Trade (Anti-dumping and Countervailing Duties) Amendment Bill

I rise to speak to this bill. We will be opposing this bill on this side of the Chamber, because it undermines a level playing field in international trade, something that we believe is incredibly important. We do not believe that New Zealand businesses should be put at risk through this kind of interference by the Minister—that is what this bill introduces the potential for in our market.

This bill creates the opportunity for the responsible Minister to decide that goods can be dumped in New Zealand at below-market value, either because they have been subsidised in their production and they have been produced more cheaply than they really cost to produce or because a surplus has been created and a country is trying to dump goods on another market to clear a backlog. For those reasons, occasionally countries do look and say: “It’s in our interests.” We saw it with the Canterbury earthquakes. We saw this House put business aside to say that in this circumstance—and it is exceptional—we will allow dumped goods to come into New Zealand, because there is a shortfall and an immediate need. We saw then and there that the Parliament has the ability, when it matters, to put aside those normal operations in order to take account of exceptional circumstances.

There is no need for this bill. Unfortunately, we saw, when we came to the Commerce Committee, that there was no justification offered beyond that. This is a bill designed to give the Minister extraordinary powers to decide when products can flood in and undermine a competitive market place in New Zealand. We stand against that on this side of the Chamber, because we believe in the value of New Zealand businesses and New Zealand exports. Unfortunately, under this Government, its track record shows that it does not. It talks about getting to 40 percent of GDP as exports, but it is now down below 30 percent and it is going backwards, and Mr Joyce knows it. He has seen, under his watch, the exports as a percentage of the economy decline further and further, and the projections say that it is going to decline further and further over time. This Government has failed to grow our export industries. Here we have another measure designed to undermine our exporters, and it is pushing it through the Parliament. I think it has come under pressure. It has come under pressure from industry groups, and I think it has made the wrong decision.

We asked officials how they were going to introduce this public interest test, what priorities they were going to put into the different factors they were going to consider, and how they would weight those factors. Unfortunately, they were not able to give us a convincing answer. They said: “We will consider eight factors prices, and they are a focus on prices, product choice and availability, product and service quality, the financial viability of the domestic industry, employment levels, and competition in the market.” We said: “Those are things that you might want to look at, but how will you weight them? Which ones are the most important? How will you judge which industries are going to be put under pressure? How will you judge what is enough product availability and choice in the market? How will you judge what constitutes quality when a good coming in may not measure up to the New Zealand things?”. They had no answers for us, sadly.

I think they had been sold a pup by the Minister. They were told “We want this to happen. Please make something up, officials. Please make us look good.”, and, unfortunately, it just was not possible in the circumstance. This introduces uncertainty for exporters, because they do not know how that test is going to be applied. Officials were not able to tell us, and business after business after business came before the select committee and said: “This uncertainty creates a risk for us. This creates cost in our business, because we have to account for that uncertainty when we’re making our investment decisions.” More than one business told us that when it is trying to make investment in a new capital plant it may have to look to Australia instead. Australia has twice looked at similar legislation to this, and has twice resoundingly rejected it, because it put their domestic producers at risk—at risk of uncertainty created by ministerial whim. It put this to one side and said: “We will have nothing to do with it.”

Catherine Beard represented that view on behalf of Business New Zealand. She said: “We don’t abide by this.” Business New Zealand stood against this. This undermines our domestic producers, and that is often what we heard. We heard from many of the big players in New Zealand—they are able to represent their interests—and they say this is bad. But what about the small players? What about the disruptors that are coming into the market—the innovators in New Zealand? How are you going to measure what effect it is going to have on them when dumping comes in, if their business model is not even understood or known about? I can be confident that the Ministry of Business, Innovation and Employment will not be across every single innovator in the New Zealand market and will not have the ability to scan the whole market for who might be affected by products being dumped here against our will because a Minister says it is a good thing to do on that day.

This also leaves us exposed in international fora. As a country, New Zealand argues that a level playing field is incredibly important in international trade. I have heard, in international fora, wise men argue for the benefits of a level playing field, where, if we reduce tariffs over time and if each country does what they are good at, we get higher-value produce, we have specialisation, and the world is better off through trade. I have heard wise people talk about this. Yet in this bill we have a suggestion that we should be doing something different: that when it suits us we should allow dumping, we should allow subsidised goods to flood the markets, and we should allow bigger countries that want to throw their muscle around to affect New Zealand domestic industries—that we will have a level playing field when it suits us.

This undermines our moral standpoint and this undermines the high moral ground that New Zealand takes in international trade negotiations and in international trade fora, where we espouse the benefits of a level playing field on trade. This actually undermines New Zealand and I think that point needs to be heard loud and clear, and the Government needs to answer.

The Minister in the chair, the Hon Jacqui Dean, needs to answer why it is that she thinks it will be in New Zealand’s long-term interest to have a trade position that says we will pick and choose when we think tariffs and duties and so on are a good thing, when historically we have relied on the WH rules and the WHA procedures and have said that we think that having a level playing field is a good thing.

I look forward to hearing the Hon Jacqui Dean explain why she thinks we should now meddle in international markets and allow different practices at different times, because that is a big change in New Zealand’s foreign policy that Jacqui Dean is putting forward to this House.

So let us have a think about this. I think what we need is a fresh look at this. We need a fresh approach that just says “Let’s do the right thing. Let’s not meddle. Let’s not give a Minister that discretion. Let’s not put the Minister in a place of risk and uncertainty when they are in international negotiations and our trading partners know that the Minister has that discretion to allow dumped goods into the country if there are non-tariff barrier disputes and so on.” I am very much looking forward to how Ms Dean thinks that that will play out as Ministers get pressure put on them in those international trading negotiations, and how her new principle will take effect and how that will impact on our trade internationally, because that is a serious risk that is being introduced.

