Anti-Dumping & Protectionism

Commentators on anti-dumping measures do not seem to understand anti-dumping rules under the WTO Agreement.

Take the discussion about Arrium, an Australian steel maker employing almost 10,000 workers. Arrium is the company that was spun out from BHP Billiton 2000 as OneSteel. Recently it collapsed into voluntary administration with debts of more than $2 billion. Why did this occur notwithstanding the presence of tariff protection in the form of anti-dumping measures applied for and granted in respect of a number of its products?

According to the commentators and politicians, Australian governments at all levels should be giving preferential treatment to steel produced by Arrium in an effort to save the company and several thousand jobs, notwithstanding existing tariff protection in the form of anti-dumping measures.

Whilst well-meaning, there’s little basis to the argument. The steel produced by Arrium historically apparently was not a high value-added product. It apparently was not the high quality steel that would be needed in the manufacture of submarines for example. Why should Australian governments use taxpayers’ money to prop up poorly managed companies that are merely producers of commodity products? Certainly, Australia is the first to complain when other countries, especially China do the same thing! Where and how did we get here?

Why did Arrium pile on a huge amount of debt? Who was in charge of management? What was their strategy? Why did they keep the Whyalla steel mill operating when it was not economical to do so and what was their marketing strategy? Why was there no investment in the steel mill and why was it apparently run on a cash-even break, presumably on the hope that the global steel market would not turn against that strategy? Did it have to do with, as one commentator has indicated, that closing down the mill would cost more than keep it operating due to the environmental remediation of the plant. Why was protection in the form of tariff protection from anti-dumping measures apparently not effective?

Why is there a concern with the stated glut of steel products and their impact on the Australian market and the alleged dumping and subsidization of such steel products? Dumping and subsidy on commodity products such as steel, glass and A4 Copy Paper constitute the majority of antidumping measures and usually imported from China.

Perhaps, in the case of Arrium, this will change under the new purchaser of Arrium.

Similarly, Capral, an Australian producer of aluminium extrusions, has been actively seeking the imposition of anti-dumping measures and advocating that those measures that have been too low according to its corporate presentations. Will the imposition of tariff protection in the form of anti-dumping measures under the guise of "fair trade" make any difference to a commodity producer subject to fluctuations to the commercial and residential building markets? Also, what constitutes "fair trade" in international trade and how does it compare with "fair trade" in domestic trade?

These companies as commodity producers are not the only Australian commodity producers seeking tariff protection in the form of anti-dumping measures. However, has anyone assessed whether those measures are effective and what costs do they impose on the Australian economy? Why has this not been assessed?

As successive governments have realised, tariff protection, in whatever form, reduces the competitiveness of Australian industries both domestically and internationally. Is this in the national interest?

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