The Fence
Manufacturing

Trade & anti-dumping

Mark Vassella

Mark Vassella, BlueScope Managing Director and CEO, discusses how Australia needs to sharpen the focus on its anti-dumping regime if it wants to keep a domestic manufacturing sector as the nation recovers from the coronavirus.

One regrettable economic trend made worse by COVID-19’s disruptions to supply chains, has been the surge in tariffs and trade barriers used by countries as political weapons.

The trend is indefensible and risks further inflaming global geostrategic tensions at a time when the world economy is most fragile.

While it is a term that is sometimes maligned, the aim of countries should be to practice ‘free and fair’ trade.

Simply, countries should trade with each other to the greatest extent possible without restrictions such as tariffs, quotas and non-tariff barriers. But that also means they should play by the rules of world trade and individual trade agreements.

Free and fair trade does not mean trade without rules – the law of the jungle. Some restrictions are perfectly reasonable, and they include bio-security and national defence measures.

But where countries violate trade rules, such as by providing illegal subsidies or imposing trade restrictions without reasonable cause, there must be effective measures to combat and compensate for this behaviour.

BlueScope has been a strong supporter of free trade agreements that reduce barriers to trade in steel.

For example, we have been enthusiastic supporters of the Indonesia – Australia Comprehensive Economic Partnership Agreement, (IACEPA), and have already signed a new customer for exports from our Port Kembla Steelworks to Indonesia.

This 5,000-tonne order (with another 5,000 tonnes imminent) is a small part of the 800,000 tonnes of steel we export from Australia each year – but it is yet another example of why Australia can be a competitive manufacturer on the global stage.

We are also supportive of the elimination of trade barriers in Australia. Most steel products made in Asia – the largest steelmaking region in the world – enter Australia tariff-free, as a result of free trade agreements or because they come from developing countries.

The reality is that in a small market like Australia, we cannot and should not be self-sufficient in all steel products. It is in the interests of our customers to have a choice of suppliers, local and international.

Despite the claims of some, Australia is an open market, with over 2 million tonnes of steel imports each year.

However, one trade practice that is not consistent with free and fair trade is dumping.

Dumping occurs when goods are sold in an export market at prices lower than in their country of manufacture, and this causes material injury to domestic manufacturers. Dumping is especially egregious when the dumped goods are subsidised by foreign governments.

Unfortunately, some armchair or editorial desk commentators and academics appear to believe that dumping and subsidisation are entirely legitimate practices, and that companies damaged by such behaviour should simply cop it in the neck. That surely is the law of the jungle – survival of the biggest and most heavily subsidised.

Dumping and subsidisation are not legitimate trade practices, and that is why there are World Trade Organisation (WTO) rules to discipline such behaviour.

Australia’s anti-dumping system complies with WTO requirements and is one of the most transparent in the world. It is the product of more than a decade of bi-partisan support in Canberra, initially led by former Labor Party Industry Minister, Brendan O’Connor with continuing strong support by successive Coalition and Labor ministers.

Extensive information about each domestic anti-dumping case is available to any member of the public on the Anti-Dumping Commission’s website, which is not the case in many jurisdictions elsewhere.

The clear-eyed operation of the anti-dumping system here has seen Australian jobs secured – a task now more important than ever.

This might be an inconvenient truth for the ideologues in broadsheet columns or deep in the bureaucracy who use cherry-picked data to try to score political points or argue theoretical economics – far removed from the reality of global free and fair competition.

Despite their claims, neither the number of anti-dumping cases in Australia, the level of dumping duties imposed, nor the range of countries such duties have been applied to, are out of step with global norms.

Over 50 countries currently have steel trade measures (anti-dumping, countervailing and safeguards) in place, with a total of 216 such measures imposed.

Australia has 14 such measures in place – one behind Canada (15) and one ahead of Mexico (13) – while the United States has 60 such measures in place.

While some have alleged that trade measures have targeted certain countries, Australia takes an evenhanded approach to all exporters, based on the facts and data of each case.

Globally an average of over 80 per cent of steel trade measures include China, whereas in Australia the proportion is 36 per cent.

And despite headline grabbing claims that duties are regularly imposed at more than 100 per cent, the average level of dumping duties currently in place on imported steel products in BlueScope’s range is 11 per cent.

In our view, critics who say the anti-dumping system should be abolished or curtailed are really saying that foreign manufacturers should be allowed to take predatory actions that put Australian companies out of business and workers out of jobs.

They are also implicitly endorsing foreign government subsidies aimed at dominating global supply chains.

As Australia heads out the front door with the giant task to resurrect our economy post COVID-19, we should check we have locked the back door – and that means a well-resourced, effective anti-dumping system.

The risk of a COVID-induced surge in dumped steel from our region is very real and would be disastrous for Australian industry and jobs.

There should be continued bipartisan support for the impartial and professional way in which the Anti-Dumping Commission has operated. Now is not the time to weaken Australia’s anti-dumping system.

This article was first published in The Fence magazine.

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