Nick Collins: Trump's tariffs will see more steel dumped on markets like ours

Opinion

The Government's coalition agreement has a strong focus on regional economic development in primary industries and on job creation - but where is policy to support our existing manufacturing businesses?

The future of New Zealand's metals manufacturing businesses, which provide nearly 30,000 jobs in New Zealand, was already under pressure before US President Donald Trump imposed import tariffs of 25 per cent on steel and 10 per cent on aluminium.

Imports of steel and aluminium products into New Zealand have increased significantly in the past five years as a result of global oversupply of these products. Imports of aluminium products have increased 300 per cent over the past three years.

The potential consequences of Trump's action have been well documented, harming New Zealand's exports, as have the knock-on effects of other jurisdictions imposing tit-for-tat tariffs on US exports which could endanger New Zealand's relationships with our trading partners.

Trump has granted an exemption for Australian exports after striking a deal with Prime Minister Malcolm Turnbull, joining Canada and Mexico on the exemption list.

But, an exemption for New Zealand would only impact positively upon the future of a small proportion of New Zealand's steel and aluminum exports. It doesn't address the real threat to New Zealand's metals manufacturing businesses – because we have negligible current trade remedies to deter dumped steel and aluminium imports, unlike Australia, US and Europe.

In a global trading environment those metals exports to the US which are now subject to tariffs will find their way to other markets, particularly those markets where there are very scant or no trade remedies protecting local manufacture from subsidised exports – New Zealand being a case in point.

New Zealand's Commerce Minister has recently rejected Pacific Steel's application for duties on reinforcing bar and coil, and last year New Zealand Steel's application for duties on imported galvanised steel coil was rejected by the previous administration's Commerce Minister. That decision is now the subject of a judicial review.

The Ministry for Business Innovation and Employment's final report on the reinforcing bar and coil case concluded that there had been an increase in imports, that Pacific Steel had experienced significant price depression and there was a significant decline in Pacific Steel's profitability in 2015-2016.

But MBIE could find little evidence of subsidisation of exports of reinforcing bar coming into New Zealand from China. This decision beggars belief when similar recent trade remedy cases in Australia and US have been upheld in favour of Australian and US manufacturers.

The respective trade authorities in Australia and the US have identified significant levies of local subsidies provided to Chinese manufacturers through a range of raw material subsidies and purchase of raw material stocks, favourable lending terms, capital and support grants, subsidised land and infrastructure.

While New Zealand metals manufacturers have made significant progress in improving their international competitiveness in recent years, failing to protect New Zealand's metals manufacturing businesses from subsidised imports not only places at risk the future primary steel and aluminium producers but also the hundreds of downstream processing and fabricating metals businesses, which provide jobs in construction and manufacturing.

For a Government committed to regional economic development, protecting existing jobs is likely to be an easier task than creating new jobs.

• Nick Collins is chief executive of Metals New Zealand, an organisation serving the needs of New Zealand's metals-related industry.