[A-List] China: flexing trade muscles

["Michael Keaney" <michael.keaney@xxxxxx>]

China to extend steel tariffs against Japan
By Ken Hijino in Tokyo
Financial Times: November 7 2002

Japanese trade officials confirmed on Wednesday that China had notified the
World Trade Organisation that it would implement formal import tariffs on
steel products after emergency import measures expired in the middle of
November.

Beijing's decision follows similar tariffs implemented by the US and EU
earlier this year and adds to the growing protectionist trends in global
steel trade.

The Japanese government expressed regret over the decision. Trade officials
will be meeting with their Chinese counterparts as early as next week for a
clarification.

Japanese steelmakers, which have offset sluggish domestic demand by stepping
up exports to China and South Korea in recent years, criticised the move.

"China's decision to impose safeguards is deplorable as worries about moves
towards trade protectionism for steel products are spreading," said Akira
Chihaya, chairman of the Japan Iron and Steel Federation.

Beijing plans extra tariffs of up to 23.2 per cent on imports of five steel
products, including hot-rolled and cold-rolled steel sheets and cold-rolled
stainless sheets, that exceed a certain volume based on past export levels,
Japanese officials said.

The measures will begin on November 20 and are expected to stay in place
until May 2005.

China is the second largest importer of Japanese steel after South Korea and
exports have been particularly strong this year. Between April and August,
exports to China surged by more than 80 per cent year-on-year to 3.3m
tonnes.

In May, Beijing decided to impose provisional 180-day import tariffs of up
to 26 per cent on nine steel products following the US decision in March to
impose "safeguard" tariffs.

In an effort to avert the implementation of full-scale curbs, Japanese
steelmakers had already been cutting exports in the October-to-December
quarter as much as 30 per cent from the previous quarter.

Analysts said that the impact on Japanese steel mills may be limited by the
possibility of exemptions for certain steel items.

"Chinese steelmakers, more than their US counterparts, have products that
they can not make themselves, so there is a strong likelihood that Beijing
will allow for exemptions on different items," said Shinya Yamada, analyst
at Deutsche Bank.