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AEGIS Europe urges the EU to act against excessive non-market capacities threatening EU manufacturing

AEGIS Europe, an alliance representing over 20 key EU manufacturing sectors, urges immediate action from the European Union to address the critical and unprecedented threat posed by economically irrational excess production capacities, especially from China and other emerging economies. This trend is particularly alarming as most of the AEGIS Europe’s members are seriously impacted, while they are essential to achieve the EU Green Deal and ensure our economic security.

This issue was acknowledged by world leaders in their conclusions of the G7 (Italy, 13-15 June 2024). While AEGIS Europe welcomes the recognition of the need to have an appropriate and effective toolkit, we believe that engaging in diplomatic discussions with the countries contributing to overcapacities worldwide is, by far, not sufficient. Since the situation has worsened dramatically over the last years, the Union industry needs effective and immediate measures, as a matter of urgency.

The build-up of economically irrational excess production capacities in various industries is causing global market disruptions due to unsustainably low prices, undermining the EU’s competitiveness. In China, the economy is strategically planned to dominate globally important sectors, such as steel and aluminium, posing a systemic risk to the EU’s economic future. Other countries are instead fuelled by the desire to have national champions and new production facilities focused on exports, often built with Chinese state-backed subsidies.

While the United States has reacted timely by introducing the Inflation Reduction Act to support their domestic industries and imposing tariffs on key imports such as steel and aluminium, but also on electric vehicles, solar cells, and lithium batteries for EVs, “The EU’s response lacks the urgency and effectiveness needed to protect its manufacturing sectors from massive overcapacities that are flooding the markets and dragging global and/or regional prices down”, commented Inès Van Lierde, co-chair of AEGIS Europe. “As traditional trade defence instruments can deal only partially with this situation, an immediate and robust EU action plan is urgently needed to restore a level playing field and facilitate future investments in the EU. The upcoming entry into force 3 of the countervailing duties on Chinese EV is a step in the right direction, but not sufficient to tackle the systemic issue of worldwide overcapacities”, she continued.

AEGIS Europe urges therefore the adoption of necessary legislation to allow the imposition of punitive tariffs or equivalent measures at the border on goods from countries supporting (directly or indirectly) these excess capacities. Furthermore, AEGIS Europe suggests a relaxation of injury requirements in trade defence investigations for the affected sectors and emphasises the need for the inclusion of provisions in EU Free Trade Agreements allowing the Union to counteract.

“The European manufacturing stands at a crossroads: immediate and decisive action is required to give relief to an EU industry that is already suffering. Without such measures, we risk compromising our economic security and the future of the EU’s industrial base”, concluded Renaud Batier, co-chair of the Alliance.
Source: AEGIS Europe

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