Trade (Anti-dumping and Countervailing Duties) Amendment Bill

I move, That the Trade (Anti-dumping and Countervailing Duties) Amendment Bill be now read a first time. I nominate the Commerce Committee to consider the bill. The bill puts in place new arrangements for the Government to consider the wider impact of imposing anti-dumping or countervailing duties.

In 2013 the Government completed the Residential Construction Market Study in response to a Productivity Commission report into the cost of residential construction. The study found that residential building materials were considerably more expensive in New Zealand than in Australia and recommended steps that the Government should take to reduce their cost and help improve housing affordability. One recommendation was to remove tariffs on residential building products, which the Government did by putting in place a tariff concession in 2014. Another was to introduce a public interest test into the dumping and countervailing duties regime. The study highlighted that anti-dumping and countervailing duties can impose costs that are disproportionate to their benefits.

The current system protects New Zealand industry from material injury caused by the dumping and subsidisation of goods from abroad but it does not take into account the wider public interest when duties are imposed. So the point of this bill is that it will allow the Government to have a fuller consideration of the effect of duties through the introduction of a bounded public interest test, also known as a consumer test. The test will consider the benefits that a duty will have for the domestic industry against the cost of that duty on downstream industries and customers. This change modernises the anti-dumping and countervailing duties regime by weighing up those who will pay for the duty through higher prices and those who will benefit.

The test will have a materiality threshold built into it—that is, a presumption in favour of imposing duties. The bill requires that duties are imposed unless the cost to downstream industries and consumers is likely to materially outweigh the benefits to the domestic industry. The materiality threshold is designed to strike a balance between maintaining a regime that provides an appropriate degree of assurance to domestic industries that they have remedies available to them when confronted by dumped or subsidised goods and the wider public interest in determining whether duties should be imposed.

Dumping and countervailing duties are legitimate trade instruments that are part of an international set of rules necessary to facilitate fair and honest trade between World Trade Organization members. The dumping and countervailing duties agreements provide member States with legitimate trade instruments to level the playing field and to provide remedies against dumped or subsidised goods. It is important that New Zealand maintains an effective trade remedies regime so that our domestic industries have confidence in the international trading system.

However, the current Act does not allow the Government to consider the effect that duties can have on consumers and other industries. The bill prescribes specific factors that the public interest test must consider. They relate to competition, prices, alternate supply sources, choice and availability, quality, employment levels, and the financial viability of the domestic industry. The public interest test reflects similar credible trade remedy regimes such as those found in Canada and the European Union, and was developed with consideration of specific features of the New Zealand economy. The test is necessarily bounded within parameters and factors prescribed in the legislation. This ensures that the Government maintains a consistent approach over time. The test will be automatically conducted immediately after investigations or reviews.

The current Act gives specific deadlines before which investigations have to be completed. This bill continues those deadlines and imposes additional time frames within which the public interest test must be completed. The Minister will make a determination on whether or not to impose duties based on officials’ findings that dumped or subsidised goods have caused or threatened to cause material injury to a domestic industry, and whether or not those duties are in the public interest. Officials will collect information from parties that are likely to be affected by the duties being imposed or not imposed. They will also draw on advice from external expert parties, such as the Commerce Commission, and use information gathered in the initial investigation on dumping or subsidisation causing injury.

The bill requires officials to release a draft findings report prior to making the final recommendation. Interested parties will be invited to comment on draft findings. The bill will allow the Government to complete a public interest test on ongoing investigations and on duties that have been determined within 3 months before the date of commencement. The bill also clarifies various processes in the Act that are undertaken in conformance with the World Trade Organization rules. For instance, the bill clarifies the decision-making powers and reviews of existing duties and explicitly allows for the imposition of a separate rate of duty for named exporters and a residual rate of duty for all other exporters, and allows for those rates to be reassessed if circumstances change. I am sure the members are very pleased to hear that.

The Government considered and consulted on an automatic termination period—this is where duties would automatically expire after a set number of years. I spoke extensively to relevant industry representatives and decided that introducing a public interest test but not an automatic termination period would strike the right balance between improving competition and maintaining an effective dumping and countervailing duties regime.