So we need a fresh pair of eyes over this. A Labour Government would do this differently. A Labour Government would respect having a level playing field in trade rules and not allow Ministers to get in there and meddle and pick and choose, because we have seen under this Government how it has picked and chosen and picked winners and, with Mr Joyce’s approach to economic development, how that is not succeeding, how exports as a proportion of the economy are dropping under Mr Joyce’s watch, despite rhetoric to the contrary. We know the importance of business succeeding on the international stage and having those fair rules not introducing extra cost and risks of uncertainty. On this side of the Chamber we have respect for domestic manufacturers. We are not about supporting the speculators, as they are over there. We are about supporting the productive economy—making sure that businesses that are taking risks are supported in taking those risks and not going to experience a Government that dumps on individual sectors when it picks and chooses because one is a favourite and one is not. We do not want to open up those kinds of risks and we do not think that this Parliament should be doing that.

We heard from New Zealand Steel, we heard from Wattie’s, we heard from Oji Fibre Solutions—we heard from a range of big companies that expressed how badly this could play out for New Zealand and how investment could instead go to Australia into productive industries there because it has a more stable regime. It understands the importance of successful business across the Tasman and the importance of not undermining the set of rules that are in place and of not imposing extra costs on business in terms of legislative uncertainty, process uncertainty, unclear rules, and all that goes with that. I would urge the Government to listen to what we are saying on this side of the Chamber, to revisit things, or at least, in the case of the Hon Jacqui Dean, to explain how she thinks this new international position of picking and choosing is going to advantage New Zealand as it tries to take the moral high ground and encourage others to trade more with us and to play fairly on the international stage.

Thank you, Mr Chair. Tēnā koe. Thank you for calling me on this bill, the Trade (Anti-dumping and Countervailing Duties) Amendment Bill. We would like to talk to the “General provisions” in Part 1 of the bill: “The purpose of this Act is to enable New Zealand to apply anti-dumping and countervailing duties …”. Actually, the purpose of this amendment is why the Government should not apply anti-dumping. We are deeply concerned over this bill and have expressed that concern in the select committee process. We are joint authors with Labour and New Zealand First in a minority opinion on this bill, which is reflected in the Commerce Committee’s report.

We have some very fundamental questions about the purpose of this bill. Firstly, it is not quite clear what problem it is we are trying to solve here. If the problem is responding to the Christchurch earthquake, which appears to be the dominant rhetoric around the need for this bill, then, certainly, there are provisions already in existing legislation for emergency response for exactly that situation. We are not sure why these amendments are required more broadly to give the Government powers to deny New Zealand companies their rights of redress when foreign producers predate their markets.

The second issue we have is: who wants this bill? We have heard, as Dr Clark said, from a number of submitters, including Business New Zealand, including the Manufacturers and Exporters Association, and including most of the business associations, which were—how shall I put it—puzzled as to why the Government would be putting this bill forward. We have, as Dr Clark said, seen that this bill would introduce a complexity with regard to our trans-Tasman trade. Australia has twice looked at this kind of test to introduce for anti-dumping and has twice—after far more comprehensive analysis than we had available to us as a committee—rejected it. This lack of coherence with Australia on the issue of anti-dumping will create problems for our manufacturers and exporters, and, what is more, will create some incentives for foreign companies to come and predate our markets, undercut local businesses, and, once they have driven them out of business, according to a national interest test of lower prices for consumers, then, of course, they are free to raise their prices again and use up that consumer surplus in order to generate monopoly profits in the New Zealand market.

We think that, instead of a bill that would even the level playing field, what we have is a bill that further tilts the playing field in support of foreign companies, and that, actually, foreign companies are being given advantages through this bill, and these are foreign companies that often already have advantages—for example, through not being forced to pay tax. If you are a multinational that can benefit from transfer pricing or if you are a company that sells goods online for under $400, then you do not have to pay GST—a disadvantage to New Zealand companies of 15 percent. So we are adding insult to injury through the inability now of manufacturers to be able to understand whether or not they have protection from anti-dumping laws, and it is this aspect of uncertainty for a manufacturer that is one of the harshest aspects of this bill.

The companies that are facing unfair competition have an opportunity, first, to put in their application to the bill, and, as we see in the legislation, in 180 days they will get a preliminary opinion. But even if they won the case as to why they are being predated by anti-dumping rules, then there is a test applied, and that test applied means that they may not get redress even though they are clearly able to show that they are being predated. That is bad for their business, and, therefore, that is introducing an element of uncertainty into New Zealand business that I think is disadvantageous for what is left of our manufacturers.

This bill is particularly harsh on small and medium sized enterprises (SME), and as we go through the clauses in this bill we see the difficulties that SMEs have in being able to negotiate procedures and timetables that are burdensome and disadvantageous to them. Not only is there a 180-day period, which for a small company is often a long enough period for them to be driven out of business, but then, with the introduction of this test, there is a further 90-day period to understand whether or not they will receive any redress. That compounds the problem for them. They are obliged to provide more information and, as small businesses, they are put at a great deal of disadvantage compared with their often far better funded overseas competitors. Again, this bill is tilting the playing field towards our foreign competitors and against the interests of New Zealand companies. Surely we want New Zealand companies to do well. That is why it is very hard to understand the rationale for this bill and the purposes of this bill.

The further problem here is a problem with the criteria in the test itself—and we will come with specific recommendations and specific comments on the criteria that are to be applied under the national interest test—but in the select committee we had officials who were quite open with us to say that it was extremely difficult to provide an objective and conclusive assessment of this national interest in ways that could be sure that the national interest outweighed the long-term damage that companies would face by being driven out of business by predatory pricing from their overseas competitors. There are deep failings in the proposed methodology, which is likely to result in the application of a standardised methodology. We heard of a methodology that would be applied by Treasury to estimate a consumer surplus that might apply in this case, and that methodology was tilted entirely in favour of the cheap importers that are dumping goods and ruining the prospects for New Zealand manufacturing companies.

