A study unveiled this week at Brazil’s Steel Congress, held in Sao Paulo from August 21-22, recommended Brazil recognize China as a “non-market economy.” The study was requested by local steel association IABr, and was performed by two consulting companies: Barra M Jorge Consultores Associados and Oxford Consultoria.
The study analyzed regulatory frameworks in different countries, existing anti-dumping duties (AD) against Chinese steel, as well as the mechanisms driving China’s steel output.
“Despite different legal frameworks in place, the US, the European Union, Canada, Mexico, India and Australia didn’t accept to use Chinese costs and evaluations (when drafting their AD duties),” said economist Germano de Paula, when presenting the study.
De Paula said different entities within the Brazilian government label China’s economy different. Brazil, as a country, always treated China as a non-market economy (NME), he said. However, Brazil’s chamber of foreign trade, Camex, has not labled China with NME status.
“The debt of China’s steel sector is much higher than the global average. So we see a landscape of low profits and high debts,” De Paula said, when comparing 20 Chinese listed steelmakers. Citing different data and comparison, he said China’s steel sector has survived through subsidies.
Given the different views the own Brazilian government have regarding China, the study suggested Brazil to continue not considering Chinese own cost estimates when drafting AD or countervailing duties (CVD).