EN Official Journal of the European Union C 389/60

Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee, the Committee of the Regions and the European Investment Bank — Steel: Preserving sustainable jobs and growth in Europe

[COM(2016) 155 final]

(2016/C 389/08)

Rapporteur: Andrés BARCELÓ DELGADO Co-rapporteur: ENRICO GIBELLIERI

On 4 April 2016, the European Commission decided to consult the European Economic and Social Committee, under Article 304 of the Treaty on the Functioning of the European Union (TFEU), on the:

Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee, the Committee of the Regions and the European Investment Bank — Steel: Preserving sustainable jobs and growth in Europe

[COM(2016) 155 final].

The Consultative Commission on Industrial Change (CCMI), which was responsible for preparing the Committee’s work on the subject, adopted its opinion on 22 June 2016.

At its 518 plenary session, held on 13 and 14 July 2016 (meeting of 14 July 2016), the European Economic and Social Committee adopted the following opinion by 194 votes to 1 with 3 abstentions.

1. Conclusions and recommendations

1.1. The European Economic and Social Committee:

1.1.1. Calls on the EU institutions to ensure, as a key priority, a level playing field for the steel industry.

1.1.2. Welcomes the Commission communication aimed at addressing the challenges facing the EU steel industry in the current crisis and maintaining sustainable jobs and growth in Europe.

1.1.3. Calls for the immediate re-establishment of the High-Level Group on Steel, as there are specific issues that cannot be addressed in the broad Group on Energy-Intensive Industries.

1.1.4. Appeals to the Commission for the High-Level Group on Steel, once re-instated, to include the Commission, Member States, the EIB, the social partners, industry and the unions, the R & D technological platform and competence centres.

1.1.5. Urges the Council and Commission to produce a roadmap, with specific implementation commitments, resources, and targets that will make it possible to deal with the threats and challenges described in the analysis.

1.1.6. Encourages the Commission to produce a follow-up report in one year’s time on how the measures set out in the communication have been implemented.

1.1.7. Encourages the Commission to significantly enhance and accelerate the effectiveness and efficiency of existing trade defence instruments in order to be able to immediately address unfair trade practices on the part of exporting countries and re-establish a level playing field.

1.1.8. Calls on the EU Institutions, as long as China does not meet the EU’s five criteria (1) in order to qualify as a market economy, to use a non-standard methodology in anti-dumping and anti- subsidy investigations into Chinese imports, under Section 15 of the China WTO Accession Protocol.

1.1.9. Requires any change in the treatment of Chinese imports to be accompanied by appropriate measures to prevent EU industry from being harmed by unfair trade practices.

1.1.10. Points out, particularly to the Member States, that it is important to conclude the package modernising trade defence instruments, as it will speed up the process and remove the so-called ‘WTO+ elements’ from the EU system, particularly the ‘lesser duty rule’.

1.1.11. Highlights the fact that, as the import duty on steel products is zero under the Common Customs Code, it is imperative that the lesser duty rule for steel products be abolished.

1.1.12. Welcomes the Commission’s commitment to further accelerating the adoption of provisional measures. With regard to calculating the injury margin, the current practice of setting the target profit must be better defined, in a transparent way, in order to ensure that target profits are realistic, that they promote R & D in Europe and that the injury is effectively removed.

1.1.13. Acknowledges that the reintroduction of the prior surveillance system for certain steel products will help the Commission to properly address unfair imports, with the possibility of initiating cases on grounds of threat of injury becoming generalised practice.

1.1.14. Urges the Commission to register imports prior to the adoption of provisional measures and to retroactively apply definitive antidumping and/or countervailing duties three months before the adoption of provisional measures under the Basic Regulation.

1.1.15. Encourages the Commission to ask that other trade partners are fully transparent with regard to State aid and indirect state support to the steel industry, requesting their engagement to avoid state intervention to backstop steel facilities that cannot survive under market forces.

1.1.16. Calls on the Commission and Member States to define a clear and effective methodology for managing the restructuring process in a socially sustainable way, adequately updating all the available instruments to take account of the current global economic situation, and preventing the impending consolidation of the EU steel industry from taking place unilaterally at the expense of employees.

1.1.17. Reiterates the importance of promoting social dialogue in order to improve workers’ skills in adjusting to new challenges. This will require a specific roadmap and detailed schedule to be agreed on by the Commission and the social partners.