The factors in these tests are vague and subject to ministerial discretion, and that, for us, is a crucial point. Throughout this bill there is extensive discretion given to the Minister, which politicises this process in a way that is deeply worrying for the future of independent and objective decision-making on important issues like anti-dumping. The Minister, throughout this process of a national interest test, is given discretion at every stage of the process. We think that discretion is not sufficiently fettered by controls and objective criteria that will rein in the accountability of a Minister, and, once again, we will come with specific proposals during this debate to introduce some greater accountability for Ministers into this process.

Finally, I would say that we are concerned that this bill shows a neglect of the respect for, and understanding of, the difficulties faced by small business and producers in New Zealand. We have seen over the years manufacturers driven out time and time and time again by predatory foreign competition, and this bill will not only not stop that happening; this bill is a mechanism to facilitate it happening. It takes what was an anti-dumping bill and says “Maybe it’s an anti-dumping bill, but, actually, it might be a bill that would allow predatory pricing by foreign competitors.” It completely changes the nature of the anti-dumping legislation in this country. We cannot, as the Green Party, support it. Thank you.

I do want to say at the outset of my contribution that the Labour Party, when this bill was introduced, was of a mind to support it. We support a robust and fair regime when it comes to the rules around anti-dumping and countervailing duties, and historically there has been widespread support pretty much across Parliament for measures that create that fair regime. That regime is about making sure that New Zealand producers and New Zealand businesses are not the victims of large-scale products coming into New Zealand and being sold for a price that is much lower than the price the product would be sold for in that country’s domestic market—that is, the classic form of dumping that people will be familiar with—or, indeed, whether the product benefits from a big subsidy in the country where it is produced. There are World Trade Organization rules and then rules that have found their way into New Zealand law that create a robust and a fair environment, so a piece of legislation that made the claim that it was going to make that environment work better was one that we were interested in supporting.

I was not on the Commerce Committee, but the consistent feedback our members were giving us when they came back was that, little by little, their concerns increased, in terms of the substance of the new public interest test—which I am going to talk about in a moment—but also because of the feedback from the business community. It is probably not a great surprise to members that Catherine Beard is somebody whom I do not always agree with when she puts out her statements and makes her comments on behalf of Business New Zealand and Export New Zealand, but we certainly agree with her here. Then we began to hear from companies like New Zealand Steel and Wattie’s, which were saying that this has the potential to be very damaging for New Zealand companies. Of all the people, New Zealand Steel is the company that I think of here. I have to be a little careful with how I choose my words here, but there is the current situation we have got with accusations about Chinese steel being dumped in New Zealand.

One of the issues raised by submitters was about what this legislation would mean for how other countries would view New Zealand’s anti-dumping regime. It reduces the certainty and the clarity of our regime, and puts in its place a subjective—a highly subjective—test that could be exploited. In the way in which these things work, a lot of it is around the signals that you send and the way that companies operate internationally with confidence, and that is what is being undermined here. This is not Opposition parties playing politics; this was a consistent theme of the submissions that came to the committee, and that is why Labour, New Zealand First, and the Greens are jointly opposing this bill. The more information that came to light, the more concerned we got about it.

Other colleagues have covered some of these overall concerns, but I have got some questions for the Minister in the chair, Jacqui Dean. There are the high-level concerns that we have around whether this framework can actually work, but when you get to the public interest test itself, the criteria are vague. The factors to be considered are not ranked in any order, so a Minister who is presented with this exercise does not have guidance as to what factors matter more than others. I would ask the Minister in the chair to take a call and explain to this Committee how she, as a Minister who might be responsible for this one day, will deal with a set of criteria that are not ranked. There is no weighting, there is no prioritisation, there is not even any formula to be followed by a Minister when making an evaluation of these factors. That is introducing an unacceptable level of uncertainty to a process that businesses need to be certain about.

Time and again, submitters were saying that in the absence of any certainty about how this public interest is going to be applied, businesses will lose the confidence to invest. We all know that when businesses are making those decisions, it is about their confidence about rate of return, their confidence about whether or not they will be able to compete well and fairly, and the Government has gone and introduced a piece of legislation that undermines that. The Minister needs to be able to get up in this Committee and give us her view of how that prioritisation process will work. I am sorry to say that in the absence of that in the law—even the Minister’s answers are going to make that interesting, but at least they might enlighten the Committee a little as to how the Government actually plans on this taking place.

Our members of the committee asked consistently for examples of how this would work, and there was an absence of those. In the end, affected businesses made the call that you would make in these circumstances, which is that they do not have confidence in a regime that is so vague. From the point of view of members of this House, it is then our responsibility, I believe, to say this is not good enough. A piece of legislation that normally would get widespread support across the House has found its way back here not supported by at least three parties in the House. I think the Minister owes it to those exporters, owes it those businesses, and owes it to those companies to stand up and tell us how those criteria will work, in some specific detail.

I just want to cover a couple of other quick matters. One of those is the time that will be added to the process by the public interest test. As proposed, the bill would add 90 days to the time frame. From the point of view, again, of a number of submitters, New Zealand manufacturers looked at that and said: “This really is going to make our lives extremely difficult.” There is a lack of clarity about what those businesses will do, in terms of remedies, if they are concerned about how the system is working. Ultimately, the end result of this may well be some manufacturing businesses deciding to move offshore. That cannot—and I will give this to the Government—have been the Government’s intention in promoting the bill, but now is the time for the Government to acknowledge that it has got it wrong. Opposition members of the committee, as Barry Coates said, had very specific ideas, which could be amendments, that would at least make the system more robust. Unfortunately, Government members of the select committee were not prepared to consider those matters.

