IRON AND STEEL: ENHANCING COMPETITIVENESS IN A GLOBAL CONTEXT.

At the end of 1998, the iron and steel industry employed 290,000 people with output estimated to be worth Euro 75 billion. The EU is both the world's leading steel producer and the largest single market for steel. More than 60% of steel production is currently covered by five large groups, compared with 23% in 1993. In 1998, the steel industry recorded a first ever deficit in its steel trade balance with the rest of the world, owing to an extraordinary 50% surge in exports alongside a 13% decline in exports. In terms of value however, the EU remained a net exporter since imports consisted largely of low price products and because the products exported by the EU generally have a higher added value. Its trade surplus nevertheless declined by a third.An important chapter of the action plan outlined in the Communication focuses on competition policy and state aid, highlighting three aspects of this policy:- Horizontal cooperation on research: such agreements do not result in a distortion of competition to the extent that they stimulates EU enterprises to make good lost ground in international alliances on technology.- The treatment of mergers: there has recently been a spate of steel industry concentrations at world level through mergers, takeovers and joint ventures and more are expected in the near future. Competition policy will therefore need to take account of the pursuit of concentrations.- State aid: strict rules must be maintained to ensure that any distortion to competition between Community steel producers can be avoided, even after the expiry of the ECSC Treaty in July 2002. This aid will also be applicable to the steel industry restructuring process in Central and East European countries.The Commission also calls for the establishment of a multilateral framework for competition rules in the context of the World Trade Organisation (WTO). Given the failure of efforts in...