19 Aug 2016

'Massive oversupply' of Chinese steel

6:22 am on 19 August 2016

Pacific Steel - which is understood to have laid an anti-dumping complaint against China - wants the government to take a stronger stance on the "massive over-supply" of steel from China.

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Photo: 123rf.com

The government has been embroiled in a controversy over its response to threats of trade retaliation from China if the complaint is investigated.

Pacific Steel general manager Robin Davies told RNZ steel dumping was happening in New Zealand, and that could have a drastic impact on the domestic industry.

"If you look at all members of the World Trade Organisation, Australia, Canada, the EU, large parts of Asia, have all brought trade remedies for anti-dumping and countervailing duties on steel to date.

"New Zealand is just about the only country that hasn't.

"There's a massive oversupply from China which has driven that process, and we are very concerned from a New Zealand steel point of view that there is steel dumped and subsidised at this time."

When a complaint is laid with the Ministry of Business, Innovation and Employment (MBIE) there is a period of some months before any decision to launch a formal investigation.

The embassy of the country which is the subject of the complaint is informed during this initial time, but neither government ministers nor officials can publicly discuss the complaint, or even confirm its existence.

If an investigation is confirmed there is a further six months before the minister has to make a final determination.

Mr Davies appeared before a parliamentary select committee considering a bill to allow the Commerce Minister to override anti-dumping rules when it is considered to be in the public interest.

He told MPs the timeframe for dealing with anti-dumping complaints was very disadvantageous.

"The timeliness for that process, from a personal experience, there's significant room for improvement compared with other jurisdictions, particularly Australia that have seen it as a big issue for them and have resourced and have really looked hard at bringing a process to bear."

Mr Davies was asked whether the complaints process would disadvantage his company with the steel dumping complaint it had laid with MBIE.

He said he would prefer not to talk about "any specific matters at hand".

"But I think we're keen for the New Zealand to uphold World Trade Organisation rules, if there have been dumping or countervailing duties at play, and every other jurisdiction in the world has determined there has been, then I believe New Zealand should do the same and work swiftly through a review process and come to its determination."

Mr Davies again declined to discuss any specifics "due to the confidential nature of that process".

"But in general terms, the process is long and complex in its current form."

After the hearing, Mr Davies told RNZ the length of the review process exposed the company to further harm.

"Say there's an injury sustained, the injury is continuing to be sustained while the review process is underway."

In July, kiwifruit exporter Zespri and dairy giant Fonterra were warned via Chinese industry players about possible trade retaliation.

Trade Minister Todd McClay has said he and his office was made aware of possible retaliatory action around 25 May.

But he refused to say who made contact.

"When it comes to any competition issue legislation prohibits us from talking about that more directly, but the information came to me from an email from my office."

Mr McClay said he had sought broad assurances from China there would no real retaliation, but nothing specific about a current complaint with MBIE.

"No, what we've said is that there have been a number of issues that have been raised, particularly by a number of New Zealand companies, we've sought assurances around those and we've received them."

He said he had no reason to believe those assurances would change, if MBIE was to confirm an investigation.

Labour MP David Clark said he did not buy the line the minister could not talk about who informed his office about possible action from the Chinese, because of legislation.

"The reasons being used for secrecy around this issue by the government seem to pertain to a law that says this must be kept secret because there are potential retaliatory consequences.

"If that's true then it's incumbent on the government to solve this issue as quickly as possible, but the timeframes are currently very, very long."

He said Mr McClay was jumping around on the head of a pin.

"He has said that he can't reveal certain information, and yet he has talked about possible trade retaliation and government engaging in various levels - if it's serious enough that the government has engaged, the New Zealand public has a right to know what's going on."

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