I am not going to unduly delay the Committee on this; I know other colleagues have got comments they want to make. I will just finish on the point of what the Government did claim was the motivation around putting this bill in place, and that was around concerns about the cost of building materials entering into New Zealand. What we saw in the wake of the Canterbury earthquakes was that when it is necessary for there to be something outside of the norms—when we need to do something that moves quickly in response to a crisis—we can do it. We can do it under the existing regime we have, rather than creating a regime of uncertainty, for that kind of purpose. I think that if that was the Government’s motivation, actually, the response in Canterbury ensured that New Zealanders could have confidence that the system was already flexible enough.

I think we have here a classic situation of a proposal that, on paper, might have looked all right. It looked like more choice. It looked like more flexibility. But then, in reality—and under the scrutiny of a parliamentary select committee, which is an important part of our democratic process—it has been exposed for what it is: a vague set of criteria for a public interest test that is entirely subjective, that will lead to huge uncertainty, and that is opposed by the very companies these rules are designed to protect. If that is not enough for the Minister and the Government to understand that they should think again, I am not sure what is.

Members have raised a number of issues, so I will cover off a few of the issues that have been raised. The first—and it has been mentioned several times—is around the subjective nature of the public interest test. I would note that the public interest test is subjective by necessity, simply because it involves judgment. The inclusion in the bill of multiple criteria to be evaluated, such as quality, means that a purely objective public interest test is simply not realistic. The reports outlining the recommendations to the Minister of Commerce and Consumer Affairs will be made public at the end of the investigation. This will provide a great degree of transparency, will provide a degree of clarity, and will also signal and give future applicants an idea of how the public interest test will be conducted.

There were also comments around the nature of the public interest test criteria not being weighted. I would say this: being too prescriptive and rather inflexible during the test could result in inconsistent and unintended outcomes. What seems sensible to one sector of the economy might not be appropriate at all in another sector of the economy. There were comments around New Zealand’s international reputation, and I would say to that that the public interest test simply allows the Minister to take into account the wider competition and consumer effects of imposing a duty. The public interest test, as it is introduced in this bill, contains a presumption in favour of imposing duties and it also does not conflict with New Zealand’s stance against subsidies.

Finally, a question was asked about what constitutes “quality”. The Government has an entirely separate regime for dealing with quality control of imported goods. The anti-dumping and countervailing duties regime was never intended or envisaged to deal with issues relating to compliance with standards. That is an entirely different matter.

I rise on behalf of New Zealand First and my colleague Fletcher Tabuteau to speak to the Committee stage of the Trade (Anti-dumping and Countervailing Duties) Amendment Bill. Today I want to discuss three areas throughout the bill. The first one is the proposed amendments in clause 16, which is the expansion of the suspension period. What we found through the submission stage of the select committee was that members who actually came and spoke to their submissions were quite concerned that parts of these provisions were going to expire on 30 May this year. They wondered what this Government had been doing with its time, and the fact that we were, and are today, weeks away from provisions in this bill expiring.

The actual suspension period is now going to be drawn out for a further 2 to 3 years. What we are wondering in that sense, and on behalf of those submitters who came through, is why they should have confidence in this Government. The Government has already had 2 years to get this right, and to make sure there is a level playing field on behalf of New Zealand businesses. It has had that time to investigate and to take officials’ advice. Why should they have confidence that in another 2 or 3 years - plus there are going to be a system and provisions that are actually going to protect their trade? What they are asking is why they should have confidence in this Government when this bill already has, in its provisions, gone outside of its origins.

We also heard from the industry and stakeholders who had concerns about some of the standards. The question was: what standards? We know that we have had plasterboard come in from Thailand that was deemed to be standard plasterboard—well, who sets those standards? Who sets them and are they standards that the industry itself is actually happy to maintain? So that begs quite a few questions around what the standards are and who is setting them. What came about from that too is that we know that the cost of building materials is high, but that is another conversation entirely, for another time. We should be talking more about the anti-competitive behaviour and the domination of certain players within our New Zealand market.

One of the issues that also arose, which we talked about, was the domestic market threat here in New Zealand. One of those examples—and we know this all too clearly—is cement. So when there has been too much cement made in one country then it comes into New Zealand and it totally puts at risk our New Zealand domestic market. That was quite a huge concern. We listened to a submitter talking about other areas and about two products that would be at absolute risk for New Zealand businesses when we are making legislation in this House, and when new Ministers, such as Jacqui Dean, come in with a Supplementary Order Paper that says that this is OK. Well, it is actually not fine.

New Zealanders are telling us, and the big players did come and tell us, that they have a huge concern about this bill—how in terms of the regulatory impact statement that they read through, itemised throughout was the absolute risk to New Zealand businesses. We feel—and when we say “we feel”—on this side of the House we put through a minority view to indicate and articulate the absolute concerns that we have. Having a look through and listening to further members in the Committee of the whole House today talking about the current issues, in terms of allowing the Minister to have that decision-making process kept on her shoulders, I do also want to remind the Committee that in the area of having to waive provisions within legislation we did that already through this House. This was when it came to the Canterbury rebuild and there was an absolute need for building materials to get there quickly and try to help rebuild our Canterbury area. We had the rights and we waived those. So we wonder what it is that says that we now do not actually as a Parliament continue to waive those rights in the best interests of our rebuild and emergency situations like that.

I also want to pick up on what David Clark said. He said that this provision inside the bill does actually create and give the Minister a lot of power. She gets to decide on behalf of New Zealand businesses what is best for them. I can say that submitters—excuse me, Minister Dean, but a lot of this uncertainty and mistrust has arisen from the fact that this Government has done one thing with the start of this bill and now the bill has turned into quite a bad piece of legislation. What we are seeing now is a bill that could have done something for our New Zealand businesses, but has not.

