Trade (Anti-dumping and Countervailing Duties) Amendment Bill

It is my pleasure to take a short call and talk about this Trade (Anti-dumping and Countervailing Duties) Amendment Bill, which is incredibly important. Labour will not be supporting this bill. We supported this bill, at the first reading, to select committee. But, as some of my colleagues who sat on the Commerce Committee—some of whom have spoken and some who are yet to speak—will outline more fully, I am sure, once we got into the detail and saw the fish-hooks, this is not a bill that we can support.

Goods are considered to be dumped if the export price to New Zealand is less than the price they are sold for on the domestic market of the exporting economy. What this piece of legislation does is it introduces a public interest test into New Zealand’s anti-dumping and countervailing duties regime. It says that changes to the law to allow goods into the country without duties can be imposed if it is considered that consumers will benefit. Officials told the select committee, when this bill was there, that this was going to be an incredibly subjective test. There is no other way to put this test in place, other than for it to be a highly subjective one. And what does a subjective test like this do? It introduces a whole raft of uncertainty for businesses. Businesses are left wondering whether or not they are going to have this subjective test applied to them.

In Labour, we support anything that increases benefits for consumers while protecting our industries, and it was for that reason we were able to support this bill to the select committee, but, as I have outlined, it is this public interest test that really is the critical thing for Labour and is what is stopping us from being able to support it. It is those criteria. It is that subjective methodology that is being applied, and we are not satisfied that these concerns were addressed in the amendments that were proposed at the select committee stage in terms of the scope and parts of that public interest test.

We share the concern of a number of submitters who appeared before that committee, who drew attention to the proposed changes and the undermining of our domestic producers here in New Zealand in favour of a shift to Australia. This is not something that in the Labour Party we are prepared to support in a piece of legislation. We are not prepared to support a piece of legislation that is going to undermine our small and medium sized businesses in this country, which are so critical for providing employment.

What we do not want to do is weaken New Zealand producers by introducing this new complexity into their business, which really does not need to be there. By removing robust protection around dumping and subsidies we are concerned that this legislation will hurt New Zealand businesses in cases where foreign producers dump products at below their export prices to benefit from subsidies. And this is not some theoretical scenario. This is something that, as legislators, we should all be wary of. It is our job to protect New Zealand’s small and medium sized businesses, not introduce legislation that weakens those protections, for no benefit. We do not see that the public interest tests and the benefits to consumer criteria and methodology that is being applied in the case of this legislation are sufficient.

That view was shared by the majority of submitters. This is not just something that we on this side of the House think. This is something that many of the submitters who came to the select committee expressed. They were worried, and they warned that this was a bill that would tilt the playing field in favour of dumped import products rather than local producers and employers or local jobs. That is not something that we are prepared to support. Why would we spend our time in this House putting in place legislation that empowers foreign companies to dump their products in New Zealand, rather than standing up for New Zealand businesses, standing up for New Zealand employers, and, most importantly, standing up for New Zealand jobs? That is something that, as members of the New Zealand House of Representatives, we should always have at the forefront of our mind.

Labour is concerned about the uncertainty that this legislation would create in the trades remedy regime. It is not going to benefit. It is not going to help our businesses achieve the growth scenarios that they need to have. This is not a piece of legislation that Labour can support.

The Trade (Anti-dumping and Countervailing Duties) Amendment Bill enables New Zealand to apply anti-dumping and countervailing duties in accordance with the World Trade Organization agreement.

This is one of those international obligations that New Zealand has, which are to be ratified from time to time. The bill introduces a test to the anti-dumping regime that will better balance consumer interests with those of the manufacturers threatened by unfairly priced imports. By introducing a public interest test, the regime can now consider whether consumers are benefiting from lower prices, more choice, availability, and quality, and whether this outweighs the effect on the industry. The Government wants to ensure that New Zealand has a competitive market where consumers get the best value for money. I commend this bill to the House.

