China trade dispute reports ‘overblown’

So says Stephen Jacobi, executive director, NZ International Business Forum.

Everyone should take a "deep breath", he says.

However if there was a real threat to our dairy industry we should challenge it head-on through due process – the Free Trade Agreement and World Trade Organisation procedures.

"One would always want to be concerned if there were genuine threats of some kind," Jacobi told Dairy News."But in this case I think the fact that an official might have said something to someone and that has been reported back doesn't really constitute a major threat to our interests.

"What we have to do is rely on the processes and relationships we have both in relation to the anti-dumping issues presented and in relation to any threat that might be raised.

"I see now the Chinese Government through the embassy in Wellington is basically saying there is no threat. I personally think the whole thing has been completely overblown which is unfortunate," says Jacobi, who also heads the APEC Business Advisory Council (NZ) and is acting executive director of the NZ China Council.

Inevitably with a big country like China – and the same thing with the US – we as a smaller party feel particularly aggrieved at any notion that we are being bullied, he says.

"Big countries do things to small countries," he says. "That's why we have trade agreements that protect us and that's why we need these sorts of protocols and agreements that enable us to work through things.

"We just have to take a deep breath and meet whatever challenges arise but continue to maintain our own policies."

Jacobi says the fact of the matter is NZ manufacturers are able to apply for assistance in the form of anti-dumping duties if they feel aggrieved. But there are tight guidelines for this; it is not a simple thing to prove.

"Also we are entitled to say, if we take action in [one] area, that it shouldn't overflow to others. I think we have to take a deep breath and follow due process."

However Jacobi says if there was some sort of threat to our dairy industry then we would have to meet that challenge head-on using all the means at our disposal, particularly through the Free Trade Agreement and World Trade Organisation process.

"I don't think we are anywhere near that and I would be surprised if that was what China was really wanting to do."

Jacobi's comments follow daily media reporting last week that Fonterra and Zespri representatives had been warned by Chinese business people and commerce authorities of retaliatory measures if NZ were to put in place penalties against Chinese steel.

Last week Trade Minister Todd McClay confirmed he had been advised of an approach by China to one NZ exporter.

Reports suggested China would 'heavy' NZ on key exports such as dairy, wool and kiwifruit if MBIE found that Chinese steel was being sold at below cost price and imposed tariffs.

Zespri was reported to have said that local staff had received unsubstantiated information from an industry body in China on purported industry consultations related to the importation of NZ agricultural products. Consultation is the first process leading to penalities.

Zespri says this information was passed to NZ embassy officials in China as part of normal business.

Fonterra has not commented on the issue.