It is my pleasure to take a call. I would like to thank the Minister in the chair, Jacqui Dean, for taking the opportunity to take a call, but I have some further questions for that Minister in the chair.

As colleagues who have taken calls on this side of the Chamber have said, we did previously support this legislation. We supported it to the select committee, but there were just too many questions at that select committee stage. I did not sit on the Commerce Committee, but from talking to colleagues who did and reading through the reports that came out of that, there are some glaring questions that need to be answered.

One of those questions, for me, and one I would like the Minister to respond to, is why New Zealand is choosing to go down a very different path to Australia, where Australia has a regime that allows this to remain in ministerial discretion. That is the regime that Australia has had, and, as the speaker who has previously spoken, Ria Bond, who has just taken her seat, has identified, it actually is a situation that has worked in New Zealand. Members are using the Canterbury earthquakes as an example of why it is that we need this legislation to come into play. What we have an example of there is the ability for things to be done a little bit differently in exceptional circumstances under the current rules. So why is there a need for this shift? Why is there a need for us to put in place a regime that is fundamentally different to Australia’s—one of our largest trading partners—why is it that we would do that?

I would also like to address the Minister’s comments that she made around the need for the subjective nature of the test. I think the Minister, when she took her call, said that was because of necessity. I dispute that. Actually, the advice that was put forward to the select committee actually did talk about different subjective and objective tests that could be applied. I would like to know why it is that objective tests around—for example, a numerical objective test around a proportion of a market that was affected or other proportionalities and numerical measures were not put into play and that we have a solely subjective test at play here. That is something that I would be interested to know why it is that we have not chosen, when there were various models that were put forward—why any element of objectivity in that test was put into play.

If we do actually look at the clauses in the bill—new Part 4, clause 10, which has a number of letters following it—that lay out the investigation and where the public interest test lies in clause 10F of the bill. What I would like to know—the Minister has said, on the issue of waiting, which I think is an important issue, that what we have is we have heard from industry that it needs some kind of clarity. It needs to know the rules it is playing in. It needs to know what is going to be the really important element when applying these tests. One of the things that led to us pulling our support from this was listening to New Zealand exporters and New Zealand manufacturers telling us how detrimental this would be to their businesses and how this would not be a help at all.

If we turn to clause 10F of the bill, where the public interest test is laid out in clause 10F(3), paragraphs (a) through (h), I would just like to ask the Minister some questions around that. In subclause (3) we have: “In investigating whether imposing the duty is in the public interest, the matters the chief executive must investigate include the following: (a) the effect of the duty on the prices of the dumped or subsidised goods:”. What is the trigger? When we are talking about the effect, what kind of trigger are we talking about here? What threshold has to be passed in order for the chief executive to think that that is significant?

We then go to paragraph (b) “the effect of the duty on the prices of like goods produced in New Zealand:”—again, what kind of ballpark are we talking about? What does the impact have to be in order for the chief executive to take this seriously as a consideration? This is something that I would like to hear from the Minister on. If we look at paragraph (c) “the effect of the duty on the choice or availability of like goods:”, now, this is a very broad test, and I think we do need some clarity from the Minister. What scope are we talking about here? How broad does the choice have to be or how narrow does it have to be in order for this test to be applied? That is something that does need to be clarified.

Even more oblique is paragraph (d) “the effect of the duty on product and service quality:”. I would like to know more from the Minister on exactly what is intended by this clause. What do we mean by “the effect of the duty on product and service quality”? What threshold has to be crossed in order for this to be deemed significant? In paragraph (e) it states: “the effect of the duty on the financial viability of the domestic industry:”. So what I would like the Minister to tell me is whether this means it is going to put a single player out of business, whether it undermines several players in a particular industry, whether or not it reduces the profits of a single player in an industry, or whether it reduces products across the board to several players in that industry. What does that mean, and how will that be applied?

And then, if we go further down that list to “whether there is an alternative supply (domestically or internationally) of [the] goods available:”—how broad? How broad are we going here? Are we saying that somewhere in the world there is an alternative, or are we saying that that is available in New Zealand, or that it is available in markets that we trade with regularly? What does that mean in application, in terms of how this legislation is intended to be applied? Then there is the very broad criterion in paragraph (h), which is “any factor that the chief executive considers essential to ensure the existence of competition in the market.”

These are the factors that the chief executive can investigate when applying the public interest test. These are not “ands” or “ors”. They exist in beautiful harmony together, but what we do need to know from the Minister is what the strongest driver here is. What is it that the chief executive will be looking at most strongly when making these assessments, when applying this test? To say, as the Minister has when she took her call and said that we need to leave that, that we do not want to be too prescriptive, that that is not desirable—well, it is desirable to those in the industry to know what the rules are that they are going to be operating under. We are introducing a new test here, and I think that businesses and industry players deserve to know exactly what those rules are. To simply say that it is too prescriptive to talk about weighting does not cut it, and I would like the Minister to take a further call and give some clarity to the Committee and, indeed, to impacted industries about what that may be. These are the criteria that will be applied when the Minister makes a choice about whether or not the countervailing duty will be applied.

The Government has decided it wants to go down this route—that it wants to go down the route of having a change of legislation, where we have a regime and tests. Well, people need to know what that means, and I look forward to hearing from the Minister and hearing what each of those factors that the chief executive will investigate when applying the public interest test mean, and what the relative weightings will be. I understand that the Minister cannot be absolutely precise and say it will be the same in every single circumstance, but what we do need to know is what the direction of travel is. The industry is telling us it does not have that at the moment. There is confusion, there is lack of clarity, and it is not good for anybody when our manufacturers and our exporters are left wondering where it is that they stand around the kinds of protections that will be in place for them. Of course, Labour wanted to be able to support this legislation, but when it came down to the detail like this—and we went through it in detail at the select committee—we could not be satisfied. We could not be satisfied that the right rules and a robust enough regime had been put in place. So I look forward to hearing from the Minister in the chair.

