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- The unintended outcome of the US China Trade war – Australian manufacturers accuse US exporters of unfair trade practices8-Jul-2019
The unintended outcome of the US China Trade war – Australian manufacturers accuse US exporters of unfair trade practices
In the trade war between the US and China it is the Chinese that are painted by the US as not playing by the rules. In an ironic turn of events, the Australian Government is now investigating claims that in response to the US China trade war, US suppliers of plastics are engaging in unfair trade practices that is causing harm to Australian manufacturers.
The Australian Anti-Dumping Commission (ADC) has commenced an investigation into the alleged dumping of high density polyethylene exported to Australia from the US, Singapore, Korea and Thailand. The claim is that the HDPE is being sold to Australian customers at dumped prices, being prices that are less than the price at which the same goods are sold in the exporter's domestic market. The Australian industry is seeking dumping duties of 28% on HDPE exported from the US.
So what has caused US exporters to allegedly dump goods in Australia? The Australian industry claims that this is a fall out from the US China trade war. As part of the trade dispute China has increased tariffs on certain US HDPE to 25%. Naturally this causes a decrease in Chinese demand for US HDPE. At the same time, US levels of production of HDPE increased due to new production facilities coming online. Lower demand and increased production means lower prices.
The Australian industry claims that US suppliers with excess stock are targeting the Australian market as the Australia US Free Trade Agreement both lowers the costs of US imports (no 5% duty) plus there are less non-tariff barriers.
It is also alleged that the imports are not merely coming directly from the US. Some US HDPE is claimed to be exported first to Singapore where it is repackaged for export to other markets. It is alleged that US exports to Singapore have increased by 300% . It is not known whether Singaporean exporters are hiding the US origin of goods when repackaging and exporting to third countries. We are aware of Chinese exporters seeking to have goods repackaged in Australia for export to the US without disclosure of the Chinese origin of the goods.
It will not be surprising if the claims of the Australian industry prove to be true. Raising tariffs to 25% will distort trade flows from China to other countries. For Australian importers this has resulted in lower prices but has allegedly cause loss to the Australian manufacturers. If dumping duties are imposed US exporters will need to look for another market for HDPE or hope that President Trump can quickly resolve the trade war.
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