China steel trade subsidies subject of dispute with NZ

China steel trade subsidies subject of dispute with N.Z.

Chinese subsidization of steel exports to New Zealand remains an issue to be resolved following a High Court ruling yesterday critical of advice provided by the Ministry of Business, Innovation and Employment to the former New Zealand Government.

The Chief Executive of the Building Industry Federation, Bruce Kohn, said today the Court’s determination that MBIE had wrongly discounted findings of overseas investigations dealing with the extent of Chinese subsidisation reignites a significant irritant in the Beijing-Wellington trade relationship.

“When allegations arose two years ago of subsidised Chinese steel entering New Zealand suggestions were made in China that any imposition of penalty duties on the imports could threaten the flow of New Zealand dairy products to the Chinese market,” he said.

The Court made it clear that the judicial review was principally concerned with MBIE’s investigation and advice to the then Commerce Minister about the level to which the Chinese goods were subsidized.

NZ Steel, which competes with Chinese imports of galvanized steel coil, contended that errors in advice provided by MBIE meant that the Minister’s decision not to impose duties on the Chinese product was inconsistent with the Trade (Anti-dumping and Countervailing Duties) Act 1998.

It claimed that MBIE applied the wrong law in deciding that any benefits Chinese producers received from banks or other Chinese entities would not qualify as subsidies and MBIE had also wrongly discounted the findings of overseas investigations in its advice to the Minister.

The Court accepted NZ Steel’s position on both these points, quashed the Minister’s decision to reject an imposition of penalty duties and ordered that the matter be reconsidered.

MBIE estimated subsidization might occur up to a level of 0.02 percent whereas earlier American and Australian investigations into Chinese subsidisation of exported steel products claimed levels of 39.05 percent and 22 percent respectively. Seven Chinese firms were asked to respond to MBIE’s inquiries as to whether their coil exports were subsidized and only one answered. The Chinese Government said the claim of subsidization had no merit and contained no evidence of subsidization or injury to the local producer.

“The Coalition Government needs to make its position on the issue clear so that New Zealand manufacturers have some certainty on the extent to which it is prepared to tolerate, or not, competition from subsidised products in their local market.” – ends

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