1.1.18. Asks the Commission to review the current specific rules on State aid in order to evaluate the possible inclusion of the steel industry in the general framework.

1.1.19. Urges the Commission, taking into account the specificities of the Research Fund for Coal and Steel (RFCS), to: — keep the same level of participation in the industry, as this assists the Commission in managing the RFCS programme by preserving the original specific features, whose efficiency and effectiveness were identified in the Monitoring and Assessment Report; — retain the network of experts, which has been active in the course of more than 60 years of collaborative research, and ensure their full involvement in the selection of RFCS proposals and in monitoring ongoing projects; — prevent the RFCS from being undermined by other programmes.

1.1.20. Encourages the European Parliament and the Council to guarantee that in the ETS revision process, the most efficient facilities will be granted full free allowances, without restrictions, in order to provide a meaningful incentive to other facilities to improve their performance.

1.1.21. Emphasises that full compensation for indirect costs, resulting from the increase in electricity prices derived from the ETS and support for renewable energies, must be provided in a harmonised manner to avoid the current distortion of the EU Single Market.

1.1.22. Requests that the Commission take the necessary measures to guarantee that waste shipments out of Europe are handled and processed in full compliance with environmental rules and human health.

1.1.23. Urges the Commission and Member States to take into account, and properly reward within the public procurement regulations, the voluntary sustainability schemes developed by the steel industry, aiming to increase corporate commitment to current and future generations, as the best way of promoting the sustainability approach across the entire EU market.

2. Introduction

2.1. The Commission acknowledges that the steel industry, which accounts for 1,3 % of EU GDP, is the basis for many industrial sectors’ value chains, providing 328 000 direct jobs, and that it has an even greater impact on dependent jobs. The industry is established right across Europe, with more than 500 production sites in 24 Member States.

2.2. The steel sector has been seriously damaged by a flood of unfairly traded imports that have pushed down steel prices and called into question the viability of the whole sector in the short-term. This situation comes hard on the heels of a seven-year economic crisis that has hit the steel industry hard and led to the loss of around 90 000 direct jobs.

2.3. Plants that have survived the crisis are operating with reduced staff and with limited room for manoeuvre. Added to this are high energy prices and the impact of an environmental and climate policy that represent additional handicaps in the European steel industry’s race to regain its competitiveness at international level. Finally, the sector’s difficulties are also related to austerity policies that penalise the steel industry, particularly in the markets for construction, building services, transport and infrastructure.

2.4. Despite the high technological performance of the EU steel industry, the drop in demand from emerging countries and global overcapacity, particularly in China; have created an unprecedented situation that requires exceptional and urgent measures.

2.5. In China the combination of overcapacity and unfair trade practices has led to a dramatic increase in exports, destabilising global steel markets and depressing steel prices worldwide. As the EU market is the most open market in the world, with zero duties and no technical barriers to trade, most of the small degree of economic recovery in the market has been absorbed by extremely low-priced, unfair imports.

2.6. The Commission has launched ten new investigations into unfair trade related to steel. The situation is far from normal, and urgent, long-term measures are needed to cope with these developments.

2.7. Employment and investment in the sector have plummeted and if no action is taken, more job losses can be expected soon.

2.8. The EESC deplores the fact that the 2013 Steel Action Plan roadmap has not been updated and seems to have reached an impasse in some tasks.

2.9. As the EESC pointed out in its opinion of 11 December 2013 (2), the 2013 Steel Action Plan (3) was ‘a comprehensive action plan for steel’. Unfortunately, the EESC cannot issue the same opinion on the current communication, which lacks concrete goals and specific short, medium and long-term targets.

2.10. The EESC notes that the European Steel Action Plan was further refined and it proposed a roadmap of specific measures to preserve the European steel industry.

2.11. Following several Competitiveness Council meetings, the European Council on 17 March 2016, and the G7 meeting on May 2016, the EESC feels that the essential political will is evident and that now is the time to transform this will into effective and appropriate measures to restore a level playing field in the EU steel industry.

3. Trade policy

3.1. Trade defence

3.1.1. The EU will continue to be the global champion of open and free trade, provided trade is conducted under fair market conditions. In the absence of international competition rules, trade defence instruments are essential for tackling unfair trade practices that harm EU industry.