The bill also creates a power for the Government to suspend or terminate current duties, or to defer or not impose new duties on products where the users have been affected by a natural disaster. This power is a stand-alone provision in the bill, so it is not tied to the public interest test, nor any review provision. This provision will strengthen the Government’s ability to respond to natural disasters. The bill ties the natural disaster powers to the Civil Defence Emergency Management Act to ensure a consistent approach to emergency management across legislation.

I do nominate the Commerce Committee to consider this bill, because it will improve competition in the New Zealand economy. Under the current legislation, anti-dumping and countervailing duties can impose costs that are disproportionate to their benefits. This bill takes the necessary steps to modernise the legislation. The new consumer test will help promote competition in New Zealand by requiring the Government to consider the interests of consumers and downstream industries before imposing duties. So I do look forward to progressing the bill through the House. I move that the bill be now referred to the Commerce Committee for consideration. Thank you.

Can I state from the outset that the Labour Party will support this bill in its first reading, and can I say that as a basic principle we welcome the Minister of Commerce and Consumer Affairs’ innovative attitude in respect of New Zealand business. What we seek is that in any trade agreement the rules of a trade agreement are enforced on all borders—likewise on our own borders. We understand the anti-dumping regulations, we understand the importance of New Zealand business, and we understand the enforcement of those rules around our domestic borders.

We welcome the public interest test. There has been a lot of conjecture in respect of trade agreements per se. There has been lot of debate, I think, in recent times in respect of the positive nature or otherwise of trade agreements, and what a number of manufacturers have sought over a long period of time despite Governments is that we enforce the rules of the day as our Australian and other counterparts do. So, in essence, we support this legislation. We want to scrutinise it appropriately in terms of its balance between the New Zealand interest and the interests of our economic partners. We welcome the fact that it will go to the Commerce Committee, and, to be fair, I do pay tribute to the chair of the select committee. I am not a member of the Commerce Committee but, in fairness, and to be fair in this great Chamber, Melissa Lee does preside with a balanced approach to select committee hearings and does give all parties a fair go. This has not always been the case, Mr Assistant Chair, as you, as a learned and long-serving member of the Parliament, may acknowledge, in respect of the Commerce Committee.

The public interest test, we think, is imperative. If it is appropriate to enact these provisions, then there needs to be a public interest test. I acknowledge the commerce and consumer affairs Minister, who is grappling with a whole series of issues. Whether they be ports or whether they be patents, there is a whole series of interwoven issues that he is dealing with. What we seek and what we would support is a commerce Minister who would support the public interest. I take the Minister at his word that in introducing this piece of legislation he is determined to support New Zealand industry, to support the New Zealand public interest, and to ensure that we are internationally competitive with our trading partners. It would be a dark day if New Zealand industry was somehow hampered and somehow hobbled behind other industries in foreign competitive markets, and hampered in respect of its export earnings.

In the brief commentary that I wish to give—because I do not think there is major conjecture about this issue and about this legislation—I wish to say that we will support the bill to select committee. We want to ensure that the committee gives the appropriate scrutiny and that the appropriate tests are put in place. It does introduce a public interest test. We know that in terms of construction products, for instance—if we look at those in respect of the housing issue—there is a lot of conjecture in respect of the competitive nature of those products. I am told that you can land a container of Gib, for instance, out of the United States for about two-thirds of the cost for which you can produce it locally. One could make an anti-dumping or dumping argument in respect of that.

💬 Dr David Clark: You are not going to argue that there is a consumer benefit?

No, I would always argue that there is a consumer benefit. My colleague the trade spokesperson makes an interesting point. But what New Zealanders want to know is that there is a level playing field—that if you are in business, and if you are producing goods and services and you are in the international trading market under World Trade Organization (WTO) rules, there is a level playing field. So I welcome the Minister’s comments. In respect of the select committee I look forward to scrutinising those comments in the legislation, because what we want and what New Zealand manufacturers and producers want is not a free lunch. They want to be competitive and they want to be out there on the international stage. They do not want Government provision; they simply want to compete with their international markets, and they want to compete within the rules of the WTO.

If this legislation’s intent is positive, we want to see the detail, but that being the case, we support the legislation. We want to see it progress, but we want to give it due scrutiny, and we want to also, of course, scrutinise the Minister’s intent. Over patents legislation, ports legislation—all these issues—we acknowledge that the Minister, of course, has New Zealand’s interests at heart. We want to ensure that that is communicated and is legislated through this legislation, so we support this bill to select committee.

