Anti Dumping Cases Increase as the Technique Becomes More Widely Adopted

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Anti-Dumping, Ferrous Metals

Fine words were espoused from all quarters during the economic crisis that countries would not adopt protectionist measures, but one year on and we can see that few have held to that line. The US and Canadian authorities action over steel tubes and fasteners from China is one that naturally hit the headlines but to be fair the north Americans are far from alone.  Of course countries do not even have to apply a duty, just the threat of a case being under investigation is enough to choke off imports as the supply chain does not want to be caught holding material if a levy is applied.  So when the Russian government extended its year-long anti-dumping investigation into imports of nickel-bearing flat stainless steel products from China, Korea, Brazil and South Africa they were in effect extending a protectionist move without needing to actually apply a rate. The investigation, which commenced on 27 March 2009, will go on for another three months, the Russian ministry of industry and trade said. Meanwhile the €840/metric ton (US$1180/metric ton) import duty on stainless with nickel content of 2.5% or higher from the European Union expired on 20 March and although there is currently no sign of a new investigation into European stainless, “¦ producers will have to make some effort in order to reinstate their presence on Russian market,” Steel Business Briefing reported a Russian special steel association spokesman as ominously saying.

In turn Europe has anti dumping measures against China on fasteners and yet Chinese products are still finding their way into the European market as grey imports via Malaysia according to this article. Alibaba News just reported that at the request of European steelmakers, the European Commission is expected to open anti-dumping and countervailing duty investigations into imports of stainless steel cold finished bars from India at the end of March. A newsletter from the European Confederation of Iron and Steel Industries (EUROFER), which represents the European steelmakers, has pointed out that the Indian share of total European imports for the products in question increased from 39% in 2005 to 57.9% in 2008 and 59.3% in 2009. Notice the reason given is the rise in imports no mention of unfair pricing, Eurofer’s concern is market share and they are using anti dumping as a mechanism to counter it.

Even countries like Egypt are in on the act, a Reuters report covered in Arab Steel says Egypt is looking into possible anti-dumping action against Turkish steel imports used to meet government and housing infrastructure spending which has been resilient in spite of last years downturn.

China, as producer of half the worlds steel and beneficiary of low labor costs (if not cheap iron ore) is often singled out for special attention probably because with so many of the leading producers in state hands it is difficult to believe they are not benefiting from state aid in some form or another. China’s trade surplus narrowed to US$7.6 billion last month from $14.1 billion (US) in January and $18.4 billion (US) in December according to a Lexology article. But probably in response to a growing focus on the Yuan/US$ exchange rate the US has announced a slew of rulings against imports from China. In the past three months, the US has decided to levy tariffs on Chinese-made potassium phosphate salts, coated paper, steel tubes, gift-wrapping ribbons, electric blankets and wire deckings. China was targeted in 116 anti-dumping and anti-subsidy cases last year, with more than US$12 billion involved.

Good work for the lawyers. Will all this legal wrangling ease as markets come out of recession and gradually return to strong growth, probably not. Whatever lawmakers say anti dumping and similar trade disputes have become a course of action favored as first resort by domestic metals producers and unions the world over. A sophisticated network of agencies has grown up on the back of it, lawyers, analysts and lobbyists, which can be swung into action if a case looks sufficiently promising. We are not saying many of the cases are not justified; currency manipulation is clearly a major cause of the problems with China for example, if the Yuan was free floating the US and Europe would have a lot less to complain about. But there is also a large number of cases where the process is used as blatant protectionism.



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