On Friday, the US Commerce Department announced its plans to raise import tariffs for the Chinese stainless steel products from 63 percent to 190 percent citing a probe that found they were selling on US market at dumping-level price.
“China is disappointed that the United States continued to launch high taxes on Chinese steel export products and calls into question the unfair way the US conducted its investigation,” Wang said, as quoted by the South China Morning Post newspaper.
The United States did not take into the account the evidence previously submitted by the Chinese steel manufacturers and avoided cooperation with the Chinese government, violating the rules of the World Trade Organisation (WTO), the Chinese official underlined.
This is a second blow for the Chinese steel importers in the recent months. The European Commission imposed in January anti-dumping duties on Chinese stainless steel tubes and pipe butt-welding fittings to protect its industry from steel overcapacity.
According the European Commission, Chinese imports will be taxed with duties ranging from 30.7 to 64.9 as its investigation commission confirmed that Chinese stainless steel products had been sold in Europe at dumping prices.
The cross-border movement of goods, services, and capital increased markedly for the thirty years up to the Great Financial Crisis. Although the recovery has given way to a new economic expansion in the major economies, global trade and capital flows remain well below pre-crisis levels. It gives a sense globalization is ending.
The election of Donald Trump as the 45th US President has underscored these fears. His first few weeks in office clearly mark a new era not just for America, but given its central role in late-20th-century globalization, for the world as well. Trump is a bit of a Rorschach test. He did not win a plurality, let alone a majority of the popular vote, but that does not stop pundits from claiming that Trump won because of this or that issue.
There are some campaign promises which Trump has backed away such as citing China as a currency manipulator on his first day as President or pursuing legal charges against Hillary Clinton. His priorities have been repealing the national health insurance, formally withdrawing from the Trans-Pacific Partnership, and signaled an intention to re-open the North American Free Trade Agreement.
Trump and his closest advisers seem intent to unwind not just his predecessor’s initiatives, but the general thrust of America’s grand strategy since the end of WWII. His rhetoric of America First harkens back to Warren Harding, who succeeded Woodrow Wilson after the US Senate rejected the League of Nations. Some historians refer to that period as ‘isolationism, ’ but in practice it was unilateralist.
“It’s a great thing for the American worker, what we just did,” Trump said on Monday after signing an order withdrawing the U.S. from the Trans-Pacific Partnership accord with 11 other nations. He didn’t sign any actions to direct a renegotiation of the Nafta accord with Mexico and Canada, yet he said on Sunday he would begin talks with the two leaders on modifying the accord, BBG reported. “We’ve been talking about this a long time,” Trump said.
As the AP notes, the move is basically a formality, since the agreement had yet to receive required Senate ratification. Trade experts say that approval was unlikely to happen given voters’ anxiety about trade deals and the potential for job losses. It remains unclear if Trump would seek individual deals with the 11 other nations in TPP— a group that represents roughly 13.5 percent of the global economy, according to World Bank figures. Trump has blamed past trade deals such as the North American Free Trade Agreement and China’s entrance into the World Trade Organization for a decline in U.S. factory jobs.
Trump’s trade focus fulfills a campaign promise to rewrite America’s trade policy during his first days as president. In declaring his determination to renegotiate Nafta, Trump would rework an agreement that has governed commerce in much of the Western hemisphere for 22 years. By scrapping the Trans-Pacific Partnership accord negotiated by former President Barack Obama, Trump will delight many of his most fervent supporters as well as a good many Democrats, while opening an economic vacuum in Asia that China is eager to fill.
Trump campaigned against the TPP and other trade deals, including Nafta, during his campaign for the White House. In a video released in November, Trump promised to exit TPP “on day one,” calling it “a potential disaster for our country.”
India is planning to shift fully from limiting cheap steel imports by way of minimum prices to applying anti-dumping duties, according to Steel Secretary Aruna Sharma.
“The [Minimum Import Price] was initially imposed on 173 steel items, which came down to 66 and now it is down to 19,” Sharma said in an interview with the Nikkei Asian Review. “On balance, 19 items, if [the] case is made out by industry, they will also be shifted.”
The main objective of the move is to target foreign suppliers alleged to be selling steel below cost. India started imposing an anti-dumping duty of $474-$557 a ton on hot-rolled flat products of alloy and non-alloy steel imported from China, Japan, South Korea, Russia, Brazil and Indonesia in August. These six nations account for almost 90% of India’s steel imports.
Other categories of steel, such as color-coated products, are expected to be hit with anti-dumping duties amounting to the difference between the producer’s current price and approximately $800 a ton. By contrast, minimum import prices have been set at $350 to $700 a ton depending on the category of steel. The shift is expected to lift import prices to a level more on a par with the cost of domestic production.
MIP is calculated as the weighted average international price of a particular category of steel product, while anti-dumping duties are based on an estimate of the cost of production in the exporting country.
Between 2013 and 2016, India’s imports of finished steel more than doubled from about 5 million tons to 11 million tons a year. The government claims to have “sufficient evidence” against Japan and other countries of dumping cheap steel, Sharma said. India signed a preferential trade agreement with Japan in 2012.
A reversal in U.S. trade policy could make 2017 the year that efforts to build multinational trade zones crumble, returning the focus to tough, bilateral dealmaking.
