Chinese dumping a slow death for European industry – Mr Gotz
EurActiv.com reported that Mr Gerd Götz, director general of European Aluminium has warned that unfair Chinese aluminium trading is killing the European aluminium industry and if the country is given market economy status by the European Union, it could have a catastrophic impact on EU jobs and production
He spoke to EurActiv deputy news editor Mr James Crisp.
Q - What challenges is China posing to the aluminium industry in Europe?
A - Since the beginning of this year there has been double digit growth in imports to Europe from China. About 50% of global aluminium is produced in China. In the past when you look at the growth strategy of China, you could see this was consumed domestically. But now that growth in China is slowing down, there is suddenly overcapacity. Other regions, such as Europe, would bring down their capacity but China is exporting it into the world economy. We are talking about production of 28 million tonnes of aluminium in China and ten million of that is overcapacity. In Europe we have a primary production of two million – so you can see why the industry, companies, unions, everybody is really alarmed about the situation.
Q - And this is new aluminium being extracted and created rather than recycled aluminium?
A - We are talking about new aluminium.
Q - Doesn’t that have an environmental impact that the Chinese need to take into consideration given the commitments they have made on global warming?
A - The carbon footprint of Chinese aluminium is certainly different to it in other regions. China exports aluminium with a footprint that is not helping our ambitious environmental and low carbon economy goals in Europe.
Q - A big part of the transition to a low carbon economy involves the circular economy. I am right in thinking that aluminium is recycled a lot?
A - Oh yes. It is and that will continue and grow. But the demand for aluminium is so high that we do not have enough to recycle. Today we still have 75% of all aluminium ever made still in use and if you look at the applications, they are also all long-lasting. It can take sometimes 15 or 20 years before you can get the aluminium back into the circular economy. That’s why there is also a lot of competition to get scrap aluminium from the market and unfortunately, we lose scrap aluminium to other markets every year in Europe.
Q - Including China?
A - Yes it is one of those regions.
Q - Does that mean that Europe’s aluminium recycling industry is already losing ground to China because it is not as competitive?
A - They are certainly as competitive.
Q - Then why is all the aluminium scrap going to China?
A - Because you have different cost structures and there’s European legislation that does not allow all kinds of recycling.
Q - Surely those cost structures and the regulation makes European scrap recyclers less competitive?
A - It plays a role. But this Chinese aluminium comes with a price tag on it that you can only call close to dumping.
Q - Are you concerned that we might see what happened with solar panels happen to the scrap aluminium industry? China overtook Europe in that sector and has also been accused of dumping.
A - We know today that more than 50% of all antidumping cases in Europe are against China. Let me be clear though, we absolutely support free trade. The point is not to protect Europe against any producer but to have fair trade. We don’t see the fair trade element as long as these Chinese production facilities are strongly subsidised and don’t meet the high environmental standards we have in Europe and just flood our markets - at the price of our jobs and production. Once you lose these industries, which are long term investments, you don’t get them back. It’s a slow death but it is a death and we have seen this in Europe in our aluminium industry in the last ten years. We have a competitive disadvantage because of the much high regulatory costs we have in Europe compared to the rest of the world and the fact that aluminium has a global price mechanism. The price is same all around the world so if you have a different cost production level you suffer.
Q - So aluminium has a set global price?
A - Yes it is set by the London Metal Exchange. That makes a huge difference if you have to live up to the standards we have in Europe. We don’t, for example, allow small hands in the sorting process, but a trader may find it easier to sell to regions where the rules are not so strict.
Q - China has been pushing for market economy status at the World Trade Organisation. Does that cause you concern?
A - Yes. A market economy normally does not have a five year plan! When you look at the criteria China must meet to gain market economy status, it is failing on four of those counts. They include the absence of state intervention, a full set of bankruptcy laws, an independent financial sector and a company law that is transparent and not discriminatory. That is not a passing grade. I hardly see that we are on a level playing field as long as these criteria are not being met.
Q - How likely is it that China will get market economy status?
A - The members of the WTO made an agreement nearly 15 years ago. The agreement was that if you deliver on the criteria, we will give you market economy status. This 15 year period is running out and a decision has to be made.
Q - Do you think the Black Monday crash on the Chinese stock market and the state devaluation of the currency highlights the risks of dealing with China?
A - I don’t think we should mix the specifics of our industry and global economic developments. The question is how they get their production sold to safeguard their jobs and production.
Q - If I can ask a question back, can you imagine what would happen to the 10 million tonnes overcapacity of aluminium production if we were unable to file antidumping cases against China and accept Chinese prices as pure market-driven ones? Would that happen if China got market economy status?
A - It is what happens already. We see probably the tip of the iceberg.
Q - To be crystal clear – trade with China is currently unfair?
A - What we see from China coming to Europe is dumping on our markets.