Charles Finny: Is cheap Chinese steel harming Kiwi manufacturers?
OPINION: Anti-dumping cases involving China are not new – but never before have there been threats of Chinese retaliation like those New Zealand industry alleges are happening now.
I have been working on the China New Zealand trade relationship pretty much all my 35-year professional life. I was one of the people who in 2004 persuaded the Chinese Government that a free trade agreement with New Zealand was a good idea.
More recently I handled the incredibly sensitive FTA negotiation between New Zealand and Taiwan. This involved spending almost as much time in Beijing as in Taipei. I most recently visited China in April with the Prime Minister.
I am surprised that China would choose to pressure exporters of New Zealand primary products to try and pressure the Ministry of Business, Innovation and Employment (MBIE) on an anti-dumping or countervailing duty complaint, particularly when it doesn't appear that any decision on that complaint has been taken.
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A countervailing duty complaint would allege that the Chinese government is somehow subsidising a Chinese manufacturer. These cases are complicated. MBIE officials will need to be convinced that steel from China is being sold into New Zealand at less than the price at which it is sold in China and that these sales are causing or threatening to cause "material injury" to the New Zealand steel industry (or that a subsidy was being received and that this subsidy was causing or threatening to cause "material injury").
I have seen no evidence to convince me that either dumping or subsidy ,and material injury, is happening or likely to happen. Both tests need to be met.
Anti-dumping cases involving China have occurred from time to time and have not in the past resulted in threats of retaliation of the type that is being alleged here.
More likely would be concern being expressed direct to our Trade or Foreign Minister. And if China did want to seek leverage on this matter I would have thought it could do so more easily by linking any anti-dumping investigation with the proposed negotiation to update the FTA.
As it happens, our Trade Minister met the Chinese Commerce Minister on Sunday and my sources assure me that this matter was not raised.
But my sources in Government do confirm that at least one major exporter is saying that they had heard from an industry association that the Chinese Government would like pressure to be applied to MBIE. It would also seem that some form of complaint has been received by MBIE and that MBIE are considering whether to investigate it.
New Zealand was the first OECD member to recognise China as a "market economy". We did this formally in 2004 but in practice we had been treating China as a market economy for anti-dumping purposes since about 1995.
China welcomed this as it means that we investigate the price a good is sold for in China. If it were not a "market economy" we would be using a "surrogate market" for pricing comparisons.
China has historically disliked this practice which it deems unfair – probably with considerable justification.
* Charles Finny is a former senior trade negotiator and is now a partner in the government relations practice Saunders Unsworth where he specialises in international trade and the supply chain.
- Sunday Star Times