Lack of Govt action and clarity puts primary industries at risk - Mar 2017

Prior to Christmas, the TRADE (ANTI-DUMPING AND COUNTERVAILING DUTIES) AMENDMENT BILL parliamentary select committee was unable to reach an agreement on whether or not to recommend that the bill be progressed.

Primary industries are at risk in geographies where dumping and subsidsation are evident and for steel and aluminium products these threats are real with more than one investigation currently under way at MBIE, and others being considered.

Why is there no clear decision?
The purpose of the bill is to ensure that imposing anti-dumping and countervailing duties is in the interest of New Zealand in each case. It does this by introducing a public interest test into the trade remedies regime.

Dumping occurs when goods are exported for a lower price than they are sold in their own country. Where dumping causes material injury to the domestic industry that competes with the dumped imported goods, the importing country can impose anti-dumping duties.

Similarly, countervailing duties can be imposed where a domestic industry is experiencing material injury from competing with imports that have benefited from subsidies from a foreign Government.

Countervailing duties aim to level the playing field by imposing a duty at the border, to offset the effect of the subsidisation. A public interest test would automatically be applied following a dumping and subsidy investigation, where the Minister of Commerce and Consumer Affairs determines that anti-dumping or countervailing duties should be imposed.

The public interest test would consider the cost of the duties on downstream industries and consumers against the benefits to the domestic industry. The public interest test contains a list of eight factors that officials must consider. These factors relate to the effect of the duties on prices, availability of goods, and the benefit to the domestic industry.

Where the test determines that the costs of the duties to downstream industries and consumers materially outweigh the benefits to the domestic industry, the Minister of Commerce and Consumer Affairs may make a determination that the duties are not in the public interest.

There would be a presumption in favour of importing duties. This aims to strike the balance between ensuring that duties are imposed only where there is a public interest in doing so and giving domestic industries sufficient assurance that they would be protected from injurious dumping or subsidisation.

The bill ensures that the New Zealand trade remedies regime follows the rules set in the World Trade Organization agreements on anti-dumping and countervailing measures, while also ensuring that New Zealand's best interests are at the forefront of our consideration.

A number of other countries around the world have implemented public interest tests in their trade remedies regimes, such as Canada and the EU. In developing the public interest test in the bill, the Government took aspects from public interest tests in other jurisdictions and developed a test that is fit for purpose in the New Zealand economic setting.

The Commerce Committee heard concerns about the subjectivity that the public interest test may bring to the trade remedies regime. Users of the trade remedies regime can be assured that the Government intends to run the public interest test as a thorough process using information gathered throughout the dumping or subsidy investigation supplemented by submissions made by interested parties through the period of the public interest test.

The commencement of a public interest test would be publicly notified and interested parties, such as importers, downstream industries, and consumer groups, would be welcome to make submissions.

The bill also proposes changes to the regime that would allow the Minister of Commerce and Consumer Affairs to take action where users of a good — subject to anti-dumping or countervailing duties — have been affected by a natural disaster or an emergency. The Minister would be able to suspend or terminate existing duties, and to defer, or not, the imposition of new duties.

These powers will help alleviate pressure on prices of certain goods subject to duties, where the users of those goods have been affected by natural disaster or by an emergency.

Given that the Commerce Committee was unable to agree on whether to recommend that the bill be passed, no changes to the bill have been recommended to the House. After considering submissions to the bill, the Government will be looking to progress some changes in the Committee of the whole House stage.

Our industry remains against the introduction of such a public interest test in NZ. Australia has considered a similar test and have decided against legislation. We will be watching the progress of the bill and continue to advocate against it.

If you would like to discuss issues in your area of industry, please contact me.