Little NZ is getting a bit of a reminder of its significance in the global economy:
China threatens reprisals on NZ dairy, wool and kiwifruit if government doesn’t back off cheap steel inquiry
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.
We are well within our rights to inquire into the quality of this steel. It is being used in our infrastructure and it has failed strength tests (doh!). We could be building ourselves another leaky homes disaster here.
The behind-the-scenes threat comes just days before the arrival of US Vice President Joe Biden in New Zealand, forcing 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.
Exactly what we should be doing.
In the past week, representatives of New Zealand’s biggest export industries 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, kiwifruit and potentially meat to the 1.35 billion-strong Chinese consumer market.
Local producers are alarmed. “A trade war with China is definitely not in our interests,” says Andrew Hoggard, a Manawatu dairy farmer. “It’s about 20 per cent of our markets and we’re getting good market penetration with added value products in there.”
But these are the realities. China expects to be able to exert its “influence”. China wouldn’t even notice a “trade war” with NZ, whereas it would have a huge impact on our economy.
The government is trying to calm the waters:
John Key downplays retaliation suggestions over potential China steel import sanctions
Prime Minister John Key has downplayed fears of a trade war from China if sanctions are slapped on its steel, saying he has received “no indication” the world superpower is upset with New Zealand.
However, Kiwi trade officials have been asked to “seek assurances” from the Chinese embassy about the country’s stance on competition issues, as local exporters worry about a backlash. …
Exactly what they should be doing. We can’t afford to be using sub-standard steel. We shouldn’t have to buckle to pressure to do so, but we have no leverage at all. A very difficult task for our negotiators, and a hard lesson in trade realpolitik.