NZ Steel sues government over Chinese import decision

Former Commerce Minister Jacqui Dean decided not to take action over Chinese steel dumping.

NZ Steel is suing the government over the previous Commerce and Consumer Affairs Minister’s decision not to take action over Chinese steel dumping.

In July, then Commerce Minister Jacqui Dean said she would not impose countervailing duties on imports of galvanised steel coil from China.

A Ministry of Business investigation found Chinese imports of steel were subsidised at very low levels, no more than 0.08%, a spokesperson said.

However, the report was heavily criticised by E tū at the time of its release, with the union saying it was “extremely disappointed" with the decision. It claimed there were serious questions about the rigour of the research given only one Chinese manufacturer responded to questions from the New Zealand government.

This September NZ Steel lodged an application for judicial review of the former minister’s decision.

A hearing began this morning in the High Court at Wellington before Justice Susan Thomas, with Jack Hodder, QC, representing NZ Steel, which is owned by ASX-listed BlueScope. James Every-Palmer, QC, is representing the government.

MBIE and new Commerce Minister Kris Faafoi wouldn't comment further on the case. NZ Steel says in a statement while it will not comment on specifics, "it recognises the importance of countries operating within the WTO framework and is committed to free but fair trade."

The ministry is taking a look at different claims over Chinese steel imports, with former minister Ms Dean having signed off on another investigation in August just before Parliament was dissolved for the general election.

That investigation, which is still going, concerns the reinforcing steel bar and coil or rebar from China and Malaysia.

Chinese steel imports have been a bone of contention around the world as US and European producers claimed their own industries were being undercut by the dumping of subsidised steel in their markets.

Australian-owned New Zealand Steel achieved a $A100 million turnaround in underlying operating earnings in the year to June 30, following two years of deep cost-cutting, the sale of its Taharoa ironsands business, and a focus on domestic over export sales.

Underlying earnings before interest and tax came in at $A61.1 million for the year, compared with a $A40.3 million loss in the 2016 financial year, despite a fall in total steel despatched from 697,100 tonnes the previous year to 604,900 tonnes in the latest year and sales revenue of $A747.5 million well below the $A887.3 million recorded in the previous year.


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17 Comments & Questions

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The Australian operators of NZ Steel should be brave and raise this issue in Australia and then they can enjoy all the fireworks in their own Country when China decides to retaliate.

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A pointless comment. The two markets are quite different.

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It would be pointless getting into a trade dispute with China and risk multiple billions of dollars of trade with them. No one in government is dumb enough to do that. The only reason we would do that is if our arm is being twisted by some of our larger traditional allies to do their dirty work for them.

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That's the key: the threat of retaliation.

That's what makes the contention that "it doesn't matter who owns the land, as NZ can legislate over it" argument I've seen many times in NBR comments so stunningly naive.

No, you will not be able to legislate in ways that much stronger foreign powers do not like, when that much of your land is owned by foreign public-private companies.

Forget about it...New Zealand couldn't keep two French terrorists in jail in the face of trade threats, much less legislate in ways foreign powers do not like once too much of NZ's productive land has been sold off.

"Maaaate, ya dreamin!"

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The Aussies and the Chinese ay. Wouldn't trust either of them, especially in business.

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I was in business in Australia for 20 years.
In my experience the most impossible to deal with were people with Mediterranean suntans - you were lucky if you ever got paid - I found Chinese ethnic tough but fair to deal with - In the end only dealt with Mediterranean's on a cash-up-front basis

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The Chinese make their own rules. Deal with them at your peril. 'Buyer beware' is the mantra all traders with the PRC, would be well advised to keep foremost in their minds.

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for further information on the behaviour of the Chinese when it comes to trade , read "In the Jaws of the Dragon, the Chinese take over of New Zealand". I am afraid we are very naïve to trust the dragon even a small bit. What they are doing is truly frightening and we are babes in the wood in the face of Chinese practices.

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It is just not NZ, it is the entire world and they're well on their way to achieving it, if you study their investment portfolios around the world. Many of these investments are subtle and fall below the radar in the West, but they are very strategic to China's obsession for world domination

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If the NZ govt rules that there was steel dumping then America can use this ruling against China in the World Trade Organization and impose their own tariffs against Chinese steel imports into America. The decision could cost China tens of billions of dollars. That's why they are so concerned with NZ getting involved in America's trade fight.
Basically other countries are trying to use us as their own pawn against China.

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If the Chinese are using their taxpayers' money to subsidise steel manufacture and then selling it to us at below cost then surely the right response is to say "thanks very much, any chance you can give us a bit more"? Effectively the Chinese taxpayer is giving us their money; which sounds like a great deal to me.

It isn't like the Chinese can get an exploit any monopoly that they could develop by driving the competition bust; as soon they tried to do it competition would spring up again. Which is precisely what happened when they tried to exploit their rare earth mineral monopoly - and now rare earths are cheaper than they have ever been.

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Domestic manufacturers would potentially beg to differ.

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Mouse
Suggest you have a look at the Australian anti dumping commission website / current cases… http://www.adcommission.gov.au/cases/Pages/default.aspx
There are forty current cases before the Australian commission and most of these relate to dumping or subsidization of steel or aluminium from Asian producers.
The dumping of Asian sourced steel and aluminium in western markets is a serious global issue. Governments across Australia, US and Europe have all been active in supporting their industries to take action.
New Zealand has been very slow to respond to the dumping of, or subsidization of imported steel and aluminium products, partly because MBIE is not well resourced to process claims, partly because government ministers and officials have been reluctant to call Asian governments to account. Conversely, preparing claims is a costly and time consuming endeavor and local businesses are reluctant to invest in preparing claims when chance of a fair hearing is slim.

I would suggest that New Zealand Steel are rightfully acting to protect their business in New Zealand and the multiplicity of down stream steel processing businesses in New Zealand who rely on New Zealand steel products for their livelihood.

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China has a planned economy with five,ten year plans etc. Some might say that's why they have done so well in lifting hundreds of millions of people out of poverty. It not only leads to China building super modern steel plants that can out perform the ancient mills that many western countries have, but also to inexpensive solar panels, electric buses and cars, and a hundred and one other things that China produces.
If you really want to be idealistic complain about the barriers that America has put up to stop our lower priced dairy being exported to their country. For New Zealand that is a serious issue, steel not so much.

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There is more than just the military way to conqueor a people. The other is by buying up their land and their businesses so they are beholdened to you. So they control the means of production and the price of that production.

It reminds me of the frog in the pot of water that is being bought to the boil very slowly.

By the time the frog realises whats happening its too late the frog is boiled.

And so with the Kiwi citizen. Slowly but surely boiled alive.

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That is precisely how they operate. I also wouldn't mind betting that like many other products which are labelled Made in China, are in fact made elsewhere, in lower cost labour markets such as Laos/Cambodia/Myanmar and I would also guess now, Africa. Interestingly, how does NZ know for a fact that the steel is actually made in China? It doesn't but, neither does it change anything anyway.

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Seems crazy, someone sells something cheap and people moan??

Should China complain about Fonterra dumping milk powder there??

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