China said to be threatening trade reprisals if government runs cheap steel inquiry

But former trade negotiator –  a key source for the story – tells NBR he's dubious about the rumour he relayed to the Sunday Star Times. With special feature audio.

LATEST - No indication of China trade war threat: Key

China is allegedly trying to heavy the New Zealand government into dropping an inquiry into cut-price Chinese steel.

But Charles Finny – the former trade negotiator who confirmed the rumour when the Sunday Star Times came calling – tells NBR he is dubious about his own tip-off.

Chinese steel used for the Waterview Connection tunnel has caused trouble on two fronts: alleged dumping and alleged safety issues.

MBIE has acknowledged concerns about imported steel used in major construction projects but not as yet mounted a formal investigation. The Commerce Commission has separately looked into imported steel mesh used in housing.

A Sunday Star Times story today says: "Trade expert Charles Finny, who has worked on China-New Zealand trade issues for decades, said sources in government confirmed at least one major exporter had been told 'the Chinese government would like pressure to be applied to MBIE.'

The flow of NZ dairy products, kiwifruit and wool into China is said to be threatened. (That statement is not directly attributed. Others quoted in the story, including NZ First leader Winston Peters, appear to have no direct knowledge of events.)

However, in an online discussion about the article, and followup emails, Mr Finny told NBR he was "dubious" that any pressure had in fact been applied by China.

"I confirmed that there is a story going around. I still find it strange."

He says he was only asked by the Times about rumours China is applying pressure to avoid a dumping investigation, not whether it was also seeking to strong-arm over steel safety.

However, he's dubious if either has occurred.

"This just doesn’t make sense," he tells NBR.

"If this is such a big issue why did MOFCOM [the Chinese Commerce Ministry] not raise the issue with [Trade Minister] Todd McClay last week?"

He says he hasn't picked up any chatter around the Beehive about pressure to head off an investigation, either.

While no minutes were published of the MOFCOM-McClay meeting, Mr Finny is well-placed to have the inside word. He has previously worked for the Prime Minister's Department, the Department of Trade and Industry and the Ministry of Foreign Affairs and Trade – notably on the free trade agreement with China. 

He is now working as a lobbyist for government relations outfit Saunders Unsworth but says he has no steel or construction clients, and that his comments are based on his past and present knowledge of New Zealand trade.

Pacific Steel, the sister company of iron miner and processor NZ Steel, is said to have 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. However, in an op-ed for the SST, Mr Finny says he does not believe there is a case for an investigation into steel dumping (that is, government subsidies allowing Chinese companies to export steel below the cost price), notwithstanding the pressure rumours.

Fletcher Construction's decision to import low-price Chinese steel for the Waterview Connection tunnel has drawn flak over alleged safety issues and short-cutting the certification process.

Fletcher has also drawn political heat for favouring keener-priced Chinese steel at the expense of local operator NZ Steel although the counter-argument is that taxpayers' should have the best possible deal on all construction costs.

The SST says that in footage for TV3's The Nation, which did not make it to air, Chinese ambassador Wang Lutong said there was no issue with the imported steel quality but the embassy had been discussing the industry's concerns with New Zealand authorities. But how exactly, and in what manner. For now, it's not clear if China has been strong-arming or if it is, so to speak, a case of Chinese whispers.

LATEST - No indication of China trade war threat: Key

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