China threatens NZ trade war

NZ considers punitive tariffs against China for dumping cheap steel World’s biggest trading nation retaliates with threats to dairy, wool, kiwifruit LATE-BREAKING: Ministers to plead with China, amid fears for Kiwi jobs and livelihoods

China has threatened ‘‘retaliatory measures’’ against New Zealand trade, warning it will slow the flow of dairy, wool and kiwifruit imports.

The world’s biggest trading nation is angry at New Zealand inquiries into a glut of Chinese steel imports flooding the market; the Chinese believe New Zealand is part of a US-led alliance to target Chinese national interests.

The behind-the-scenes threat comes just days before the arrival of US Vice President Joe Biden in New Zealand.

It has forced government and commerce officials to scramble to open urgent talks with China.

New Zealand is angry that China should take such a combative approach, and is asking that it desist.

Pacific Steel, the sister company of iron miner and processor NZ Steel, has lodged a confidential application, under local and World Trade Organisation rules, for an investigation into alleged Chinese dumping of cut-price steel on the New Zealand market. The local industry is struggling to compete with the glut of sometimes substandard Chinese metal, which is being used in major projects such as the $1.4 billion Waterview Connection and bridges on the Waikato Expressway.

Right now, lawyers for the Ministry of Business, Innovation and Employment (MBIE) are deciding whether the investigation should proceed, which could result in punitive anti-dumping tariffs against China.

But China somehow learned of the application – and it is retaliating. In the past week, representatives of New Zealand’s biggest exporters have been called in by Chinese officials, and told to exert their influence to make sure the MBIE investigation does not go ahead.

To up the ante, they have been told China has begun consulting with its local food producers about imposing reprisal tariffs to slow down the access of New Zealand dairy, wool, fruit and potentially meat to the 1.35 billion-strong Chinese consumer market. Local producers are alarmed. Andrew Hoggard, chairman of the Federated Farmers dairy division, said a trade war with China was the last thing farmers needed. A number had been forced off the land by last year’s very low milksolid prices. ‘‘China’s about 20 per cent of our markets and we’re getting good market penetration with added-value products in there.’’

Highly-placed sources have confirmed China is applying pressure in an attempt to sway regulators away from imposing anti-dumping duties on imported Chinese steel. Zespri and Fonterra are said to have been heavied, and other exporters may have been.

Pacific Steel’s parent company, BlueScope Steel, is said to have applied for punitive measures in Australia, as well. In New Zealand, Pacific Steel did not respond to a request for comment, and MBIE’s acting manager of trade, Karl Woodhead, said the ministry could not confirm or deny if it had received an application.

Under World Trade Organisation rules, such applications are confidential unless investigations are initiated, begging the question of how China found out.

The world’s biggest trading nation believes the United States is leading an alliance of sycophantic nations, doing America’s bidding by shutting down Chinese trade and trying to force its military out of the contested islands and atolls of the South China Sea.

Joe Biden landed on the USS John C. Stennis aircraft carrier in the South China Sea on Friday, where he told crew, ‘‘we’re going to be active in the region as long as all of you are alive’’. He flies into New Zealand on Wednesday – and it seems certain relations with China will again be high on his agenda.

The US and the EU believe China is dumping steel at prices far below the cost of production.

The US has imposed anti-dumping and antisubsidy duties of up to 450 per cent on corrosion-resistant steel from China in the latest move against its steel exports. China would likely view any New Zealand move on steel as part of an orchestrated, US-led attack. However, NZ industry representatives and officials have made it clear MBIE’s processes are rules-based and are not influenced by foreign powers.

China’s unusual tactics have caused government and industry to close ranks. The Ministry of Commerce of China has denied consulting on retaliatory tariffs. Fonterra spokesman Phil Turner and Zespri’s chief operating officer, Simon Limmer, both denied any knowledge of the Chinese industry consultation.

But 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’’.

China believes any anti-dumping move against its 600,000 tonnes of exports to New Zealand would be out of proportion, when the value of the imports from China was less than 6 per cent of total New Zealand imports of similar product.

Commerce Minister Gao Hucheng had been expected to raise the Pacific Steel complaint at his meeting with Trade Minister Todd McClay in China this week, where McClay was attending the G20 meeting. But McClay said no competition issues were raised.

NZ First leader Winston Peters said China was ‘‘monstering’’ Fonterra, Zespri and the NZ steel industry. ‘‘And as for the upgrade of the trade agreement, it’s all dependent on what stance we take on the South China Sea. That’s the reality of it now.’’

It’s all dependent on what stance we take on the South China Sea. Winston Peters