How do non-tariff measures matter for Austrian trade?

21 September 2017

The rise of protectionism and non-tariff measures accelerated by the US should not only bother China or Mexico. Austria will also have to deal with its effects.

A commentary by Julia Grübler

Trade war rhetoric has become popular again. Since the onset of the global economic and financial crisis, fears have been expressed that trade policy is increasingly used in a purely protectionist fashion. US president Donald Trump and his ‘America First’ policy are important drivers for these fears to materialise.

Fighting ‘unfair’ politics is at the core of Trumponomics to make America great again. The Trump administration argues that Canada is exporting lumber at unfairly low prices. Further, it considers unfair that companies, such as General Motors or Fiat Chrysler set up plants in Mexico and not in the US (while arguing that they simultaneously ‘bring drugs, crime and rapists’). NAFTA as a whole is argued to be an unfair trading block in the eyes of the Trump administration. And China, however, is the country most intensely targeted with non-tariff measures (NTMs).

The WTO actually allows using Non-Tariff Measures (NTMs) to combat ‘unfair’ trade practices. Antidumping duties are additional tariffs on products exported below ‘fair value’, i.e. below production costs or its home market price. Countervailing duties should mitigate the harm of subsidised exports. Safeguard measures are temporary duties allowing the domestic industry to adjust to a big import influx. It is therefore not surprising that these instruments feature prominently today in US trade policy.

Austria is also affected by the rise of NTMs. A recent example is the US antidumping case against certain ‘carbon and alloy steel hot-rolled or forged flat plate products’ manufactured in Austria by Bohler and voestalpine(1). In May 2017, the US estimated the dumping margin at 53.7%, which is the final duty that Austria has to face.

Additional data analysis for Austria’s top 10 extra-EU export markets even suggests that such contingent protection measures do not hamper Austrian trade the most, but rather technical barriers to trade (TBT), particularly for processed goods and machinery. Similarly, extra-EU trade of the agricultural sector is heavily regulated in Austria’s top 10 export markets by sanitary and phytosanitary standards (SPS). And, though this sector is underrepresented in Austria’s extra-EU exports, it is also worth actively engaging in shaping future trade relationships – also with regards to the harmonisation and/or mutual recognition of sanitary and phytosanitary standards – with e.g. the Southern Common Market MERCOSUR (including Brazil) and Japan.

(1) Bohler Bleche GmbH & Co KG, Bohler Edelstahl GmbH & Co KG, Bohler International GmbH, voestalpine Grobblech GmbH, voestalpine Steel Service Center GmbH.