The member Megan Woods has just very well and precisely illustrated the difficulty of constructing what will be an objective public interest test. Of course the test will vary by circumstances—those circumstances that the member has just rehearsed from within the bill. It will also depend on what sector of the economy is being complained about. Therefore, the need for judgment is inevitable. I would direct the member to clause 13 of the bill, which inserts new section 10, “Application for investigation” into Part 4, because the member asked how an investigation will be initiated. It will be simply by way of a complaint.

I think one of my greatest concerns about this bill arises from the pressure that can be put upon a Minister to take a decision, for non-competition regions, to decline to either proceed with an investigation or impose duties on dumped products. The Labour Party has said in its minority view that it shares the concerns expressed by Catherine Beard from Business New Zealand and by the New Zealand steel industry, being but two examples, that the introduction of ministerial discretions, which allow the Minister to not impose tariffs despite the fact that there is a case that there is product being dumped into New Zealand, creates a poor process. I want to explore one aspect of that, which is the pressure that can be brought upon New Zealand by more powerful trading interests than us.

I will probably get it in the ear for this, but I am going to recount what has already been in the media in the last year. We know from the story that was broken by Vernon Small in the Dominion Post that at a time when Chinese steel exports to other countries were facing duties for dumping, the suggestion that there might be a complaint in New Zealand led to pressure upon the New Zealand Government and on other exporters of other goods to China.

Before I go into that, I want to explain what is happening in other countries. It is very simple—and the Minister Jacqui Dean, I expect, will already know this—to know that there is a very significant oversupply of steel being produced in the world now. There has been a massive expansion of steel production in China, and some of that is alleged, by other countries that have had anti-dumping inquiries, to be either subsidised through cheap forms of capital available to some of those companies from the Chinese Government or Chinese State-owned enterprises, or—just because it has become such a surplus commodity and they have got so much of it to sell overseas—to be sold below cost to get rid of it. Those allegations have been accepted in both Europe and the United States.

In respect of some subsets of steel, anti-dumping tariffs in the United States have recently been increased from about 60 percent to 190 percent. Such is the level, they assert, of subsidisation or dumping that is occurring in respect of stainless steel being exported from China to the United States. In respect of Europe, Europe has decided that the dumping of steel over there is occurring, and it has imposed tariffs of between 18 and 35 percent. New Zealand Steel, the major producer of steel in New Zealand, is concerned that it has been suffering the consequences of the export of subsidised or discounted steel into the New Zealand market.

I am not talking about issues relating to quality. I am not talking about competition issues in the New Zealand supply chain. I am just talking about imported product. At the time—because there is still no clarity as to what has actually been happening within Government—this occurred, the Ministry of Foreign Affairs and Trade, according to the Dominion Post newspaper, was told by exporters to China that they were being given a message in China that if New Zealand was to investigate the allegations of steel dumping into New Zealand, there would be retaliatory action or there would be risks to New Zealand exporters of kiwifruit and, perhaps, dairy products into China.

We all know that on the world stage New Zealand is a minnow. We rely upon multilateral rules and fair-trade rules around the world in order for us to be treated fairly abroad and in order to protect our domestic producers and domestic consumers from unfair, predatory trade practices from abroad. As a small country that is reliant on relationships with superpowers, be they big economies like the United States or China—I do not want to single anyone out—or Japan or anyone else, why would we be putting ourselves in a position where the Ministers, through back channels, could be opening themselves up to pressure from those countries to actually say: “Look, you have got a discretion here, Minister, to actually not proceed with this anti-dumping inquiry. We want you not to proceed; otherwise, there are going to be consequences for New Zealand.”?

That is what this legislation introduces. It introduces more trade-related risks to New Zealand producers, like New Zealand Steel, of the Minister coming under pressure for reasons relating to other trading interests that New Zealand has overseas. We should not be doing that. That is what Business New Zealand told us, that is what New Zealand Steel told us, and that is what other submitters said as well. I think they are right, and I think New Zealand’s recent experience—we still have not had disclosure of all of the cables and other information that came back from overseas posts to New Zealand. There have been redactions that the Government has made to those documents, so we have not got transparency as to what actually went down. I suspect that the accusations that were being made through the media were right—that New Zealand was being pressured.

I ask the Minister previously in the chair, Jacqui Dean, through the Minister sitting with the Chair of the Committee, Tim Macindoe, why we would be passing legislation that makes more of those pressure points and that makes the exercise of discretion in respect of those pressure points opaque. As other speakers have already said, there are so many competing criteria that are to be applied by the Minister in making the decision—and those criteria can go in different directions—that just about any decision would be legitimate on the part of the Minister. Legally legitimate, I mean—not the right decision, but legally legitimate. I cannot understand why the Government is going down that route. I think of what Dr David Clark said—that we should be looking at what has happened in Australia. It has looked at doing this a couple of times. It has got far more muscle than we have, and yet it decided that it was not right to go down this route.

It seems to me that this is incredibly naive. Why am I not surprised? This is the Government that will not even enforce New Zealand standards at the border. When Opposition parties participated in the manufacturing inquiry during the term of the last Parliament—Labour, the Greens, New Zealand First—they all heard submissions that New Zealand standards, or equivalents overseas, are not enforced at the border properly, and, therefore, inferior products are imported, competing against more expensive products made in New Zealand to New Zealand standards.