3.1.2. The EESC welcomes the Commission’s commitment to further accelerating the adoption of provisional measures in terms of its internal procedures and in allocating the necessary resources. Changing current practice and carrying out verification visits, after the imposition of provisional measures, might speed up the process without the need to change the Basic Regulations.

3.1.3. In the case of anti-subsidy proceedings, the EESC urges the Commission to broaden investigations to include all subsidy schemes uncovered in the course of an investigation, even if they were not identified in the original complaint.

3.1.4. The Commission and the EU as a whole must tackle the China Market Economy Status (MES) issue in a way that does not undermine the effectiveness of anti-dumping measures. Section 15(a) (ii) of the China WTO Accession Protocol may expire in December 2016, but this should not automatically and undeservedly grant China MES unless it fulfils the criteria set out in the EU’s Basic Anti-Dumping Regulation.

3.1.5. The EESC hopes that the current impact assessment being carried out by the Commission will be comprehensive and sector-based, and will also take into account the specific impact of granting MES to China, especially on some European regions, without appropriate and truly effective accompanying measures.

3.2. Overcapacity

3.2.1. The EESC acknowledges the Commission’s efforts in bilateral or multilateral negotiations to reach agreement on capacity reduction and transparency concerning State aids. However, the track record of these bilateral and multilateral negotiations is unsatisfactory.

3.2.2. Tackling the causes of overcapacity needs a strong commitment to periodical reporting on State aid schemes and specific measures agreed under the OECD and the WTO umbrellas.

3.2.3. The EESC hopes that the Council will include the energy and raw materials chapters in every new Free Trade Agreement (FTA) mandate, as this will allow the Commission to introduce these chapters in overall negotiations for each and every FTA.

3.2.4. Furthermore, full respect for the rights of civil society organisations, trade unions and individual workers as regards environmental matters must be included as important points in forthcoming negotiations and new agreements.

3.2.5. The Commission should make public those cases in which a country does not fulfil its commitments concerning State aid transparency and reporting, and consider this as non-cooperative behaviour in trade defence proceedings.

3.2.6. Diplomatic negotiations cannot prevent the imposition of trade defence remedies where they are needed.

4. Investments

4.1. Regarding the European Fund for Strategic Investments (EFSI), it actually creates additional risk-bearing capacity in the market to support viable investment projects developed by EU steel companies. However, it is regrettable that not many companies can currently access this Fund, as steel market conditions cannot guarantee an adequate return on investment with prices at such a low level.

4.2. The emphasis must be on creating the framework for guaranteeing an adequate return on industrial investment in the steel industry. Under the current framework, there is plenty of funding available, thanks to the European Central Bank’s (ECB) monetary policy.

4.3. Investments in the European steel industry must be boosted in order to modernise plants and equipment, and research into and development of new products and processes must be promoted.

5. Investing in people

5.1. The EESC fully supports the Commission’s communication, but it lacks a detailed action plan to ensure that steel remains an attractive industry for talented young people. The EESC calls on the Commission and Member States to define a clear and effective methodology for managing the restructuring process in a socially sustainable way, utilising all the available instruments (EGF, Structural Funds, etc.) further ensuring their flexibility and ability to respond to the challenges of the fast-changing global economy. Promoting social dialogue in order to improve workers’ skills in adjusting to new challenges will require a specific roadmap and a detailed schedule to be agreed on by the Commission and the social partners.

5.2. Under the current State aid rules, some Member States have intervened to support the steel industry, which remains crucial for the entire manufacturing industry downstream. These state interventions have taken various forms, such as support for R & D investments, energy-efficient technologies and investments to protect the health and safety of workers and compensation for indirect energy costs.

5.3. In order to maintain skills in a downward cyclical market, measures such as partial unemployment, Kurzarbeit (short-time working in Germany), schemes for the replacement of staff (contrato relevo in Spain) and solidarity contracts (in Italy) have been implemented.

6. Competition policy and State aid flexibility for R & D

The EESC calls on the Commission to organise a workshop with Member States and the social partners in the second half of 2016 in order to draw up guidelines to implement the flexibility allowed under the new State aid rules framework.

7. R & D

7.1. The European Steel Technology Platform (ESTEP) has established major partnerships involving the entire European steel industry, its suppliers and customers (transport industry, construction sector and energy sector), SMEs, private and public research bodies, public authorities and trade union representatives.

7.2. The new Research & Innovation roadmap proposed by the European Commission has been carefully analysed by ESTEP’s Working Groups, and its revised agenda already includes topics which are relevant to the steel sector.

