RESOLUTION OF THE ECSC CONSULTATIVE COMMITTEE ON STEEL IMPORTS INTO THE EUROPEAN UNION AND THE THREAT TO THE EUROPEAN UNION STEEL MARKET OF TRADE ACTIONS IN THE UNITED STATES OF AMERICA (98/C 371/06)

(adopted unanimously during the 342nd session of 23 October 1998)

THE ECSC CONSULTATIVE COMMITTEE,

- referring to its previous resolutions devoted totally or partially to problems concerning EU imports, and most recently to that dated 14 March 1996 (1),

- referring to the forward programme for steel for the second half of 1998 and for 1998 as a whole (2) presented by the Commission in which clear reference is made to the evolution of imports,

NOTING THAT:

- the present situation of the world steel market is critical. The crisis which began in SE Asia has global effects. It has affected all countries that produce and trade in steel. The collapse of the economies of the far east brought with it a collapse of steel demand there and led to sudden changes in the pattern of trade,

- the European Union has so far absorbed a very significant share of the shifts in trade balance arising from this crisis and assumed the overwhelming burden of it. No other market including the US has seen such an increase in imports in either absolute or in percentage terms,

- imports of steel products into the EU, following a significant increase in 1997 of 17 %, have rapidly accelerated in the first six months of 1998, showing an overall increase of over 70 %. For certain flat products, the percentage increases are even higher,

- while in tonnage terms Italy, Spain and Germany have borne the initial brunt of imports, other countries are now experiencing significant increases: France + 265 %, Belgium and Luxembourg + 264 %, the Netherlands + 146 %, Austria + 74 %,

- the development of imports is a direct consequence of the crisis in the Asian economies and the collapse of steel demand there. Imports direct from that region are rising rapidly, moving from 38 kt/month in 1997 to 299 kt/month so far in 1998, an increase of 685 %. Imports from Asia now represent 21 % of all imports of finished ECSC products, up from only 4 % in the same period of last year,

- even more important in tonnage terms is the distortion in trade flows in steel which the crisis in the Far East has provoked. There are now massive influxes on to the European market of material which would normally have been exported to the markets of the Far East. In that respect, tonnages from the Central and East European countries, the largest exporters to the European Union of ECSC products, have risen by 32 %, those of Serbia/Montenegro by 88 % and of Turkey by 105 %,

- all the evidence points to a continuation, and even an acceleration, of this trend. Import licence information available up to August shows increases in licence applications for finished products of 60 %; the economic weakness has spread to other regions, notably Russia and South America,

- owing to the same factors that are driving imports into Europe, export opportunities are falling. Exports by European producers have fallen by 17 % in the first six months of this year. Exports to Asia, which in the past represented about 30 % of exports by European producers, have fallen by 56 %. Exports to the USA have fallen by 12 %,

- as a consequence, for the first time in the history of the ECSC, the European Union has become a net importer of steel. Should the increase in imports and the decrease in exports maintain the same rhythm for the whole of 1998, the European steel industry will be faced with a negative balance of nearly 4 million tonnes, which represents a loss of tonnage for the industry compared with last year's positive balance of some 13 to 14 million tonnes,

- the damage to the European steel market is exacerbated by the trade practices of certain countries which are delivering at price levels far below the market price in the EU,

- such trade practices are often the result of subsidies or dumping on the part of the producers concerned,

- a proliferation of dumping actions worldwide concerning steel products is increasing the risk of diversion of tonnage to open markets such as the EU,

- in this respect, the intention of the US steel industry to seek remedy through the preparation of massive trade cases and/or safeguard measures represents a real threat to the EU market. The closure of the US market could create an unsustainable situation for the European market, either through the inclusion of EU countries in US trade cases or by the diversion of tonnage to the EU market by countries implicated in such cases,

- the impact in terms of employment of the loss of turnover now being experienced by the steel industry in Europe will be grave,

REQUESTS THE EUROPEAN COMMISSION, THEREFORE:

- to monitor closely the development of imports, both as regards quantities and prices and their impact on the situation of EU producers,

- to consider an overall response to the situation and report on a comprehensive plan to respond to the import crisis before it spreads to other sectors,

- to intervene with third countries, using the approach most appropriate to each according to their membership or not of the WTO and the nature of their relationship with the EU, to draw their attention to the concerns of the EU steel industry and explore possible solutions,

- to assure the full and effective enforcement of the trade policy instruments to defend the EU steel industry and its workers from unfair trade practices, including the possibility, foreseen in the legislation, of introducing complaints based on threat of injury,

- given the continued delay in the provision of trade data by Member States, to continue meanwhile the system of prior surveillance and of double control,

- given that European producers have clearly not contributed to the present critical situation on the US market, on which they have a long-established presence, since EU exports to the US have decreased rather than increased this year, to urge the US administration at the highest political level that any actions taken to deal with the US trade problems are appropriate, measured and target genuinely the sources of these problems,

- recognising that the present crisis in the steel market is a global problem, calls for the end of the present destructive price deterioration; a measured and responsible reply by importing countries; the examination, together with the US administration, of an appropriate action to avoid a complete closure of markets as a response to the immediate crises caused by the distortion of trade flows in steel products which would simply exacerbate the present problems being experienced on steel markets,

- to affirm that retention of an indigenous steel industry is essential to the long-term viability of the EU as a manufacturing base; that if the US market were to close the inevitable result would be that the EU steel industry and its workforce would alone pay for the effects on steel markets of the global economic and financial instability; and that in such circumstances the Commission would take additional steps to safeguard the future of the EU steel industry.

(1) OJ C 138, 9.5.1996.

(2) OJ C 233, 25.7.1998.