile our genius Chancellor, Gidiot, has led our economy so well the trade deficit is at its highest ever level. We need an economist in charge, not a towel folder. My vote goes to either Steve Keen or Yanis Varoufakis.

I think we need to ask why our government is arguing against raising punitive tariffs on Chinese steel

We are a net importer of steel. Putting tariffs on Chinese steel would therefore increase prices for consumers. Those countries in favour of these tariffs are, in the main, net exporters of steel and therefore would not be affected in the same way.

It's telling that nationalisation is not ok for a major and strategic industry like steel but is vital for RBS and Lloyds

They were temporarily nationalised under a Labour government, of course, and neither was fully nationalised. If they had been allowed to fail the damage to the economy would have been huge which would have hurt all of us. Whether or not steel making is major and strategic is an interesting question - personally I don't think it is either. If it fails it will be damaging, particularly to those who lose their jobs as a result, but nowhere near as damaging as failure of the banks would have been.

If we want to save Tata the sensible move would be to exempt them from green levies as the government promised a while ago. They currently pay far more for their energy than steel plants in France and Germany as a result of these levies.

We need an economist in charge

We don't. The record of economists that have tried to run economies is poor. The job is more about politics than economics.

Putting tariffs on Chinese steel would therefore increase prices for consumers

But steel prices are at multi year lows, as are most commodity prices. Inflation is very low (borderline too low). Slightly higher steel prices would make little difference to most consumers.

Sky News has just reported that China will impose a 46% tariff on imported steel manufacturers by TATA

The record of economists that have tried to run economies is poor
Yes!

mistigri But it will make things, such as EU built cars, more expensive or hit automotive profits, allowing non-EU automotive manufacturers to steal market share.

carol and how much has the collapse in steel and other metal prices reduced car prices in the last two years? Answer: it hasn't...

Professional hat on: steel prices really are exceptionally low right now, low enough to actually disrupt economic activity in some areas (recycling).

Misti They are low globally, so all car manufacturers are benefiting. If you put duties on EU imports, you benefit non-EU manufacturers, either through higher profits or the ability to reduce prices.
Also, what is you evidence car prices are not lower than they would have been otherwise?

We are a net importer of steel. Putting tariffs on Chinese steel would therefore increase prices for consumers.

Quite correct. We used to have inflation right up to the start of the last/current recession, and the lack of it now is one of the reasons the MPC can't raise interest rates. Or rather won't. They can and they should, those banks we rescued and ot
hers need to go so the whole system can be reformed to suit the majority.

We need an economist in charge

We don't. The record of economists that have tried to run economies is poor. The job is more about politics than economics

The only economist I can remember being a chancellor is Yanis, and the reason he failed is the troika did not allow him to implement his policies, instead insisting on austerity measures which will only shrink the economy. Rather like Gidiot is doing to ours.

.The banks should've been allowed to die in 2008. Instead they've been allowed to carry on with their risk taking, knowing that when it all goes tits up us taxpayers will bail them out again.

carol the car market isn't a simple commodity market ...

US tariffs on dumped Chinese steel are about 20 times those currently imposed in the EU. But that's largely irrelevant anyway, because the vast majority of cars sold in Europe, whether they are European brands or not, are made locally. My Toyota was made in the UK, and my previous car - also "Japanese" - was made in France. EU manufacturers are very largely NOT competing against car makers in other regions, because most volume vehicle manufacturers prefer to produce close to their end markets.

Commodity prices generally are low right now - not just steel but other metals used in vehicles. If you are going to use tariffs to prevent dumping, it's a good time to do it.

Misti I am aware of the car industry, but both Jaguar Landrover and Mini both export 80% of manufactured vehicles from the UK and about 60% outside the EU, thus competing against lower cost models.
It is not just cars, tariffs just increase price for everything. The history of the world economy shows time and time again that countries with low import tariffs are more successful than others and tariffs have significant negative unintended consequences.
See the 2002 US tariffs against Chinese steel as an example.

They don't compete on price though carol; people don't buy landrovers or minis because they cost $50 less than the competition but because they are iconic vehicles, they are paying for a brand and a style not for the steel content.

The vast majority of vehicles that partly compete on the basis of low price - we're talking about your bog standard compact and family cars here - are made close to end markets. The car market isn't a commodity market; car makers in India or China don't compete directly with european car makers, if only because models are region-specific. You can't sell a car homologated to Chinese or Indian standards in Europe, as this would not be legal, and in the same way you wouldn't export a bog standard european model to China, because it will be equipped with expensive emissions control equipment and electronics that will price it out of the Chinese market.

Don't get me wrong. Low (or even better an absence of) tariffs stimulate trade no - that's why free trade agreements and trading blocs are good for the economies concerned. But free trade only works where there is competition. Anti-dumping tariffs are designed to facilitate competition by removing the price distortions caused when state subsidies stimulate excess production and disrupt markets.

The imposition of tariffs by China really has made me think that they can smell blood, and have decided to hasten the nail in the coffin of the British and European steel industry, while our government thinks hand wringing and asking nicely constitutes doing everything they can.

'The imposition of tariffs by China really has made me think that they can smell blood, and have decided to hasten the nail in the coffin of the British and European steel industry'

Doubtful, because they are only imposing it on specialist steel. It is a warning shot by the Chinese to send a message about imposing tariffs on them.

Interesting article in today's Daily Mail about the Tory moderniser spinners and their climate change policies.

But why is Tata not also threatening to close its Dutch and German steel operations, equally part of its European business? It is because those countries have not imposed a penal ‘carbon floor price’ on their industries.

Their governments have genuinely put the interests of such firms — and their employees — ahead of ‘saving the planet’ (or, as Cameron promised, when he became PM, to lead ‘the greenest government ever’). What makes this policy most absurd is that it doesn’t actually reduce global CO2 emissions from steel manufacture — it simply moves them from Britain to China."

www.dailymail.co.uk/debate/article-3522116/DOMINIC-LAWSON-Dave-s-PR-campaign-make-Tories-look-caring-causing-untold-misery.html

Claig,
The environment is global, not local. A tonne of CO2 has exactly the same global climate effect if it comes out of a UK chimney or a Chinese one.

For any politoco to claim they are protecting the environment by imposing high energy taxes and enviro-controls on the UK whilst importing the same goods from a country with the absolute worst environmental protection and lowest pollution standards simply does not wash. But we will not allow local steel manufacturing on a competitive basis with the Chinese because of the environment and yet we are not prepared to impose environmental tariffs to create a level playing field.

Professor, I agree with you, but I go even further and believe that the whole carbon thing is a scam intended to shut down our industrial base in order to further the globalist agenda.