Sushim Banerjee
As the stark reality of the current commodity market is coming to light, it is being increasingly felt that the global market space is actually truncated. And all this is happening in the backdrop of a large number of FTAs, CEPAs, Trans-Pacific Partnership Agreement and Pacific Alliance between country blocks that have already signed RTAs (22 RTAs and 9 FTAs in 2014), increasing adoption of trade linked measures like anti-dumping, countervailing, tariff and non-tariff trade-restrictive measures and WTO’s relentless fight for widening market access between all trading partners.
In response to consumers’ growing demand for safe, high quality products, the protection of health, pollution and environmental degradation, a total of 798 notifications have been submitted by 23 countries in 2014 as technical barriers to trade. It is reported by WTO that in the first half of 2014, members initiated 109 anti-dumping investigations. This is in addition to notifications on subsidy and countervailing measures, safeguards (23 notifications in 2014), rules of origin, import licensing measures and trade-related investment measures. Of this, the steel sector has the privilege of occupying a central stage. To mention a few recent cases, Indonesia has enhanced import duties on steel under MFN clause which would affect India as big exporters like China, Japan and Korea are covered under FTAs. The country is also in the process of notifying mandatory use national standards for steel products and insisting on more use of steel made in Indonesia under local content rule for government funded construction.
Secondly, EU has imposed provisional anti-dumping duties ranging from 21.6% to 35.9% on Russia, US, Japan, Korea and China for grain oriented electrical sheets. This product from China faces similar investigations from Canada and Brazil, while Mexico is planning to impose anti-dumping duties and Turkey proposes to enhance duties on steel imports from China.
Thirdly, EU is shortly imposing such duties on imports of cold rolled sheets used by automobile and household appliances from China and Russia announced 24.3%-25.2% and 10.9%-12% ADD on imports of SS CR from China and Taiwan respectively. Fourthly, carbon and alloy OCTG from China faces ADD from the US ranging from 29.94% to 99.14%.
Thus the global trade in steel presents a conflicting scenario. Price realisations are down and the space for free and fair trade is getting restricted. WTO in its latest report has emphasised the need for stricter monitoring of trade practices and rules and procedures being pursued by its member countries in conducting global trade. There is also a risk of non-reporting or inadequate reporting of trade-related notifications issued by trading parties which places unsuspecting exporters under huge challenges. FTAs have become popular as it opens up the route of exports to rejuvenate the domestic steel industry under the garb of declining duty rates in the importing country which is persuaded to sign the treaty to receive more investment in other commodities and services. Unfortunately, in most of these cases, import routes get immediately opened up without corresponding benefits in terms of higher investment.
Surplus capacities in steel lying in EU, Japan, South Korea and the US against the backdrop of declining and stagnant domestic demand has forced these countries to adopt restrictive trade measures to counter imports to sustain the domestic high-cost steel industry and thrust exports. China and CIS countries are planning to cut capacities while exporting large tonnages at low prices. India, with potential to generate massive demand for steel in tune with building up the infrastructure and manufacturing base, faces challenges on both fronts. The government along with the industry must plan and act with maturity and pragmatism.
Source: The Financial Express
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