It is not often that we get economic and commercial bills before a select committee where business submitter after business submitter lines up to slam the National Party. But that is what has happened with this bill. The bill is ill conceived, it is badly drafted, it is fundamentally flawed in concept, and it has been met with near derision by the business community for very good reason. It shows that this Government is out of touch with the real world of commerce, and a fix is desperately needed before the legislation is set in stone.

I am going to take the House through a couple of the key issues with this. The first is why it weakens the protections on New Zealand businesses, particularly manufacturers and exporters; secondly, why it has been universally rejected by submitters; and, thirdly, what the impact will be, as my colleague Dr Megan Woods has said, on one of our key audiences here, which is New Zealand business owners and workers.

Let me start by unravelling the puzzle of why this bill was brought forward in the first place. As part of the Christchurch rebuild there was a widely held view, and it was not wrong, that the cost of building supplies was too high because the market was too concentrated. Fair enough—that is why we have a Commerce Commission. I believe that it should be investigating the building products industry. Fletcher’s, PlaceMakers, Carters, Bunnings Warehouse, and the like need to be under the microscope. But it did not take this sledgehammer to crack that nut. What this sledgehammer does is it says that any time, in any market, goods are dumped in the New Zealand market, it does not matter if it hurts the New Zealand manufacturers—as long as it benefits consumers with cheaper prices we might say that it is OK and let it past the goalie. That is what this bill says.

This so-called public interest test says that even if it is red-hot dumping we will let it pass as long as somebody, in our view, is benefiting. The trouble with it is that the test there is so fudgy, so subjective—how long is a piece of string, who is the beneficiary, how is it measured? It is all qualitative, and the worst part is that it is amenable to lobbying and what they call political economy; who knows who. It is a slippery, slippery slope.

The next issue with it is what we call, in the jargon of economics, game theory. If the foreign company or Government that is considering dumping in the New Zealand market knows that there is a rigid protection mechanism that will kick in automatically, almost like the automatic braking system on a car, then they will be less likely to dump in the first place. If they know, on the other hand, that New Zealand has weakened its regime—so even if they are caught dumping there are still 90 days to 120 days of consideration of the so-called public interest test, and they may or may not get a leave pass. You can see that the incentives to commence a dumping action are strengthened and the sanctions against it are weakened.

Ninety extra days, higher costs to those wanting to defend New Zealand markets, higher levels of uncertainty rooted in eight subjective factors—and that is why the Government of Australia twice put to Parliament the idea that they would have the same test that is embedded here, and twice the Australian Parliament threw it out. Australian business said: “Don’t be so bloody stupid. Don’t be so bloody stupid, everyone will dump in our market.”, and they threw it out.

Where was the National Party? Were they not reading the newspapers? Have they not got Google? Sounds like the Overseas Investment Office. Read the bloody newspaper, find out why Australia threw it out, and have another think before it is too late in the third reading, because this is going to cost Kiwi jobs. It is going to cost Kiwi manufacturers. It is going to make the world easier for foreign companies and countries that sell into our market at less than their domestic cost of production. They might have surpluses—they just want to get them out of inventory. We might be seen as a soft touch. It does not matter if the paint is two bucks cheaper at Bunnings Warehouse or PlaceMakers—some poor Kiwi is going to be down the road.

That is why the Aussies threw it out, and that is why every blooming submitter who came to our committee submitted against the Government. They were not what you might call the traditional Labour-friendly submitters. They are people whom we respect and whom we work with. They were organisations like Business New Zealand, New Zealand Steel, Horticulture New Zealand, Foodstuffs, and so on and so forth. These are companies that are substantial New Zealand businesses, organisations that are the umbrella groups of commerce.

So who, then, is National seeking to help if it is not good for manufacturers, it is not good for workers, and if the main business organisations have universally panned it? We were left thinking: “Why on earth has the Government got this death wish? Why are they like a moth to a flame on anti-dumping?”. We think that there has been some lobbying going on from some domestic sectors about wanting cheaper imports.

