Peru is investigating China’s dumping of various steel products, aiming to protect its local industry from significant job losses and economic instability caused by unfair competition. The inquiry follows requests from local manufacturers and aims to expose the extent of damage inflicted by low-priced imports. Countries across Latin America are similarly affected, prompting them to implement tariffs on Chinese steel imports.
Peru is investigating China’s steel dumping practices, which have adversely affected the Latin American steel industry by flooding local markets with inexpensive steel, thereby risking jobs and economic stability. In an effort to shield themselves from these unfair competitive practices, several countries in the region have implemented tariffs and anti-dumping measures on steel imports from China.
The National Institute for the Defense of Competition and the Protection of Intellectual Property (Indecopi) initiated investigations into the dumping of hot-rolled carbon steel pipes, stainless steel sinks, and steel wire rods from China. This decision was prompted by local manufacturers, including Manufactura de Metales y Aluminio Record S.A. and Corporación Aceros Arequipa S.A., who reported that such imports significantly harm domestic industries.
Notably, evidence indicates that imports of stainless steel sinks from China had a dumping margin of 491.5 percent between July 2023 and June 2024. “This percentage seems brutal to me,” remarked Sergio Cesarin, coordinator of the Center for Studies on Asia-Pacific and India.
The practice of dumping, wherein manufactured goods are sold at less than their cost, targets market acquisition through competition elimination, ultimately leading to the collapse of smaller companies and rising unemployment. Research shows that local production of stainless steel sinks plummeted by over 71 percent from January 2021 to June 2024, with domestic sales decreasing by about 45 percent.
Furthermore, Chinese-produced sinks were reported to be undervalued by more than 80 percent, negatively impacting market prices. As documented by the state media outlet Andina, productivity and profitability within the sector have drastically declined, with production per worker down over 73 percent and unit profit margins reduced by 88 points, sinking into negative values by early 2024.
As part of the investigation’s compliance with international agreements, Indecopi has informed Chinese authorities. The inquiry, initially set for six months and potentially extendable to nine, will include on-site inspections. Should Indecopi confirm the unfair practices and their detrimental impact on the local industry, anti-dumping measures may be enforced.
China commands a leading position in the global steel market, with most of its steel companies state-owned. According to research from Dialogue Earth, China maintains its production through a centralized economy with abundant financial resources, often flouting international trade norms. “China not only dominates the steel industry but also faces allegations of unscrupulous practices such as dumping,” stated Cesarin.
Since 2010, there has been a notable shift in the international steel trade as China, confronted with overproduction, redirected its surplus to global markets at reduced prices to sustain employment and economic stability.
Despite adherence to high governance, safety, and environmental standards, Latin America’s steel industry struggles to maintain competitiveness against China’s artificially low prices. “Peru is a significant target for Chinese steel because it has a free trade agreement with China,” noted Cesarin.
Countries across Latin America, including Mexico, Brazil, and Argentina, have contended with similar unfair competition, leading to factory closures and job losses, prompting them to enact tariffs on Chinese imports. Cesarin also mentioned that negotiations regarding protective measures against Chinese products often involve discussions with the Chinese Communist Party rather than the companies, complicating the process further.
In conclusion, Cesarin emphasizes that despite the challenges posed by the uneven trade relationship with China, Latin American governments must enhance their efforts to mitigate the adverse effects of Chinese steel imports. He urges the Peruvian government to take decisive actions to protect its domestic industries, preserve jobs, and foster equitable trade relations.
The investigation by Indecopi into China’s steel dumping reflects significant concerns regarding the impact of such practices on Peru’s steel industry. With evidence of drastic declines in local production and profitability, along with substantial dumping margins, Peru faces challenges in maintaining competitive integrity. The emphasis on protective measures underscores the need for stronger governmental actions to safeguard local industries and secure fair trade relations amidst the pressures of international competition.
Original Source: dialogo-americas.com
