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Japan hurt by steel import limits aimed at China

Publication Date : 19-02-2014

 

Amid a sharp increase of low-priced steel product exports from China, other countries have been invoking antidumping duties (AD) or launching antidumping investigations to protect their domestic industry, moves the Japanese government and steel industry are worried may harm the free trade system.

Japanese steel products are currently targets for AD in 27 categories in nine countries.

“It’s an unprecedentedly large number,” said an official of the Economy, Trade and Industry Ministry’s Iron and Steel Division.

In one instance, the Australian government announced on January 8 it had begun an AD investigation into alloy steel products imported from three countries, including Japan.

Australia already imposed antidumping measures against hot rolled plate steel imported from countries including Japan, China and South Korea in December last year.

The announcement in January is another harsh blow to the Japanese side, which has already amassed complaints. Japan Iron and Steel Federation Chairman Hiroshi Tomono issued an official comment on December 19, stating, “Exports of hot rolled plate steel from Japan have caused no injury to the domestic industry in Australia. We believe that it is inappropriate and regrettable that the [Australian] government has rejected our statements...and decided to enact the antidumping measures.”

Foreign countries have begun implementing antidumping measures or investigations because low-priced Chinese steel products have become prevalent in the world due to continued steel overproduction in China.

In China, construction of new steel plants continues, and steel exports in 2012 were 55.8 million tonnes, a tenfold increase over 10 years. As a result of this situation, emerging Asian nations, including Indonesia and Thailand, began imposing antidumping measures against steel products since around 2010.

The World Trade Organization permits the implementation of AD measures to prevent unreasonably low-priced imports. However, as easy implementation of such measures harms the principle of free trade, the WTO requires each country intending to impose antidumping measures on certain products imported from a specified country to prove the other country is exporting the products at a lower price than the price at which they are sold in its own country and is, consequently, harming the domestic industry.

However, countries that have imposed such measures have shown a tendency to include items and countries that do not cause real harm as they do not want to give the impression they are targeting only China and risk an all-out confrontation with China.

According to an official of a major Japanese steel company, when the company complained that it was unjust to impose antidumpling measures against Japanese steel, an official of the country that had imposed the measures secretly confessed that it put the measures in place to stop Chinese products, but the country did not want to only name China.

Currently, the cost of the additional duty is shouldered by Japanese companies such as automakers that use the Japanese steel for local production in foreign countries that have imposed antidumping measures. The situation results in higher local production costs for Japanese companies.

Abuse of AD measures likely will cast a shadow over the future of the free trade system, which is Japan’s lifeblood.

China tentatively imposed antidumping measures against high-class iron pipes imported from countries such as Japan and the United States in December last year. It is believed China invoked the measures as a countermeasure against countries that have imposed AD measures against Chinese steel products. Some industry sources said it may be a sign that a war of retaliation has begun.

“On a global scale, the implementation of AD measures has been decreasing. However, it is increasing in emerging countries,” a METI official said. “It’s unclear whether investigations are appropriately conducted in emerging countries. We need to carefully and closely observe the situation.”

 

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