New Zealand’s dairy, wool and kiwifruit imports into China threatened

Following on from Whaleoil’s exclusive yesterday, the SST have made good on their promise and looked further into it.

Pacific Steel, the sister company of iron miner and processor NZ Steel, has lodged a confidential application, under local and World Trade Organisation rules, for an investigation into China dumping cut-price steel on the New Zealand market. The local industry is struggling to compete with the glut of sometimes substandard Chinese metal, which is being used in major projects like the $1.4 billion Waterview Connection and bridges on the Waikato Expressway.

Right now, lawyers for the Ministry of Business, Innovation and Employment are deciding whether the investigation should proceed, which could result in punitive anti-dumping tariffs against China.

But somehow, China learned of the application – and it is taking retaliatory action.

In the past week, representatives of New Zealand’s biggest export industries have been called in by Chinese officials, and told to exert their influence to make sure the MBIE investigation does not go ahead.

This is going to take all our skills in diplomacy and negotiation to prevent this from getting out of hand. 

To up the ante, they have been told China has begun consulting with its local food producers about imposing reprisal tariffs to slow down the access of New Zealand dairy, wool, kiwifruit and potentially meat to the 1.35 billion-strong Chinese consumer market.

Highly-placed sources have confirmed China is applying pressure in an attempt to sway regulators away from imposing anti-dumping or countervailing duties – which are imposed when goods are subsidised – on imported Chinese steel. Zespri and Fonterra are said to have been heavied, and other exporters may have been.

Pacific Steel’s parent company BlueScope Steel has also been strongly critical of the anti-dumping protections against Chinese imports in Australia, and is said to have applied for punitive measures there, as well. In New Zealand, Pacific Steel did not respond to a request for comment, and MBIE’s acting manager of trade, Karl Woodhead, said the ministry could not confirm or deny if it had received an application.  [..]

Under World Trade Organisation rules “applications relating to anti-dumping or countervailing duties are confidential unless investigations are initiated”, begging the question of how China found out.

The world’s biggest trading nation believes the United States is leading an alliance of sycophantic nations, doing the US bidding by shutting down Chinese trade and trying to force its military out of the contested islands and atolls of the South China Sea.

Joe Biden landed on the USS John C Stennis aircraft carrier in the South China Sea on Friday, where he told crew, “we’re going to be active in the region as long as all of you are alive”.

He flies into New Zealand on Wednesday – and it seems certain relations with China will again be high on his agenda.

The US and the EU have been at the forefront of actions against Chinese steel exports. They believe China is dumping steel at prices far below the cost of production with its output far outstripping demand as its economy slows.

It appears Australian company BlueScope Steel may have put the cat among the Chinese pigeons by raising a complaint.  China looks to have overreacted by putting New Zealand’s major exports at risk.

I suspect BlueScope won’t get a lot of sympathy from New Zealand exporters for potentially bringing the wrath of our largest trading partner down on us.  The problem here is that at our end it is one company, but at their end you are essentially dealing with one customer – the government.

This is the kind of asymmetric fight that New Zealand exporters did not have any control over.  They have essentially been thrown under the bus by BlueScope Steel.

 

– Vernon Small, Jonathan Milne, Gerard Hutching, SST


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