Wednesday, April 06, 2016

Andrew Grice in the Independent: Saving our Steel

Andrew Grice has an article in the Independent today here about the problems that the threatened closer of Port Talbot's steel plant could cause for people in Wales and the possible political feedback.

Although the article has a wider focus than this the headline is about the possible impact on the EU referendum article. Needless to say there are attempts by both sides in the EU referendum to suggest that being in or out respectively of the EU might help, save the jobs of steelworkers, although of course the truth is more complicated than some people on either side will admit. To quote from the article 

“'There is real anger on the doorstep,' said one Labour source in Wales."

"A Liberal Democrat activist said: 'The EU and all the established parties are getting the blame.'

That is not surprising when campaigners for Brexit cynically exploit the steel crisis. Boris Johnson got big headlines this week by claiming that EU membership leaves us powerless to help the steel workers, citing rules limiting state aid and tariffs.We can’t take emergency action against dumped Chinese steel, even with British industry on its knees,” he argued. It is funny how free-marketeers who champion free trade deals come over all protectionist when it suits them."

On the other hand, "Stephen Kinnock, whose Aberavon constituency includes Port Talbot, is also a prominent figure in the Britain Stronger in Europe campaign. He argues  'The men and women working in the steel industry know that leaving Europe would be a killer blow for British steel.'”

Clearly there are arguments both ways on this one: Andrew Grice is clearly of the view that this is not a problem made in Brussels and he makes a strong case:

"Superficially, the Leave campaign’s message on steel is plausible. EU state aid rules could make it hard for the UK Government to ease the burden of Tata’s pension fund on a new owner. The EU has been slow to act against Chinese imports. “Brussels” is a very convenient scapegoat across Europe. Mainstream parties lose support as those to their left and right play on the genuine grievances of people left behind by globalisation and the financial crisis.

But blaming the EU for what is happening in South Wales does not stack up.

Although Tata’s decision was brought to a head by losses of £1m a day, the company is also said to be worried about the prospect of Brexit. Why? More than half of Britain’s steel exports to go the EU. Brexit could mean crippling tariffs and the loss of EU-wide unfair competition measures against Chinese steel; 16 of the 37 currently in place cover Chinese products.

Outside the EU, British steel could be hit by the same anti-dumping moves. We would not with one bound be free to bail it out: World Trade Organisation rules also limit state aid, as Switzerland and Norway have discovered."

Grice's last paragraph above contains the killer arguments. You can make an argument that he is overstating the problems of selling steel to Europe after Brexit, but not that there would be no problem with doing so if we poured state aid into the industry - he is right that this would be seen abroad as unfair competition and trigger "anti-dumping" measures. And while we can leave the EU, nobody in their right mind is arguing that we should also leave the World Trade Organisation.

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