The Government is not even enforcing New Zealand standards. It says that it thinks we have got competition problems in the supply chain for building products. Well, if that is the case, why does it not do something about that through competition policy rather than silly little exemptions to anti-dumping regimes? I am not even convinced that you should have an exemption from dumping regimes for post-earthquake events. Why should you be able to dump product in that circumstance? I do not understand that. I would have thought you should actually have to pay a fair price so as to give New Zealand producers a fair chance of producing or increasing their output to meet those periods of high demand.

The more important point—I want to hear from the Minister—is why the Minister thinks it is in the interests of New Zealand to create more ministerial discretions when we know that, as a small country, we are more likely to be able to be pressured by the big players in the world. That is whether it is Europe—they could say “Oh well, in Europe, unless you do this or that, we’re going to push harder against your butter quota.”—or whether it is the United States, in a similar way, or whether it is China or whether it is Japan. If you do something about steel exports from Japan, although they have shrunk—you know, “We’ll never let your dairy in.” You know, those sorts of threats can be made. They should not be made, and this legislation is encouraging them.

I did sit on the Commerce Committee, which heard this legislation. The Commerce Committee was a split committee. The Labour Party supported this legislation at its first reading—not being, at that point, cognisant of the significant issues that it raises. Once we were at the committee, and heard submitter after submitter come before us and talk about the threats of these measures to our domestic industry, we became seriously concerned.

We tried to get substantial amendments and questions answered through this legislation, unsuccessfully. This, basically, led us to believe that it is being pushed through for a set of reasons other than common sense, because it is a counterintuitive piece of legislation. If you were to believe that this Government was committed to a growth in exports, to a growth in the productive economy, and to a growth in small business becoming bigger business and being able to compete on the world market with good quality products—what this does is open the door to serious impacts on numerous industries in this country. It gives ministerial powers that are questionable in terms of—and I think you have heard David Parker outline the pressure that could be brought to bear, and the impact that it could have, on ministerial discretion.

I would like to say that I applaud new Minister of Commerce and Consumer Affairs Jacqui Dean for taking a couple of calls on this, because it is important to be able to engage in actual debate in the Committee stage—true debate—to be able to get some sense of what on earth was in the Government’s mind when it decided to press through with this legislation.

The reason we have such a substantial set of amendments before us in the Committee stage today is that the split committee, the Commerce Committee, voted against this bill. The Government members did not have a majority, so the bill had to be returned to the House unamended. Therefore, these amendments that are before us in the Committee stage are as a result of that and have enabled the wider debate that is occurring today.

I note that when the Minister did first speak, she talked about—and this is going to the public interest test. I want to touch on the issues in the public interest test: the time that it takes to get an inquiry happening and the impact of that on domestic industry, and then the intent—what is in the Government’s mind around this.

With regard to the public interest test, which is in new section 10F in new Part 4, inserted by clause 13, around the investigation—other speakers have noted the eight issues that have to be taken into account when undertaking that public interest test. I just want to mention four of them, and pose to the Committee the dilemmas that occur with this sort of “Solomon’s choice” approach that can be taken by a Minister. The Minister has to take into account whether prices will go down through a dumping into the New Zealand market, whether it provides more choice, whether it affects product quality, and whether it affects the financial performance of the domestic industry.

If it means that prices will go down and consumers get more choice—and bear in mind that the rationale for this legislation is to provide what the Government called “more consumer choice”. It would seem that that is what is the intent of this legislation. So let us say it means that prices go down and there is more choice. But what actually ends up in the market is a lesser-quality product, and if it affects the quality of the financial performance of our domestic industry, then how does that decision get made? It has got to be either one or the other.

The concern that submitter after submitter had—and I know that New Zealand Steel has been mentioned on a number of occasions; it talked about an unnecessary and radical shift in New Zealand’s trade policy, resulting in a materially weakened anti-dumping regime and a significant threat to New Zealand industry. I cannot stress highly enough just how alarming it was to hear the steel industry say that its very viability is on the line if this legislation is passed.

I also want to refer to another submission. I want to quote from it, and I will tell you who it was after I have quoted from it. It says: “We are not against global trade or protectionist, and support the case where a country does something extremely well and removes the need for local production of such products, but cannot agree that in some situations there is a need to tilt the playing field in favour of dumped or subsidised goods from overseas against local manufacturers, producers, and the jobs they create. How could such action, detrimental to the country’s productive base, be in the public interest? We consider that small manufacturers and producers are less able to present a strong voice to the relevant Government departments. The public interest test aggravates this situation.”

This was from the New Zealand Flower Growers Association, which sent an impassioned submission to the select committee. It wanted to bring to our attention that 97 percent of businesses in New Zealand have fewer than 20 employees, and that all of the flower growers in New Zealand fit that category. That 97 percent of businesses employs 33 percent of all employees. It was trying to get its voice heard, and I am trying to give it a voice today.

To the Minister in charge of this legislation, who I think is still the Minister for Small Business—am I correct—why are those voices not being listened to with this legislation? What is the point of this legislation when, supposedly, on the one hand, the Government says it is trying to get exports to 40 percent of GDP? We are currently under 30 percent. Here we have a piece of legislation that is encouraging, allowing, and enabling the dumping of product that may be sub-quality into our market—but, oh, it might give more choice and lower prices to consumers! How is that in the public interest? I think that is the crux of this legislation.

Other complaints with this legislation were around the time it takes to get an investigation into whether a tariff will be imposed, and then the subsequent impact of that—because it is adding 90 days to that process—on local industry. Those are really valid questions.

The reason this legislation is being hurried through in the next few days is that, ultimately, the original suspension period—and we are going back to the building industry—and the reason for allowing a temporary ability for those dumping provisions to be relaxed, was after the Christchurch earthquake. Those provisions are due to end at the close of 31 May, and one of the amendments in this bill today is to extend that suspension period until the close of 30 June 2019, which is why it has to be passed before 31 May.