In October 2015, officials from 12 nations including the U.S. and Japan gathered in the American city of Atlanta to ink the historic Trans-Pacific Partnership, confident of the dawning of a new age of trade governed by such high-level, multilateral agreements. Yet that dream lies all but dead just over a year later, not least due to Donald Trump’s presidential victory and his pledge to pull the U.S. from the agreement upon taking office Jan. 20.
Many bilateral free trade agreements, which reduce or abolish tariffs and set rules for trade in goods and services between two nations, have been struck over the years. Multilateral agreements extend this notion to the regional level and improve security in the areas they cover, further greasing the wheels of commerce.
Yet Trump prefers his trade pacts one on one — the better to drive hard bargains, leveraging U.S. economic and diplomatic might to secure the most advantageous terms. Multilateral pacts involve far more careful compromise and require each nation to give and take small concessions rather than pushing for an unambiguous win.
As the FT first reported yesetrday, in a dramatic development for Sino-US relations, Trump picked Peter Navarro, a Harvard-trained economist and one-time daytrader, to head the National Trade Council, an organization within the White House to oversee industrial policy and promote manufacturing. Navarro, a hardcore China hawk, is the author of books such as “Death by China” and “Crouching Tiger: What China’s Militarism Means for the World” has for years warned that the US is engaged in an economic war with China and should adopt a more aggressive stance, a message that the president-elect sold to voters across the US during his campaign.
In the aftermath of Navarro’s appointment, many were curious to see what China’s reaction would be, and according to the FT, Beijin’s response has been nothing short of “shocked.” To wit:
The appointment of Peter Navarro, a campaign adviser, to a formal White House post shocked Chinese officials and scholars who had hoped that Mr Trump would tone down his anti-Beijing rhetoric after assuming office.
“Chinese officials had hoped that, as a businessman, Trump would be open to negotiating deals,” said Zhu Ning, a finance professor at Tsinghua University in Beijing. “But they have been surprised by his decision to appoint such a hawk to a key post.”
Mexico could contribute as much as 150,000 barrels per day to non-OPEC oil cuts – OPEC source.
Russia has already said they would cut output by 300,000.
The non-OPEC members meet with OPEC members in Vienna tomorrow.
in other Mexican news Fitch downgrades outlook for Mexico to negative.
As per Fitch:
The revision in Mexico’s Outlook reflects increased downside risks to the country’s growth outlook and the challenges this could pose for stabilization of the public debt burden. Growth has been under-performing rating peers and the general government debt burden has been increasing steadily in recent years. The victory of Donald Trump in the U.S. presidential election has increased economic uncertainty and asset price volatility in Mexico as the President-elect has alluded to renegotiating or terminating the North American Free Trade Agreement (NAFTA) with Mexico and tightening immigration controls.
Deutsche Bank strategist George Saravelos says to stop whining about globalisation
Its not irreversible
Globalization ebbs and flows over long cycles
And right now it is ebbing, and Trump’s election win will see an acceleration of this shift: “the peak and potential unwind of globalization.”
Saravelos writes in his note: “Deglobalization Is Here: What It Means for Global Macro:”
The weakness in global trade, the rise of anti-globalization politics and the decrease in capital mobility all point towards a reversal of the neo-liberal word order constructed since World War II. In this note we introduce a framework to think about the impact of de-globalization on global macro
First, we argue de-globalization will shrink international trade imbalances. Because these are mirror images of international capital flows, de-globalization should also shrink the pool of global savings. Surplus nations such as Germany and Japan will have to spend more while deficit nations such as the US will have to pay more to borrow, which means Treasury yields will rise
Sharp differences have emerged within the government over imposing an anti-dumping duty on met coke imports from China and Australia, with the commerce ministry pushing for the move and the steel ministry opposing it.
The directorate general of anti-dumping (DGAD), which is part of the commerce and industry ministry, has recommended a duty of $25 per tonne on imports from China and $16 per tonne on shipments from Australia.
Officials said a decision could be expected next week. India had last year raised the import duty on Chinese met coke to 5 per cent from 2.5 per cent.
Meanwhile, the steel ministry is lobbying for an anti-dumping duty on alloy and non-alloy flat steel products from China and the European Union. Imports of these products have increased four-fold over three years.
The DGAD had initiated an anti-dumping investigation in January following a complaint filed by the Indian Metallurgical Coke Manufacturers Association on behalf of producers such as Saurashtra Fuels, Gujarat NRE Coke, Carbon Edge Industries, Bhatia Coke and Energy and Basudha Udyog.
The companies claimed Australian and Chinese companies were dumping low ash metallurgical coke, and only a levy could save an “otherwise dying domestic industry”.
The global economy is faltering again with growth rates “sliding back into the morass [they have] been stuck in for some time”, according to the Brookings Institution-Financial Times tracking index.
In a publication ahead of this week’s annual meetings of the International Monetary Fund and World Bank, the results will reinforce fears that many countries have become caught in a vicious circle of low growth, popular discontent and a backlash against trade and openness, resulting in more economic weakness.
The annual meetings will encourage policymakers to pursue inclusive and faster global growth as international organisations, finance ministers and central bank governors seek to reassure the public they can co-operate and that they have the necessary tools to break five years of economic disappointments.
Hanging over the meetings is the fear that the failure to improve living standards in advanced and emerging economies was important in the UK’s vote to leave the EU, may propel Donald Trump to the US presidency and will strengthen the hands of populists such as Marine Le Pen in France.