7.3. The Research Fund for Coal and Steel (RFCS) successfully took over from the European Coal & Steel Community (ECSC) in 2002. Collaborative research within the European steel sector, both within the RFCS and the Framework Programme, has been encouraged and strengthened over the past 10 years. ESTEP’s Mirror Group brings together representatives from 20 of the EU-28 Member States.

7.4. An essential precondition for a competitive steel industry in Europe is to remain at the cutting edge of technology by maintaining and developing the EU steel sector’s R & D capacities. In this regard, the RFCS is a vital and unique instrument. In September 2013, the European Commission published its Monitoring and Assessment Report, which clearly demonstrates the RFCS’s efficiency.

7.5. Recently, DG RTD has decided, on purely administrative grounds, to reduce the consolidated and essential role of industry in RFCS programme management, thereby jeopardising its direct link with industry. The EESC urges the Commission to reverse this decision.

8. Energy

8.1. The Commission cannot claim success in reducing the price gap between the USA and the EU, as this has come about without the Commission’s intervention. The gap remains unacceptable and seriously damages the competitiveness of the EU steel industry.

8.2. Active measures should be taken to ensure that energy prices do not undermine the competitiveness of the EU steel industry.

9. ETS review

9.1. The EESC welcomes the European Council conclusions (23 and 24 October 2014) stating that there is a need to strike a balance between the objective of reducing greenhouse gas emissions and that of ensuring the competitiveness of European industry.

9.2. The European steel industry is the most environmentally-friendly worldwide, and the EU must act to avoid the relocation of production facilities to third countries with lower environmental standards and higher emissions than in EU.

9.3. No linear reduction factor should be arbitrarily applied to benchmarks, as this will cut the amount of free allocation to below technically and economically achievable levels.

9.4. Benchmark revision must be rooted in realistic, technically and economically achievable levels, offering full compensation to the most efficient facilities.

9.5. Capital intensive industries, such as steel, need a clear and predictable regulatory framework, established well in advance, to allow for correct planning of necessary investments. All stakeholders must be included in an open and constructive discussion regarding the reform of the EU ETS scheme.

9.6. The Innovation Fund is a valued instrument, but should not reduce the amount of free allocation available for carbon leakage protection. Sustainable jobs must be created in the new economy, in which steel is an essential component. A fair transition must indeed ensure that pathways are created for affected workers to find jobs in expanding sectors, while still guaranteeing their working conditions and union rights.

9.7. The EESC insists that the EU ETS must not be reformed at the expense of steel industry employees. Any reform must reconcile the ambitious EU climate targets with a renewed and modernised steel industry, and ensure that the European steel industry is revived and modernised while it works towards achieving the European climate targets.

10. Circular economy: Recycling

10.1. Recycling is a definitive approach in favour of the environment, and steel, as a permanent material, is ideally suited to recycling. However, there is no economic evidence that recycling ‘must reduce the cost of production’: with a few exceptions the reality is in fact quite the contrary. If recycling were a purely economic activity there would be no need to promote it, as every economic operator would automatically switch to recycling without any regulatory framework.

10.2. The EESC cannot support the statement that the end-of-waste criteria have helped to stimulate higher demand for recycled steel. The application of end-of-waste criteria is limited to some EU Member States and, contrary to the Commission’s assertion, has not helped to improve scrap quality; its low level of implementation is due to the fact that it imposes a greater administrative and regulatory burden on the domestic scrap trade without any benefit or improvement to the recycling process.

10.3. The Circular Economy Package has plenty of good intentions but lacks the necessary ambition to genuinely promote the use of by-products, such as slag, without unnecessary administrative burdens, as some Member States are trying to impose. The use of by-products contributes substantially to reducing the use of natural resources and dumping sites.

10.4. Steel is never consumed, but is continuously transformed; the use of natural resources for producing steel for the first time is therefore a transformative process, making iron available in a more ‘practical form’ for subsequent uses (life cycles) and thereby reducing the medium/long term pressure on natural resources.

Brussels, 14 July 2016. The President of the European Economic and Social Committee Georges DASSIS

(1) Council Regulation (EC) No 1225/2009, Basic Anti-Dumping Regulation (OJ L 343, 22.12.2009, p. 51).

(2) OJ C 170, 5.6.2014, p. 91.

(3) COM/2013/0407.