Thank you for the opportunity to take a short call on this important bill introduced by the commerce and consumer affairs Minister, the Hon Paul Goldsmith. Before I get on, I would like to make the comment that the Hon Mr Goldsmith actually works incredibly hard supporting the commerce and consumer needs of New Zealand, and I would like to take a moment to say thank you to him—he is sitting right next to me so some people might actually make the mistake of thinking that I have to say that because he is sitting next to me.

I would like to commend the speaker who just took his seat, the Hon Clayton Cosgrove. I would like to thank him for his compliments on my chairmanship of the Commerce Committee. I have to say that I have also enjoyed his attendance at the Commerce Committee from time to time on bills that he has specific interest in.

💬 Hon Clayton Cosgrove: How much?

Very much—very much, sir. I look forward to your attendance tomorrow, Mr Cosgrove.

The Trade (Anti-dumping and Countervailing Duties) Amendment Bill seeks to introduce public interest, as the Minister has attested, into the current anti-dumping and countervailing duties regime, which the Minister and the Hon Mr Cosgrove have also just spoken about. Here in New Zealand, goods are considered to have been dumped if the export price into our country is in fact less than the price that the goods are sold for in the domestic market of the exporting country. For example, I mean, New Zealanders love whiteware that has been imported because we can get some brands at a much cheaper price. I might actually quote that sometimes Korean-manufactured products like Samsung fridges and whiteware could potentially come in cheaper. If, in fact, the Korean Government was, for example, providing Samsung—I am not saying that it is—with a subsidy to export to New Zealand at a much, much lower rate, then the manufacturers in New Zealand should be worried that we have a situation where we cannot compete with those products that are actually being dumped or are getting subsidies from those countries. So we want a marketplace that is actually fair, where our manufacturers, exporters, and producers can in fact compete with those overseas manufacturers and exporters.

I think this bill is actually very important. The Government, of course, has been making excellent inroads into the growth of better business and trade, supporting more New Zealand companies to be able to engage in international businesses to buy more goods, cheaper goods, and better-quality goods from different parts of the globe at competitive prices. All of the free-trade agreement negotiations and the agreements that we have signed actually go towards promoting that. We also have the obligations and responsibilities to the World Trade Organisation, where it is reflected that these law changes that we are making are important due to our standing as a good-faith trading partner to so many other countries around the world.

New Zealand, of course, was one of the founding members of the World Trade Organization, and former Prime Minister and ambassador the Rt Hon Mike Moore served as its director-general from 1999 to 2002. Such links are important to New Zealand trade, and to New Zealand consumers, who want assurances that we are giving them the best-possible deal in regulation, and also in consumer awareness, and, I guess, consumer prices—we want cheaper prices, but we want to make sure that whatever is actually coming into the country is not putting our own producers at risk, either. But if, in fact, those products that we may import are in the best interests of the consumers—this bill might actually consider best public interest issues, and I think it will actually deal with those worries.

It is a “customers first” Government, as my colleague Brett Hudson says. National’s plan is to help businesses thrive while protecting consumers, an admirable plan we took into the 2014 election, which we have consistently delivered on—and will continue to deliver on—going into the 2017 year. Small businesses are, in fact, the backbone of our economy, and make up about 97 percent of businesses in New Zealand, and they too are consumers. In this public interest test that we will be implementing, they too are, in fact, the public interest that we should actually consider as well.

I think this is a great bill, and I look forward to the submissions in the Commerce Committee, and having serious discussions with my Opposition members, as well as the Government members. I commend this bill to the House.

It is a pleasure to rise to speak to this bill, and, as my colleague Clayton Cosgrove has indicated, the Labour Party will be supporting this bill to the Commerce Committee, where Melissa Lee is the chair. We will very much look forward to the debate around what this bill has to offer and how New Zealanders can benefit from it, and, if necessary, make recommendations for tweaking or amending the bill should it prove, after submissions from interested parties, that it can be improved upon, or if there are fishhooks in it that we have not yet spotted.

