Steel Imports: Unfair Pricing (Hansard, 13 January 1999)

§ The Minister of State, Department of Trade and Industry (Lord Simon of Highbury)
My Lords, it is the responsibility of the European Commission to investigate allegations of unfairly priced imports if it believes there is sufficient prima facie evidence to warrant doing so. The Commission consulted member states about a number of investigations concerning steel imports in 1998. As a result anti-dumping measures were imposed on stainless steel fasteners from China, India, Malaysia, Korea, Taiwan and Thailand. Anti-subsidy duties were also imposed on stainless steel bright bars from India. However, anti-dumping duties on the same product were found to be unjustified and the investigation was closed. Additionally, the Commission is currently investigating six complaints of allegedly dumped steel imports and three complaints of allegedly subsidised steel imports.

§ Lord Hardy of Wath
My Lords, while I am most grateful to my noble friend for the information he has just given the House, I point out that in the previous critical period it was quite obvious that there was extremely serious and unfair competition within the EU. Is it not now clear that at present the situation is far-reaching and serious? May we be assured that the department will maintain the keenest monitoring of the situation because the achievements of the British steel industry in recent years ought not to be impaired by dumping on the part of some from overseas?

§ Lord Simon of Highbury
My Lords, I assure my noble friend that the department will certainly keep a close watch on the way the world marketplace is developing and the way that competition is intensifying. I agree with him that the performance of British Steel in the world marketplace is outstanding. Despite the difficulties of competition I note that it is exporting more both to the European Union and elsewhere than any of its competitors from inside the Union. We shall seek to maintain that position and defend strenuously the interests of a good British company.

§ Lord Clark of Kempston
My Lords, does the Minister agree that any subsidy impairs the competitive 181 position of this country? Would it not be better for the Commission to pay attention to the unfair competition that would result from the harmonisation of income tax and corporation tax?

§ Lord Simon of Highbury
My Lords, we have discussed subsidies as a principle within the European Union at great length within the Council. It has been one of our objectives to ensure that the level of state subsidies across the board is reduced. That is happening. As part of the single market action plan there is a comprehensive analysis of state subsidies, league tables and a targeting process to reduce these elements which falsify competition. As regards tax harmonisation, the noble Lord makes a hypothetical assumption that this will be a subsidy to competition. Where subsidy exists, we shall try to reduce it. Where it is hypothetical, we should wait to see whether it becomes reality.

§ Lord Brookman
My Lords, does the Minister agree that this is a matter of great urgency and it is therefore essential that the Government, working in harmony with employers in the United Kingdom, ensure that these illegal subsidies in Europe are investigated speedily as imports are increasing at a tremendous rate? It is vitally important that there is speedy action on this point.

§ Lord Simon of Highbury
My Lords, my noble friend is absolutely right. We shall certainly do our best to ensure that that is done. The marketplace is dynamic and many of the issues to do with subsidy and dumping comprise allegations which have to be carefully investigated. This is a detailed area. As I have already said, those investigations which took place in 1998 have already been resolved. Those which are being investigated currently through EUROFER—which is the group which looks after the interests of the steel industry in conjunction with the Commission—will not be left on the back burner.

§ Baroness Denton of Wakefield
My Lords, I am delighted to hear that the department is monitoring the situation. However, we are concerned about the speed with which anti-dumping legislation is put in place. That is a matter not for us, but for Europe. Of late, the problem has worsened because the Americans can move through anti-dumping procedures quickly. How many meetings has the department held with the Commission to ensure speed once the case is proven?

§ Lord Simon of Highbury
My Lords, I assure the noble Baroness that there are continuous meetings on the state of the development of the marketplace. I have no detail as to how many have taken place. There are continuous discussions between the department and the industry, the industry and EUROFER, and between EUROFER and the Commission. If the noble Baroness wishes to raise any detailed points with me outside any of those meetings, I shall be happy to comply.

§ Lord Ezra
My Lords, it is indeed satisfactory to note that a real and continuous effort is being made to 182 remove the subsidies. They have been in place for many years, particularly in certain countries such as Italy and Spain. Will the noble Lord indicate when effectively the subsidies could be removed? Secondly, a problem that arose in the removal of subsidies related to the social consequences that their removal would have in those countries where alternative possibilities for employment were practically negligible. Has that problem been tackled?

§ Lord Simon of Highbury
My Lords, it would be wrong to say that there is a target date for the removal of all the subsidies within the system. They are coming down very quickly. Those countries which have the highest levels are under the greatest pressure at Council meetings to remove the subsidies. In Spain in particular there have been successful developments within the industry in that direction.
As to the balance between reduction of subsidy and the social impact within various countries, those are matters for national governments. They are discussed at Council level but form part of the national plan for labour market flexibility and development that has been devolved to each country to solve. That is the right approach. I do not believe it is right for the Commission to try to handle labour market flexibilities and compensations between industrial sectors in the economy as a whole. As most of us would agree, the matter can be handled more effectively at a national level with an overall target to reduce across Europe the level of subsidy.