18 Jul 2016

PM downplays China steel dumping claims

1:55 pm on 18 July 2016

The Prime Minister John Key is playing down allegations of complaints that China is dumping steel in New Zealand below cost.

Prime Minister John Key talking to media outside Rainbows End. 16 June 2016.

Prime Minister John Key. Photo: RNZ / Claire Eastham-Farrelly

Fairfax Media reported steel makers had complained to the government that Chinese manufacturers were dumping excess steel here - and threatening trade retaliation if it was investigated.

The practice of 'dumping', or selling surplus goods below cost, is illegal under most trade agreements.

The Ministry of Business, Innovation and Employment (MBIE) said it could not confirm or deny whether it had received two complaints from New Zealand steel producers about the Chinese steel.

Winston Peters on the bridge at Parliament.

Winston Peters Photo: RNZ / Alexander Robertson

New Zealand First leader Winston Peters said he wanted to know why Chinese officials appeared to know more than officials in this country about the complaints.

"It may be that the government has told the Chinese, via their officials, that this investigation was happening.

"But whatever it is, the government's been pretty silent on the inference that they either told the Chinese government this was happening, or second, there has been a leak of some sort," Mr Peters said.

Mr Key said he has not heard about a complaint and if one had been made to the Ministry of Business, Innovation and Employment, then it would initially be confidential.

And he said if there was a problem he did not think China would retaliate.

"Our exports are flowing across the border into China, I regularly see the Chinese leadership.

"The Chinese ambassador has my phone number if he wants to pick it up and make a phone call.

"None of those things have happened," Mr Key said.

Labour Party finance spokesperson Grant Robertson told Morning Report the investigation was already off to a bad start, given that Chinese officials had learned of it.

He said complaints about dumping and similar illegal behaviour needed to be handled carefully and any investigation should be completed before the other country involved finds out.

"Going down the path of the anti-dumping type approach you've got to be very careful, you've got to have all your ducks in a row, do the investigation before the other country becomes involved.

"This process looks very messy."

If dumping was happening, it could undermine New Zealand's own steel industry, Mr Robertson said.

The Australian Steel Institute said it was not surprised by allegations of steel dumping in New Zealand.

Institute head Tony Dixon told Morning Report steel dumping by Chinese producers was an ongoing problem in many countries including the United States, the European Union, Britain and Australia.

He said it could be damaging to the economy and present issues around steel quality.

"Most people don't realise the impact it has on the infrastructure and the local economy in terms of jobs and local supply chains."

Trade Minister Todd McClay said he wanted answers from the Chinese Embassy in Wellington about the allegations.

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Todd McClay. Photo: RNZ / Alexander Robertson

Mr McClay said he was not confirming the dumping, but the widespread reporting of the problem made him want to know from the Chinese just what their policies on trade were.

Speaking from Indonesia where he is on a two-day visit, the minister said the matter was a departmental one and not proper material for political comment.

MBIE has neither confirmed nor denied it had had an approach on dumping from anyone.

Nor has there been any comment from Pacific Steel, which reportedly made the claim, nor from its owners, New Zealand Steel and ultimately Bluescope in Australia.

But an official at the E tū union, Joe Gallagher, said he was told of Chinese dumping by a senior executive at New Zealand Steel, whom he would not name.

"It was someone in their senior leadership team [saying] there was a lot of excess steel coming out of China and being dumped on world markets, he said.

"And New Zealand is one of those markets."

Any difficulties here would match overseas problems. Last week, the US Department of Commerce announced a preliminary decision to impose countervailing duties on Chinese stainless steel with a final decision due in November.

There have been protests in Brussels against alleged dumping of Chinese product there, with protesters from several European steel companies complaining of Chinese dumping.

The most recent figures show China's steel firms exported the second-highest amount ever, as the country deals with years of over-investment. That means there is low demand for steel in China, some mills have closed and huge stockpiles remain to be sold.

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