On the surface, of course, what it does is it makes the regime more responsive to consumers, and that has got to be a good thing. On this side of the House we recognise the importance of trade for this country. New Zealand is a trading nation, it is the way we make our way in the world, and so the Labour Party has, with the exception of the Trans-Pacific Partnership agreement, with which we have had some challenges, supported trade right since the beginning. In fact, the first Labour Government was the party that made a real impact in Europe by looking for new trade avenues there, long before the National Party was even formed. Before the National Party was even a perverse idea in somebody’s mind, the Labour Party was out there beating the drum on trade. National will, of course, have a difference of opinion on some matters of trade, but generally there has been a bipartisan consensus across this House that trade is an important thing.

We will, of course, continue, notwithstanding this bill, to challenge the Government. It has set itself the test of getting exports up to 40 percent of GDP since it came to office. It has, in fact, gone backwards during its time, and it now sits below 30 percent of GDP. We recognise that if we are going to pay our way in the world as a country, we do need to trade, and we do need to trade increasingly. Unfortunately, this Government seems to be taking us in the opposite direction. But when we see a bill come along that seems a sensible trade measure, that clarifies the rules, and that is in favour of consumer benefit, we want to support that bill. That is our natural instinct on this side of the House.

This bill allows for natural disasters and a different course of action when natural disasters happen, and, essentially, a relaxing of the regime that is in place, because it might be, in fact, to the country’s benefit to take goods in a situation that is different from the ordinary situation, despite it technically being a case of dumping. I have had a chance to flick through some of the background papers gathered under the Official Information Act, and I can see that the ministry itself has provided analysis of a range of options and assessed, in a handy matrix form for the Minister, the range of options and whether they achieve the goals that a country might set out for itself in terms of assessing the change against the status quo. Preserving the good sides of anti-dumping legislation is one of the goals the ministry has set itself, but also providing discretion in situations that are different and giving that discretion so that the public might benefit. It has done it in a simple tick-box form that pretty much anyone could understand.

I encourage people at home who are interested in this kind of thing to apply for such papers under the Official Information Act. It is something I was discussing with a constituent just yesterday, how few people do use the Official Information Act. It is a favourite, of course, of journalists and politicians to get the background information to make sure that the Minister has made the right decisions, is across his or her paperwork, and is acting in the best interests of the country given the advice that they have received. But ordinary members of the public out there, people in middle New Zealand, can, of course, request information under the Official Information Act, too. They will receive, by and large, copies of the paperwork that a Minister will receive in their decision-making process, and they can see how decisions have been made. Often that aids in the process of select committees, but it can aid, generally, in the making of good law and the understanding of how we come to be in the situations we are in as a country.

The first speaker for Labour, the Hon Clayton Cosgrove, touched on the fact that businesses want clear rules. They want a level playing field for trade. They want to be sure that there is not dumping going on that is going to affect domestic industries in a negative way because of unfair behaviours—behaviours that are outside the norms of international trade and the expectations set up by trade rules. That is fair enough, because with clear rules, some certainty, and expectations—that is when businesses prosper. When the rules are clear, when the playing field is laid out, and everyone is playing by the same rules, we back our New Zealand industries to be innovative, to put their best foot forward, and to compete on the international scene.

Of course, on this side of the House, we feel that there is more that could be done. We see some distortions in our economy. We see money going into the speculative sector in the housing market that could be going into the productive sector and supporting businesses. We see a lack of investment available for hard-working New Zealand business people. It is very hard to get the capital that people need, and, of course, one of the consequences of that is that we have seen fewer businesses created per annum under the current Government than we saw under the previous Labour Government. That, in part, is because, I would contend, the members opposite are more interested in big established businesses and less interested in new businesses coming through. They are less interested in the ordinary, middle New Zealander who risks their shirt every day. They are more interested in backing vested interests in the ultra-wealthy. That is something we have seen time and time again in the nature of legislation that is brought to this House.

However, today we are not criticising that. We are supporting this bill, for the fact that it seems like common-sense policy. It is not the big idea that is going to change things and be a game-changer in New Zealand. It is not the big idea that will get us to exports reaching the Government’s goal of 40 percent of GDP rather than going backwards. It is not the big idea that will turn the corner for us and see us earning more per capita. Unfortunately, wages in New Zealand have been static under the Government as expenses have gone up and funding in the health sector has dropped, and so on. Things are getting tougher for New Zealanders. This is not the thing that will change that overnight, but it does seem to be a sensible measure that we would want to support to the select committee to have a full examination, because we do support sensible measures, albeit they are small steps in the right direction.

