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Brazil revives anti-dumping row with China

Sept. 7, 2011 at 3:54 PM   |   Comments

BRASILIA, Brazil, Sept. 7 (UPI) -- Brazil has revived its long-running anti-dumping feud with China as more Latin American nations warm up to the idea of an overarching trade pact that will grant Chinese exports special privileges in the Mercosur regional trade bloc.

Latin America's major commodity exporters, including Brazil and Argentina, have clashed with China frequently over anti-dumping issues as they struggle to compete with the East Asian giant on a vast range of products.

Steel is the biggest thorn in Brazil's side at the moment. In a measure designed to discourage Brazilian importers from stockpiling cheaper Chinese steel in preference over local or Latin American brands of the metal, the government intends to enforce higher duties retroactively.

A trade war with Beijing is on the horizon if the planned anti-dumping measure gets implemented.

China's reaction to the measure is awaited in Brasilia and by business circles but can be anticipated, analysts said. Beijing has been quick to find a retaliatory response in past trade conflicts with Latin American partners.

The anti-dumping duties, if implemented, will cover not only steel but such diverse steel-using items as bicycles and air conditioners. Officials said the duties may be imposed retroactively by 90 days.

The problem is linked to the Brazilian currency's soaring value which makes importing more attractive than before at the same time as Brazilian exporters struggle to keep foreign customers. The overvalued Brazilian real has proved to be a disincentive for importers of Brazilian goods.

The real has gained 40 percent against the U.S. dollar since the end of 2008 and complicated the Latin American country's efforts to keep growth at an even pace.

The duties will affect imports from China most strongly but will also impact on regional exporters and Mercosur partners Argentina, Paraguay and Uruguay.

The anti-dumping duty on Chinese steel tubing used in the oil and natural gas industries is likely to reach $743 a ton. Officials admitted about half of more than 80 anti-dumping measures introduced will directly affect Chinese products bought by Brazilian importers.

The Brazilian measure couldn't have been more ill-timed for Mercosur. Argentine Foreign Minister Hector Timerman is headed for Beijing to pursue exploratory talks on concluding a free-trade agreement between Mercosur and China. Argentina and Brazil are the two largest of China's trade partners in Latin America.

More than trade, however, Latin American leaders have indicated they are interested in attracting China's surplus billions into Mercosur economies. Timerman said he would be pushing for a larger Chinese role in global economic and financial decision-making.

He said greater Chinese investment in Mercosur countries or the member countries of the Union of South American Nations could be a "smart move" by Beijing.

Mercosur members are Argentina, Brazil, Paraguay and Uruguay, with Bolivia, Chile, Colombia, Ecuador and Peru as associates, Mexico as an observer and Venezuela as the fifth full member awaiting ratification.

Unasur members are: Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay and Venezuela and Mexico and Panama as observers.

© 2011 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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