European Aluminium issued a statement regarding the deal under consideration by the European Commission for the steel sector in exchange for granting China the coveted Market Economy Status (MES). According to the organization, this approach ignores the enormous Chinese overcapacities in industries like aluminum and creates unfair distortions on the EU market. “The European Commission is playing a dangerous game,” stated Gerd Götz, director general of European Aluminium in a recent video. “If this deal comes to pass the EU would essentially be sacrificing its remaining manufacturing industry to save one sector.”
The EU steel crisis has distracted the debate on China’s MES from the reality that other European industries, such as the aluminum sector could face the same fate. If the EU grants China MES, it would put 80,000 European aluminum workers at risk of losing their jobs.
“A solution for one sector is no solution at all. Opening the door to China by granting MES – regardless of mitigating measures – would jeopardize the EU’s long-term industrial future,” Götz emphasized. “As EU leaders are well aware and have repeatedly acknowledged, China is by no means a market economy. The Chinese government systematically subsidizes strategic sectors like steel but also aluminum, solar panels and bicycles. State-supported aluminum smelters enable Chinese producers to sell at artificially low prices, to the detriment of EU companies that compete fairly and follow EU rules. The EU must therefore refrain from granting MES until it truly becomes a market economy.”
Chinese share of global primary aluminum production grew from around 10% to over 50% in just over a decade. China’s overcapacity in primary aluminum is five times the size of the EU’s entire production. China is also ramping up production across the value chain, including in semi-fabrication where exports to the EU increased by 21% in 2015 and by 17% in 2014.
“A proposal from the European Commission to grant MES to China would go against the advice of our trading partners in the US, who recently warned China that it had not done enough to qualify for MES, particularly in steel and aluminum. But more importantly, granting MES to China would go against the express mandate from the EU’s elected representatives in the European Parliament, who voted in May with an overwhelming majority on a Resolution against doing so,” concluded Götz.