World steel industry crisis high on agenda as G7 summit gets under way


The crisis in the world steel industry will be high on the agenda as the G7 summit of international leaders gets under way in earnest in Japan.

David Cameron has signalled his intention to discuss possible extensions to EU tariffs which he believes have been "effective" in reining in Chinese steel-dumping in Europe.

Leaders of the G7 countries - the UK, US, Japan, Germany, France, Italy and Canada - are due to consider measures to counter market distortions caused by over-production in the Chinese industry as part of a broader discussion of the world economy at the Ise-Shima gathering.

They have received an appeal from steel trade bodies around the world - including Britain's UK Steel - warning that more plant closures are possible unless there is action to deal with the problem at source.

Gareth Stace, director of UK Steel, said: "Chinese government policies have contributed to significant global excess capacity in steel, unfair trade and distortions in steel trade flows around the world.

"If the G7 leaders fail to address or halt market distortions it will mean subsidised and state-supported enterprises surviving at the expense of efficient companies operating in environments with minimal government support."

He called on the G7 to maintain "effective remedial measures, consistent with their World Trade Organisation rights and obligations, against exports from countries in which market economy conditions do not prevail".

Arriving in Japan on Wednesday, Mr Cameron said he was hoping to use the summit in Japan to hold further talks on the crisis in Europe's steel industry with French president Francois Hollande, Germany chancellor Angela Merkel, Italian PM Matteo Renzi, European Commission president Jean-Claude Juncker and European Council president Donald Tusk.

He said tariffs imposed by the EU had already been "effective" in reining in China's dumping of surplus steel at low prices in the European economy. 

"Wherever we have taken action, there has been very steep - 90%-plus - reductions in Chinese steel imports," he said. 

The dangers posed by over-capacity in sectors like steel would be "quite a feature" of discussions at the summit, Mr Cameron said.

"This is a good opportunity to talk again with the European Commission and the president of the Council and France, Germany and Italy about the actions we are taking in Europe to put tariffs up against dumping of Chinese steel, which is effective." 

Mr Cameron pledged that the UK Government would "continue to work towards trying to get a good outcome" for the Tata steel plant in South Wales, but admitted he could not guarantee a buyer would be found to take it off the hands of its Indian owners.

"The sales process is under way, there has been an encouraging number of serious companies and offers coming through," the PM said.

"We have got to stick to it and do everything we can to work to bring this to a successful conclusion. There is no guarantee. We can't guarantee this is going to work, but we will do everything we can."

Mr Cameron said the G7 summit had become a more useful forum to make progress on major global issues since the expulsion of Russia in 2014 over its interference in neighbouring Ukraine.

He will press fellow leaders to maintain pressure on Moscow by extending sanctions when they come up for renewal in the summer.

Mr Cameron will also seek to use Ise-Shima to take forward measures on tax transparency proposed at the anti-corruption summit he hosted in London, as well as the fight against drug-resistant superbugs which he has made a personal crusade. 

"The good thing about this is that since Russia's departure, the G7 is the place where the truly liberal democracies, like-minded countries, can come together and talk about the really big threats not just to the world economy and the world but to our own countries," Mr Cameron said.

"The things we're going to be discussing, whether it's fighting extremism and terrorism, keeping economies growing, whether it's fighting health risks like anti-microbial resistance, whether it's tackling things like the corruption that do so much to damage our economies, this is the place where you can have good discussions, frank discussions, private discussions, and if countries agree to do things, we really do get things done."

Speaking in Ise-Shima ahead of the official opening of the summit, Mr Juncker said the EU was ready to "step up" its measures to defend the steel industry against dumping. He made clear the issue would be considered when deciding whether to grant the coveted "market economy status" to China.

"Global overcapacity in the steel sector is of great concern to Europeans. It has cost Europe thousands of jobs since 2008 and the over-capacity in China alone has been estimated at almost double European annual production," he said.

"So we  will make it clear that we will step up our trade defence measures. This effort has started and as far as the market economy status for China is concerned, we will discuss this in detail. The European Union has launched an in-depth impact assessment and when this impact assessment is finished, we can deliver in the best way possible.

"Everyone has to know that if somebody distorts the market, Europe cannot be defenceless."

Asked what advice he would give  Mr Cameron in his efforts to preserve steel-making in South Wales, Mr Juncker said: "I think we have a general problem in Europe when it comes to the Chinese over-capacity. This is affecting all our countries. We have 22 steel-producing countries in the European Union and all the countries with steel industries on their territories have the right to defend their industry."