A plan to impose a punitive tariff of up to 15.45% on imported steel to help BlueScope Steel against foreign competition has sparked warnings of price spikes across the economy, including for new buildings, consumer goods and manufactured components.
The heavily subsidized car industry is leading the fight. But in a sign the decision could be self defeating, a West Australian streetlight manufacturer said it expected to switch to foreign steel if the federal government acted on the recommendation of the Australian Customs and Border Protection Service.
Mr Mick Eidam product manager at AD Coote & Co said that the tariff would increase costs. He added that "We'd probably have to look at importing more finished product rather than manufacturing here, which would possibly affect the number of employees we have. As it is, we are trying to compete against imported lighting poles. It's getting more and more competitive out there."
The tariff on imported steel, designed to protect BlueScope, the nation’s biggest steel maker, was criticized by the services sector, which is unhappy about support for stressed manufacturers, and steel customers, particularly car makers, who fear it will push up prices and lay the groundwork for tariffs to be applied to other products.
Mr Andrew McCredie Australian Services Round table executive director said that "The subsidies and protection are misguided and need to stop. Steel and car manufacturing are no longer viable here."
Mr Wilhelm Harnisch CEO of Master Builders Australia said that the government should not ignore the plight of the construction industry, which is a heavy user of steel.
Australian Tourism Export Council managing director Mr Felicia Mariani said support should be targeted at growth industries.
The Customs Service's preliminary advice to the government proposes a tariff of up to 15.45% on hot rolled coil imported steel depending on the product and the origin. Its recommendation goes to the Minister for Home Affairs Mr Jason Clare.
General Motors Holden managing director Mr Michael Devereux said the company would ask the federal government to change the dumping laws. He added that "I'm incredulous at what seems to be the path that is being taken. I cannot even begin to tell you how bad that is for our business."
Mr Devereux criticized the lack of a legislative exemption for car makers and said it was illogical to be spending government money aiding the car industry at the same time as pushing up costs for car makers.
Mr Devereux said that while he supported dumping provisions, the steel tariff was the tip of the iceberg because dumping cases covering aluminium wheel rims and coated steel were still being considered by the government. BlueScope is asking for protection from foreign coated steel.
He said that if a similar tariff were applied to coated steel it would add hundreds of dollars to Holden’s cost of manufacturing a car. He added that "There are others that are much more costly for us and I can't just make you, as an Aussie consumer, pay more."
Source - The Australian Financial Review
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