UK govt accused of putting China relations before steel industry

The British government came under fire on Friday for not supporting EU measures to stop the dumping of Chinese steel as thousands of workers at Tata's Port Talbot plant awaited a decision on their future.

Business Secretary Sajid Javed was expected to make a belated visit to the plant amid calls for him to resign over his decision to travel to Australia on a work/holiday trip instead of staying in the UK to deal with the crisis.

Finance Minister George Osborne faced accusations that he was putting closer trade links with China ahead of British workers with former deputy prime minister Nick Clegg saying the government had failed to act against steel dumping.

“George Osborne has put his special relationship with China above the UK’s best interests. The Conservative government have continually failed to take action and missed many opportunities to help the UK steel industry, such as taking steps to prevent dumping of cheap Chinese steel on the UK market," he said.

The criticism heightened when the European Steel Association (ESA) said the UK had led the way in blocking EU moves to increase trade tariffs on cheap Chinese imports.

ESA spokesman Charles De Lusignan told the BBC the UK was "the ringleader" in maintaining the "lesser duty rule", which caps tariffs at 9%.

"We have been talking about the lifting of the lesser duty rule in particular for a long time. The fact is that the UK has been blocking this. They’re not the only member state, but they are certainly the ringleader in blocking the lifting of the lesser duty rule."

"The fact that the UK continues to block it means that when the government says its doing everything it takes to save the steel industry in the UK and in Europe It’s not. It’s simply not true."

Javid told parliament in February that he was in favour of the rule, claiming current duties were enough to cope with Chinese steel imports.

“I think when we look at this, a responsible government would look at the impact overall to British industry and British jobs. If duties are applied that are disproportionate, it would have an impact, in Britain and elsewhere, on the consumers of steel as well,” he said at the time.

Javid has come under personal pressure to justify his journey to Australia at a time when the industry was calling for government help. More embarrassment followed when it emerged he had paid to take his daughter with him to have a holiday after his trade trip.

There is widespread anger among supporters of the Port Talbot workers, and the steel industry in general, at the government's refusal to consider nationalisation when it spent billions propping up the banking sector which had nearly brought down the economy though its own misconduct.

“Steelworkers across the country will be shocked that it has taken this long for the government to finally wake up to the crisis facing our steel industry," said a spokesman for the Community Union, which represents many of the Port Talbot workers.

"Sajid Javid cannot simply arrive at Port Talbot and read out his list of “achievements” – this week’s news is proof that government action thus far has been woefully inadequate. The government must commit to safeguarding the skills and assets of Britain’s steel industry. The UK simply cannot afford to lose our steel making capacity."

Any financial bailout would have to comply with tough EU rules on state aid.

China produces around half the world's steel, but a domestic slowdown has slashed internal demand and producers have been dumping stock overseas at a loss to reduce inventory.

On 30 March, Tata Steel announced it would explore all options in restructuring its 100%-owned subsidiary, Tata Steel Europe Limited, including the potential divestment of its step-down operating subsidiary, TSUK, in whole or parts.

Prior to that, on 24 March, the company announced that it has reached an agreement to sell its Clydebridge and Dalzell steel facilities in Scotland to the government of Scotland, which would then sell them to Liberty House.

Back in December 2015, Tata Steel Europe signed a memorandum of understanding with UK based Greybull Capital for the proposed divestment of TSUK's long products business in the UK. Now, with the latest announcement, Tata Steel's entire UK business has been identified for potential divestment.