Editorial: NZ need feel no fear calling steel inquiry

If a New Zealand steel-maker has lodged a complaint alleging dumping, our trade authorities ought to investigate it.
If a New Zealand steel-maker has lodged a complaint alleging dumping, our trade authorities ought to investigate it.

Having once been too reliant on one export market, New Zealand does not want to be in that position again, whether the market is a post-Brexit Britain or China. Concerns arose during the last dairy boom that we were becoming too dependent on China. The risks have been underlined by a hint this week of heavy-handed retaliation if New Zealand should take an anti-dumping case to the World Trade Organisation against recent imports of Chinese steel.

The hint fell a long way short of a confirmed threat. The kiwifruit exporter Zespri says a representative in Beijing received word from an "industry body" that there may be "industry consultations related to the import of New Zealand agricultural products". This appears to have followed notification to China of a dumping complaint from Pacific Steel which the New Zealand Government has yet to investigate. The Prime Minister calls an investigation "hypothetical". It should not be.

If a New Zealand steel-maker has lodged a complaint alleging dumping, our trade authorities ought to investigate it. Dumping is very hard to prove, since it requires very good information on the costs of production in another country. It is one thing for steelworkers and their union to suspect that rival products putting their jobs at risk are being sold below cost, quite another thing to find the evidence. But there is good ground for suspicion.

China's domestic demand for steel has plummeted in recent years as it reaches the end of an era of phenomenal economic growth and infrastructure development. Its steel manufacturers are left with overcapacity and they are being urged to export the excess. New Zealand has one of the stronger economies in the world at present and it is catching up on infrastructural needs. Last month, concerns were expressed by the Fulton Hogan/HEB Construction joint venture about the quality of steel pipes imported from China for the Huntly bypass section of the Waikato Expressway.

The steel, which had been certified as strong enough to hold up four bridges, proved too weak under testing in New Zealand and the bridges have had to be redesigned for concrete piles. If quality is being compromised in China to cut costs, it may be even more difficult to prove steel is being supplied below cost. But if the quality of Chinese product is suffering, local steel-makers have less need to compete on price and less need to worry about possible dumping. Importers such as Steel and Tube Holdings, which lost 1 per cent on its share price on the day it declared the Huntly bypass issues, will be wary now of supplies from the same source, as will road contractors and the NZ Transport Agency.

Regardless, the dumping investigation should proceed. The Ministry of Business, Innovation and Employment must also disregard any hint of retaliation against our agricultural exports to China, and disregard any assurance the Ministry of Foreign Affairs and Trade has received from China's Ambassador that no action will be taken against this country's products if the "hypothetical" investigation proceeds. Let's get on with it.

- NZ Herald

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