But I come back to that point about building products. If the problem is dominance and monopolisation of import channels, that is why we have got a Commerce Act and that is why we have got a Commerce Commission. The Government should get off its comfortable backside and do something about building products instead of having this “a before b” bill that is going to cost Kiwi jobs.

But politically the Labour Party could take a different view, which is to say: “Go ahead, make our day. Make yourselves a laughing stock in the business community. Tell them that you have lost the plot—because we are not that far off an election. Fine by us.” The problem with that approach is we do not just want to be political about it. We are voting against it because we are going to put the interests of New Zealand workers and New Zealand manufacturers ahead of the pure politics. We are just telling it like it is.

This bill weakens protections. This public interest test is an international outlier. There are only two or three countries in the entire OECD that have made this folly—two or three. Our main trading partners, Australia and the United States, do not want a bar of it. They do not want a bar of it. This bill is a bad bill. It is ill conceived. It is badly drafted. Its impact will be negative. It is bad for New Zealand business. It is bad for New Zealand workers. And I will warrant it is the product of lobbying of the Government by a few narrow interests, and possibly is the brainchild of a few bureaucrats who have not spent much time in the real world.

What to do about it? The first thing is that it is not too late for the Government to withdraw the bill. The Government could say: “OK, we will progress the bill, without the public interest test. We’ll put in an SOP before this is too late, and we’ll see the error of our ways. We’ll listen to our own business community. We’ll make the best of a bad idea. We’ll take out the public interest test and get this anti-dumping regime clean, quick, and pure.”—clean, quick, and pure.

💬 Carmel Sepuloni: That’s right, David.

My whips are telling me they want me to be clean and quick. They have probably given up on me being pure. [Interruption] Oh no. They want more. They are enjoying this so much that they want the full 10 minutes, which gives me a whole minute and 23 seconds to summarise where we have been so far.

An old rule in the House is that when you get to the bottom of your speaking notes and you have still got a minute on the clock—what do you do? You go back to the start. Start again. In that spirit, why do we think this bill is a crock? We think it is a crock because it is a bad idea. It is flawed in concept. The whole idea of an anti-dumping regime is you make your market proof from the self-interested actions of foreign companies and foreign powers that are wanting to take out domestic manufacturers and cost you jobs—for fly-by-night profits.

That is why we have an anti-dumping regime. That is why it is fast. That is why it is tough. This bill makes it weaker. It causes at least a 90-day delay. It introduces an eight-factor, subjective public interest test that gives foreign dumpers an out-clause that they do not need and do not deserve. That is why every business submitter opposed the bill, and that is why the Labour Opposition will be voting against it. We are the party of business. When we get in, economic growth in the last 30 years is faster and higher, and that is why we are honouring the intentions of business submitters tonight.

It is an honour to speak in this, the second reading of the Trade (Anti-dumping and Countervailing Duties) Amendment Bill. It is a good bill, contrary to the comments of the last speaker, David Cunliffe, because this bill is about promoting free trade, which we know members opposite are opposed to. This bill is about competitive markets, both in New Zealand and overseas, and this bill is also about protecting our local industries, while also promoting the interests of our local consumers.

We know that the anti-dumping and countervailing duties regime—they are legitimate tools and a legitimate regime, under World Trade Organization rules. What those rules promote is they facilitate free, honest, and fair trade. It is about our domestic industries having the confidence that this Government, and any Government, can protect against unfair prices. But it also must be balanced against what would otherwise be increasing costs to consumers, who have higher prices to pay for goods and services that are imported into New Zealand.

So it is not easy, and that is why we have introduced the public interest test. We have got to balance those lower prices—the more choices that consumers have; the new, quality goods that are imported into this country—with the effect that they have on those industries. This bill also clarifies the rate and the amount of duty that are determined. It inserts a purpose clause. It renames the bill. It is a good bill. That is why it has been brought to this House, and that is why this side supports free trade, free commerce, and free enterprise.