So just to remind ourselves, what we are talking about here is goods that are dumped. They are considered to be dumped if their export price to New Zealand is less than the price the goods are sold for in the exporting country. So you can see the pattern of behaviour that is being described. Goods that are subsidised by foreign Governments can be considered to be dumped, as well. Where there is a distortion in trade practices, we have legislation in place that stops dumping practices because they are, and can be, injurious to New Zealand industries. Where there is no New Zealand industry present, where it is unlikely that goods coming cheaply into the country are going to be injurious to an existing industry, they may in fact be of benefit to consumers in New Zealand. We would support this change, and that is, in fact, as I read the legislation, what it is designed to achieve.

We only hope that this can get through in a good form. We recognise that with the Commerce (Cartels and Other Matters) Amendment Bill, which Minister Goldsmith brought to the House before, there was some backtracking and a curious path taken. We hope that this one has a safer journey through the select committee. We ourselves will be putting our shoulder to that cause, to make sure that this legislation is debated fully, thoroughly, and comes back to the House, hopefully, in an improved form, because there are always good suggestions that come forward from the public and interested parties. We will bring the bill back to this House and debate it fully and see a better regime as a result. Thank you.

It is a pleasure to rise in support of the Trade (Anti-dumping and Countervailing Duties) Amendment Bill in its first reading, not least of all because it is—any way you care to describe it—a very sound and pragmatic way of dealing with the interests of consumers and the fair and reasonable protection of our own industries. As a small and trading nation, we understand how important it is for us not only to sell to the world, but—as some members opposite in recent times, in other trade discussions, seem to have failed to comprehend—also that it is important that trade is a bilateral thing, and that we are purchasing, we are importing from other nations. It is important that we meet our responsibilities under the World Trade Organization agreements that we are party to.

Actually, in the anti-dumping measures it is very important that we take a broader consideration. Historically, what we have looked at is the protection of local industry: the idea is that we are a small country of 4.5 million people and that larger economies, at a very tactical level, can take measures because of their own oversupply that have little impact on them but that have a great distortionary impact on our local economy. In the short term, if we allow that to happen, what happens in those instances is that those companies are able to dump—to offload—the excess supply they have. It comes at very, very good prices to our consumers, but it is very tactical. It is a short-lived, temporary measure, and once they have finished with their particular wants, our consumers are left—particularly in some cases where they are locked in to certain product supplies that are then only available to them under a different pricing and supply regime. So dumping is about the suppliers; it never has been about the consumers.

The measures that we have had in place are reasonable in the context of protecting not only mainly our own industry but also our own consumers, while living up to our responsibilities under the World Trade Organization agreements. There is always an instance or a regime. We might consider that the anti-dumping rules that we have had in place do not meet the prevailing conditions in New Zealand. The example that I think both sides of the House have used—certainly the Minister did in his speech—was around housing. It has been, and remains, the position of this Government that the issue with the housing challenge is one of supply. It can be dealt with mainly in the primary areas of freeing up land, of reducing time and cost for consents to create new developments, in making sure that we have the skills available to build those houses to deliver the supply, and in ensuring that the materials available for those developments are affordable. One of the things the Government took a decision on in 2014 was to provide some relief against the anti-dumping measures, because it created a means to address some of the housing supply issues by taking away some of the duties that would otherwise be imposed on goods that were considered to have been dumped.

What this bill does is to take that very sound approach and work out how we can pragmatically employ it on an ongoing basis in this country; where we can make sure that we take the right steps to protect our consumer industries, and the right step, in the case of housing, to ensure that we can support the sort of supply that we want to see, but still have the ability to protect our own local interests. That is precisely what this bill will do if it is enacted. It gives us the ability to consider what is in the consumer’s interest, and also what is in the interests of industry. And if we take the balance between those two then we can create an almost perfect storm, particularly in housing, where we are ensuring that the materials are available freely and at a good price, while not destroying our own local industry, and seeking to deliver the objectives we have, which—particularly in housing—is to make sure that we have the right supply to meet the growing demands in New Zealand. This is a very pragmatic and sensible bill and I commend it to the House.

