Invasion

The Chinese invasion has begun.

Over the past months, Beijing has been trying to dump steel products on the international market. China has 300 million tons excess steel production capacity and has offered its manufacturers subsidies to export that surplus production.

As China’s economy slows, that excess steel production capacity is likely to grow. If they dump that excess capacity on other economies, it will force plant closures, layoffs and bankruptcies at a major scale.

The US is so alarmed by the dumping, it has taken up the matter in their annual talks with Chinese counterparts last week. Meanwhile, US trade authorities have raised tariffs on Chinese steel exports by 522 percent to stall the trade onslaught.

The European Union has done the same and so have most of Asia’s economies. It is not only the export subsidies Beijing provides its steel exporters that threaten these economies. Much of China’s steel exports come from “pirate mills” – facilities that use obsolete technologies and produce substandard products.

These “pirate mills” have been ordered closed by Chinese authorities after buildings using inferior steel collapsed tragically in recent quakes. They still manage to sneak production and deliver to importing economies, at great peril to consumers.

Unlike the Americans, the Europeans, the Indians and others, our trade authorities have done nothing in the face of Chinese steel dumping. In one recent case, a regional official of the DTI in fact issued a “provisional” import commodity clearance for a 5,000-ton shipment of reinforcement bars from China.

Three more ships, according to industry reports, are being loaded in Chinese ports to dump more unexamined steel products on the Philippine market. This has to be the reason the syndicate facilitating this importation has gone on a frantic propaganda campaign that labels local manufacturers a “cartel” or an “old boys club.”

This powerful and well-funded syndicate, the shock troops of a Chinese steel invasion, has been at work for months now clearing the way for the dumping of Beijing-subsidized steel imports. By importing rather than building domestic manufacturing capacity, the syndicate stands to make windfall profits with hardly any risk – except, of course, the lives of Filipinos who will live and work in buildings constructed using substandard steel.

Over the past few months, the syndicate employed every devious means to block the construction of modern steel mills in the country. By doing that, in the midst of a construction boom, the syndicate hopes to create and artificial steel shortage and widen the avenue for steel importation.

Their best scenario, of course, is for our domestic steel industry to simply fold away. That will open the door for super profits for unscrupulous importers riding both on China’s subsidy for steel products and our defenseless ports.

Filipino manufacturers now find themselves at the frontline against this economic invasion – given what seems to be government’s abdication of its role in defense of domestic jobs and investment.

Local steel producers conform to very strict quality standards. Unlike anonymous exporters bringing their inferior products here, local manufacturers are accountable to the end users of their products.

Local manufacturers are required to test their product after every 20 tons of production. The steel is tested for tensile strength and chemical composition.

By contrast, importers are not required to undertake the same tests. Our ports simply do not have the facilities to perform the necessary tests. Our bureaucrats are vulnerable to bribes.

Therefore, our consumers are in peril.

Ideally, government ought to raise tariffs on Chinese steel imports to offset the subsidies the “pirate mills” enjoy. Short of that, local manufacturers want the same tests applied to imports: every 20 tons ought to be subjected to tensile strength and chemical composition.

More than just looking after their interests, local manufacturers want local consumers protected from substandard products. The destruction brought about by the Bohol earthquake and by Yolanda was magnified by widespread use in that region of smuggled steel products from China.

The profiteers who want to kill domestic manufacturing and leave us defenseless against the steel invasion from China commit treason.

Local manufacturers put in large, long-term investments to provide Filipino consumers safe and reliable products. They assume the risks attendant to such investments.

The merchant steel importers, who probably get their steel on consignment from a country struggling with surplus capacity, do not add to the country’s investment stock. They do not assume long-term risks. They are not accountable to the end users of the inferior products they bring in.

If a building that used substandard steel from some “pirate plant” in China’s interior collapses, could our justice system make that plant accountable for inferior products? Can we even identify the source of the murderous inferior building product?

Local manufacturers have their logo on every steel bar sold to the market. That is their guarantee of quality. If a product tests to be inferior, the local manufacturer could be called to account to the errant product.

The same could not be done with imported, especially smuggled, construction inputs. Some of the steel bars brought in from China do not even have logos. There is no desire here to be accountable to the end user.

More than the trade issues, the sale of products from anonymous manufacturers abroad is an issue of consumer protection and public safety. The protection and safety of our citizens are the core duties of government.

Our government will be remiss if it allows profiteers to inflict inferior products on our consumers.