Benxi heavy steel industries in February 2013. Photo: Andreas Habich (Creative Commons)
Battling to save Europe’s steel and manufacturing industries from China’s unfair trade
The TUC and many others – unions in Britain and across Europe and manufacturing employers – are battling to defend jobs in Europe from unfair competition from China. The impact of underpriced steel flooding the UK market is well-known, but if the EU grants China ‘Market Economy Status’ (MES) by the end of the year, it could be far worse, and affect all sorts of manufacturing industries.
In the USA, manufacturers and unions have secured support from the government, and the US administration is trying to persuade the EU to join in rejecting MES for China. The union-backed Employment Policy Institute in Washington DC was commissioned by a European cross-industry employers’ association, AEGIS, to assess the impact of granting MES. They found that:
“an EU decision to unilaterally grant MES to China would put between 1.7m & 3.5m EU jobs at risk by curbing the ability to impose tariffs on dumped goods and thus allowing Chinese companies to undercut domestic production by flooding the EU with cheap goods. Specifically, we project that the increased imports arising from granting MES to China would reduce EU output by between €114.1bn & €228bn per year, a 1-2% reduction in EU GDP (relative to base year output in 2011) that translates into 1.7m to 3.5m potential jobs lost among import-competing industries, their suppliers, and the companies that depend on the wages of displaced workers.”
Even the European Commission admits that, without taking other steps to defend European manufacturing (some known collectively as trade defence instruments, and also mitigating measures such as the EU Globalisation Adjustment Fund that pays for training for those made unemployed), hundreds of thousands of jobs could go. These figures have been questioned as being based on industries already suffering Chinese dumping, rather than those so far well-protected.
On Monday, the EU Trade Commissioner faced Members of the European Parliament’s International Trade Committee, to answer questions about MES. The trade spokesperson of the Socialists and Democrats Group, Labour’s David Martin MEP, said:
“I hope that today will mark the start of a serious discussion with Parliament, with the member states and with European industry and trade unions – as well as with the Chinese Government – on where we go from here. The EU desperately needs a modern, effective regime of trade defence instruments. There can be no automatic granting of market economic status to China.”
But there were more worrying messages. Some (like George Osborne here in the UK) want to avoid annoying the Chinese when they are pouring money into investments in Europe. Others see advantages for some sectors of the economy and are prepared to sacrifice those who would suffer most. That seems to lie behind the real politik of the Alliance of Liberal Democrats in Europe (to which the Lib Dems belong). Their spokesperson, Marietje Schaake, said:
“The question before us is not whether we believe China has a market economy where prices are set by supply and demand: it does not. The question before us is how we should address illegal trade practices by a country that is also an important trading partner.”
Commissioner Malmstrom argued that the decision on MES would have to be taken by EU national governments, which puts the ball firmly in the court of the British Government. The TUC has continued to lobby the Trade Minister Lord Maude and his boss the Business Secretary, Sajid Javid, and we know that manufacturing employers have been doing so as well, with the result that the Government’s official statements have become a lot more equivocal (and they seem now to support the EU improving its Trade Defence Instruments, something the UK government blocked last time it was raised.)
Belgium has joined Italy in speaking out against granting MES to China. We know that in Sweden, where the social democratic government has historically favoured free trade, unions and manufacturing employers are pressing strongly for a change in direction. Unions are mobilising in Europe to press for a proper impact assessment, genuine consultation with unions and employers, and stronger Trade Defence Instruments. And, above all, for China to be denied Market Economy Status until it allows free and independent trade unions and stops dumping cheap products that undercut European manufacturing.