I rise to take a call on this bill. As it stands, the Green Party is not supporting the bill, and I want to take the opportunity to outline some of our concerns. So, from our perspective, what we see this bill doing is weakening current protection for local New Zealand producers and manufacturers, under the guise of public interest. What we already have is an Act that, as it stands, provides some protection for when goods are imported that are way cheaper than locally produced goods because they are heavily subsidised by Governments overseas in their country of origin, or because they are being dumped here at a price that is well below what they are selling for in their country of origin. Both of these situations do not create a level playing field for New Zealand businesses, and that is recognised as such by the World Trade Organization. It thought that the existing Act and the existing duties that are in place under this Act are compliant with the World Trade Organization rules.

So the question would be why we would want to allow it to be possible for heavily subsidised goods, or for goods to be dumped here in New Zealand. Why would we do that? We know from international experience that the practice of dumping very low-priced goods on to local markets can have far-reaching and highly damaging long-term consequences for local economies, and sometimes they can take time to eventuate. This is because there are very few industries that are able to withstand the impact of dumped products flooding the market. In the long term, it is not in the public or national strategic interest to allow local industries to be undermined in this way. It is actually anti-competitive practice, these kinds of things.

Once we have lost manufacturing expertise in a particular area it can be very difficult to re-establish that at a later date when that particular product that had been dumped is no longer available at rock-bottom prices. So, for example, the Hawke’s Bay Fruitgrowers Association has warned that peach growers in Hawke’s Bay are likely to have to pull out their trees and get out of the business if extremely cheap canned peaches from Greece and Spain are allowed to be here. At the moment there is a duty on them; they cannot be dumped here. But if they are allowed, in the consumer interest of allowing people to have extremely cheap peaches, then what that could mean is that we undermine the peach growing industry in Hawke’s Bay. If they have to pull out their trees, they are very unlikely to reinvest and plant the trees and wait 5 years for them to start producing fruit again, at a cost to the economy.

At the moment the peach industry in the Hawke’s Bay region contributes $15 million to Hawke’s Bay and employs thousands of people. We could put all of that at risk for short-term consumer interest. But, in the long term, when the peach trees are wiped out and gone and then, suddenly, maybe there are no longer rock-bottom priced peaches available all the way from Greece and Spain, we could have a shortage. It is not in our national long-term interest to allow these sorts of situations to happen. Why would we risk sabotaging a viable industry that contributes so much to the region for the sake of short-term consumer interest? We will be looking very carefully in the select committee at what this public interest test is and how this will be implemented, and we will be asking whether there is any question of things like the peach industry being put at risk by changing the Dumping and Countervailing Duties Act in this way.

As we push out these alternative manufacturers and producers, what we end up doing is concentrating all our economic eggs in one basket, more and more into dairying. We already have an economy that dangerously relies on and is vulnerable to the ups and downs of dairying. The last thing we need to do is to undermine other viable industries that are currently viable. We also need to remind ourselves that cheaper is not always better, especially when it comes to building or construction materials. Poor-quality materials can threaten people’s safety and homes. That was all too evident recently when 1,600 tonnes of steel from China was found to be too weak for the bridges in the Huntly bypass project.

It was interesting to see the legal commentary from Chapman Tripp that pointed out there is no reason, in principle, why anti-dumping duties could not continue for as long as injurious dumping or a subsidisation is occurring. If that is occurring overseas, then let us keep the playing field as level as we can. I think it was interesting noting that officers have already acknowledged that adding a new public interest test will make the Act more complicated to enforce, reduce the overall effectiveness of the New Zealand anti-dumping regime, and make things much more uncertain in the long term about how it is going to be and how the process is going to play out. So I actually really want to know exactly what the problem is that this bill is trying to fix.

A couple of speakers have mentioned that the mechanism to justify allowing imported building materials to be dumped in the New Zealand market is a mechanism for somehow making building houses cheaper. But we only have to look at either the Huntly expressway or the leaky building fiasco to see where a race to the bottom can lead us. We do not want that scenario to be repeated. Opening our market to dirt-cheap imported goods is somehow supposed to be a solution to the housing crisis. In our view, it is an inadequate solution that risks creating more problems than it solves and shows a lack of ideas for how to make sure that New Zealanders have a roof over their heads, and is a grasping at other mechanisms. What the Green Party would do—

I am sorry to interrupt the honourable member. The time has come for me to leave the Chair.

Debate interrupted.

The House adjourned at 10 p.m.