European Union (EU) to boost protection of steel industry as imports flood in The EU is expected to strengthen its protection against steel imports, possibly as early as October 2016, as a global trade war in steel intensifies and steel imports keep flooding into the EU. The EU has strengthened trade defences over the past year, imposing anti-dumping tariffs on a range of steel products. These tariffs range from 18% to 25% for imports of steel from China. It is expected that these duties will be increased in October. EU data shows that 27% of steel imports come from China. The EU now has 37 anti-dumping and anti-subsidy measures in place for steel products, 15 of them against China. China, which produces half of the world's 1.6 billion tonnes of steel, has struggled to reduce its estimated 300 million tonnes of overcapacity, but the Chinese government denies its firms are dumping by selling steel at below the cost of production. It says global steel overcapacity is due to the collapse of demand after the 2008 financial crisis. Countries from Asia to the Americas disagree with China. The United States (US) claims that the Chinese government is subsidising its steel industry and that this is a form of protectionism that gives Chinese steelmakers an unfair advantage in world markets. It has imposed tariffs of up to 450% on some types of Chinese steel. India has also imposed tariffs on steel imports from a number of countries including China, Japan, Russia, Brazil, Indonesia and South Korea. Source: EurActiv.com with Reuters, August 2016 Table 1.1: EU exports and imports of goods to and from China 2010-2015 (billions of euros) | | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | | :---------------- | :----- | :----- | :----- | :----- | :----- | :----- | | Exports of goods | 113.5 | 136.4 | 144.2 | 148.2 | 164.6 | 170.4 | | Imports of goods | 283.9 | 295.1 | 292.1 | 280.1 | 302.1 | 350.4 | Source: Eurostat Table 1.2: EU exports and imports of services to and from China 2010-2015 (billions of euros) | | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | | :---------------- | :----- | :----- | :----- | :----- | :----- | :----- | | Exports of services | 19.5 | 21.7 | 25.2 | 27.7 | 29.1 | 36.0 | | Imports of services | 17.2 | 17.7 | 19.6 | 21.1 | 22.9 | 25.7 | Source: Eurostat

1. (a)(i)How does the EU's balance of trade in goods with China in 2015 compare with the balance in 2010?[2]
2. (a)(ii)How does the EU's services balance in trade with China differ from its balance of trade in goods with China over the period 2010 to 2015?[2]
3. (b)Outline why the US would claim that subsidies to Chinese steel makers give them an 'unfair advantage in world markets'.[2]
4. (c)With the help of a diagram explain how the imposition of import tariffs on steel will protect domestic producers of steel in India.[4]
5. (d)(i)Explain who could lose in China as a result of the imposition of tariffs on Chinese steel.[2]
6. (d)(ii)Explain who could lose in the EU as a result of the imposition of tariffs on Chinese steel.[2]
7. (e)With reference to the principle of comparative advantage, discuss whether the increase in exports of EU services to China could justify free trade in the market for steel.[6]

This question uses a diagram from the original paper, which isn't shown here. Open the full paper from the past papers archive to see it.