The EU has issued an unusually stark warning that Beijing will have to accelerate steel plant closures to improve its chances of winning market economy status.

European Commission President Jean-Claude Juncker insisted on Wednesday that Chinese steel overcapacity was running at twice the level of Europe’s entire production and was fueling a crisis in EU mills, which have lost 20 percent of their workforce since 2008.

“We are saying that market rules have to apply, the Chinese know exactly that this, in concrete terms, means the closing down of steel plants,” he said in remarks following the 18th EU-China Summit in Beijing. “For us there is a clear link between the steel overcapacity of China and the market economy status for China.”

Market economy status within the World Trade Organization is one of China’s most prized international goals and the decision on whether to award it has become a toxic political dispute for the European Commission.

Free traders such as Britain and Sweden support Beijing’s bid, arguing that the move will help promote bilateral investment. But opponents such as Italy fear that the move would trigger heavy job losses in Europe by making it harder to impose anti-dumping duties.

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Next week, the Commission will deliver an impact assessment on the effects of designating China as a market economy. A formal proposal is expected by early September and a final decision before the end of the year.

Most trade diplomats expect a compromise in which market economy status is granted but with mitigations for vulnerable sectors, possibly including steel, textiles and ceramics.

Juncker’s demand for action in China’s giant steel sector, accounting for more than half of global output, comes only days after the EU won increased anti-dumping firepower to protect manufacturing industries against unfairly cheap Chinese imports.

The Commission last week established a groundbreaking legal precedent by securing approval for the retroactive application of anti-dumping duties, people briefed on the matter told POLITICO.

In the meantime, EU officials have been scrambling to help correct a glaring weakness of Europe’s trade defenses: their slowness.

Anti-dumping measures in the EU are far slower than those in the U.S., taking about nine months to be applied provisionally, and another six months to be finalized. During this protracted period, exporters rush to dump goods before the barriers go up.

The Commission is now seeking to resolve this problem by allowing anti-dumping tariffs to be applied retroactively, covering some of the period before the retaliatory duties are finalized.

It has sought to establish the precedent through a case against cold rolled flat steel from Russia and China. In last week’s vote to make the measures retroactive, 13 countries were in favor, 10 opposed the idea and five abstained. Britain, France, Italy, Spain and Poland were all supportive. Germany abstained.

“Never has an anti-dumping measure been imposed retroactively in the history of Europe,” said Inès Van Lierde a trade lawyer specialized in anti-dumping measures and close to industry lobby group Aegis.

The case has not been formally concluded. After last week’s vote on retroactivity by member countries, the measure will be passed to the college of commissioners and is expected to be finalized in August.

Britain has led a blocking minority against tougher duties on China and it is unclear to what degree Britain will have the political capital to hold its ground after Brexit. Although Britain backed the retroactive duties last week, diplomats say it is too early to say whether London would have to change tack.

On Monday, EU Trade Commissioner Cecilia Malmström also directly criticized China for its lack of reciprocity over investment terms.

“[Europeans] ask why can Chinese firms make high profile purchases in Europe, including airports in Germany, the Port of Piraeus in Greece and Italy’s Pirelli tires, not to mention Volvo cars in my own home town of Gothenburg, when European investors face major barriers, including equity caps, forced technology transfer or licensing restrictions,” she said.

The pressure on European policymakers heightened this week with news that the EU’s trade deficit with China had hit a record high, with all of the EU’s 28 countries with the exception of Germany and Finland posted a trade deficit in goods.