TRADE-LATAM: Steel Sector Demands Anti-Dumping Measures

By Estrella Gutiérrez Reprint | | Print |

Estrella Gutierrez

CARACAS, Oct 30 1998 (IPS) - Latin American steel manufacturers demanded that governments in the region adopt urgent anti-dumping measures against imports from Asia, the former Soviet republics and Turkey.

The companies grouped in the Latin American Iron and Steel Institute (Ilafa) urged provisions that would streamline and make procedures against unfair trade practices more flexible, in order to tackle the crisis shaking the sector.

The Latin American steel sector produces close to 60 million tonnes a year of raw steel – of a global total of 750 million tonnes – and employs more than 153,000 people in over 200 companies.

The industry called on governments this week to study the implementation of collective protectionist measures by means of safeguard mechanisms allowed by the World Trade Organisation (WTO).

It urged that such measures be adopted through decisions by three regional blocs – the Southern Cone Common Market (Mercosur – Argentina, Brazil, Paraguay and Uruguay), the Andean Community (Bolivia, Colombia, Ecuador, Peru and Venezuela) and the Group of Three (Colombia, Mexico and Venezuela). The first two operate as customs unions and the third functions as a complex free trade accord.

Brazil is Latin America’s leading steel producer, accounting for more than 40 percent of the annual total, followed by Mexico and Argentina. Venezuela, which ranks fourth, is seeking to recuperate its long-standing third place.

Ilafa issued a declaration at the end of its 39th congress – held this week on the Venezuelan island of Margarita – urging government action to help the steel sector tackle the effects of the sharp contraction in global demand.

Latin American steelworks have undergone a profound reconversion in the past decade with large-scale privatisation, in a process which culminated in December 1997 with the sale of Venezuela’s ‘Siderugia del Orinoco’ (Sidor – Orinoco Steelworks) to a regional consortium.

Venezuela’s Antidumping Commission slapped compensatory duties on products coming in from Russia, the Ukraine and Kazakhstan at prices per tonne which undercut the international price by 300 dollars. The commission is also studying new demands put forth by Sidor.

Argentina, Chile, Colombia and Mexico have also addressed accusations of dumping against Russia, the Ukraine and Kazakhstan, as well as Canada, the United States, the European Union, South Korea, Indonesia and Malaysia.

China and Vietnam have taken even more drastic measures, banning imports from the former Soviet republics grouped in the Community of Independent States (CIS), which according to Ilafa are selling steel at prices 30 to 100 percent below market value.

The origins of the crisis lay in the CIS’ internal economic debacle, which led the bloc’s steel sector to turn to Asia for buyers for its surplus production. But the financial crisis that broke out in Asia led to a global drop in demand and drove down prices, which forced CIS members to seek other markets.

Ilafa’s declaration to governments in the region says the flow of CIS products joined imports from Asia and Turkey, also sold at unfair prices.

The document also points out that a large number of the countries that have resorted to dumping practices in order to find buyers for their products in a highly depressed market are not WTO members, which makes it impossible for Ilafa to take its case to the international body.

The industrialists called for the establishment of mechanisms that would permit the supervision of imports before they reached their destination, in order to detect dumping or under-invoicing.

They also urged their governments to “immediately” decide – at a national level as well as within the subregional blocs – on the application of quotas or other restrictions, if such measures are adopted by industrialised markets.

The Ilafa declaration is a sign of the growing nervousness in Latin America regarding the expected “invasion” of so-called “junk imports” from Asia and other areas in search of desperately needed foreign currency.

The permanent secretary of the Caracas-based Latin American Economic System (SELA), Carlos Moneta, said at the regional body’s headquarters that the Asian export offensive would occur once the region’s productive sector emerged from its current recessive paralysis, and that it would be facilitated by the sharp fall of currencies in the area.

Moneta has called for efforts to prevent a protectionist frenzy in the region, and has urged that each specific case be addressed through existing international and national anti-dumping rules.

The Lima-based General Secretariat of the Andean Community is carrying out a study at the request of its five member states on mechanisms for applying temporary safeguard clauses in line with the norms of the subregional bloc and the WTO.

But Andean Community Secretary-General Sebastian Alegrett pointed out that damage to a specific productive sector must be conclusively demonstrated before any selective protectionist measure can be implemented.

Colombian Trade Minister Marta Ramirez said last week in Caracas that the outlook would be more clear in January. But she stressed that the matter would be dealt with in a balanced manner, “because our countries could be interested in cheap imports of one product or another.”