There are significant issues here, and there are contradictions, absolute contradictions, in the rationale and the logic as to why you would put New Zealand industry—our productive economy—at such risk with such a piece of legislation. It is not supported by Australia, which has gone through this process twice before, and yet we push through harmonisation laws with Australia. What is the intention of the Government? I think David Parker got to the crux of that.

In line with my other colleagues, I am rising to speak against the Trade (Anti-dumping and Countervailing Duties) Amendment Bill. From the point of view of the Labour Party, this is not out of a sense of pique or rigidity, or anything like that, because, in fact, we supported this bill through to the Commerce Committee so that it could receive thorough consideration. It is as a result of the consultation of the submissions and the discussions that have occurred at the select committee level that we have determined that we simply cannot support its passage any further.

In my comments I want to focus in particular on the changes made at the select committee in respect of building materials. I want to talk about the impact on business viability, which was raised by a number of submitters to the select committee, and, also, what this bill says about the overall approach of the Government towards trade.

I am starting off with the changes to clause 16, which is about extending the suspension on building materials by 2 years, from the current date of 2017 to 2019. This, to me, seems to be a case of the Government wanting to look like it is doing something about the cost of housing. Really, if we want to determine whether this is going to have any impact whatsoever, we simply need to look at what has happened in Australia, because in Australia you can go over and, effectively, buy the same kinds of building supplies for 30 or 40 percent less than you can buy them for in New Zealand. But what has Australia done in respect of this issue? Has it gone down the same track that the Government is proposing to here? Has it softened its approach to anti-dumping and countervailing duties? No, it has not. The reason that it has got cheaper building supplies is because it has had a Government that has been more active in terms of ensuring a competitive market.

So what I would say is that if this Government is really wanting to make a difference in terms of the cost of building supplies, we need to look at the structure of the industry and its competitiveness, not to look at measures like this, which, if anything, will serve only to undermine the development of a competitive industry domestically.

In respect of the select committee changes, there was one small wording change—and I am referring here to new section 10F(3)(e), inserted by clause 13, which changes the word “viability” to “performance”. I think that is, on balance, a positive change, because of course the wording “viability” would be quite a stiff test to consider. Effectively, if we had left “viability” in there we would have been saying that you could consider the matter only if the entire viability—the entire ability—of an industry or a business to continue happening was at risk as a part of the consideration. “Performance” gives a bit more flexibility.

But, again, this goes to the point that has been made by a number of speakers in this debate about the subjectivity of this test. What do we mean when we refer to the word “performance”? There is a huge scope within that word. Do we just mean short-term financial performance for the current year of operation by that particular business? Do we mean performance across the wider sector? Do we mean the long-term business performance in that sector? These matters are commented on by the submitters to the select committee.

I want to refer to the submission from Mr Bruce Mackay, who submitted on behalf of peach growers and also other fruit growers supplying Heinz Wattie’s Ltd. The point that he makes is a really valid one, and I think every member needs to think about this seriously before voting further on this bill. What Mr Mackay is saying is that, particularly in respect of the agricultural sector, the effect of dumping on the industry is not a short-term effect. If produce is dumped in New Zealand, and if it undermines growers and producers here in New Zealand, they have to walk away. Trees get ripped up. It is not like they can come back and suddenly grow peaches again the next year; that is a 5- or 10-year proposition. What Mr Mackay says is, and I quote directly from him here: “The significant risk to growers is that any adverse impact is terminal.” He goes on to talk about the fact that if businesses go under, trees get ripped up: “If we have to remove them they will not be replanted, and it will be another 6 or seven years before any other new tree crop planted will start to make money again.”

He goes on, then, to talk about the fact that there is a huge downstream effect in terms of other businesses that support the agricultural sector. It is not clear to me whether we actually get consideration of those downstream effects—all of the supportive industries that support the original grower—in the consideration that is written into this bill. It would be good to hear from the Minister in the chair about that.

A number of submissions have been referred to. The one from Business New Zealand I thought also gave good food for thought to the Committee. This is where this bill really cuts across the grain of a lot of what the Government is saying about business simplification—about wanting to make things easier for New Zealand businesses to do their thing. The point that Business New Zealand makes, amongst other matters, is that this is going to lengthen the time that it takes for considerations to be made about whether we are going to apply duties and countervailing measures by another 90 days, another 3 months, and potentially, for businesses that face investment decisions, whose viability is on the line, that is a really significant blowout in terms of the time that they might need to factor into their business decisions.

A submission from Horticulture New Zealand—this is a really important one because it actually goes to the core of the issue, to me. New Zealand is already one of the most free and open trading nations in the world, and that is as a result of decisions made by successive Labour and National Governments over about the last 25 years. It produced evidence to show that. New Zealand industries are not protected. New Zealand industries are not particularly asking to be protected, but what they are asking for is for a Government to have their back when there is unfair and sharp trade practice being leveraged against them. Because the evidence that Horticulture New Zealand has presented to you, and that most of us in this Committee are aware of, is that, in fact, most other countries do have significant subsidies going into their farming and agricultural sectors. We have all of that, sort of, soft support.

Up to 50 percent of farm receipts in places like Norway, Switzerland, Japan, Iceland, Korea, and Turkey come from subsidies—they come from subsidies. We have got producers here who basically have none of that sort of extra support, and we are relatively proud of that and there is not too much of a contest about that in this House. But what this bill does is remove the ability of a Government of New Zealand to provide some level of protection to our producers who face that sort of unfair competition, particularly when those foreign producers try to dump their products at below source cost in our country.

In line with the other speakers from this side of the Chamber in this debate, we think that this bill is naive. It presumes that New Zealand should open itself up further when, in fact, we are one of the most open trading countries in the world as it stands. In line with the other speakers on this side of the Chamber, we oppose this bill and would recommend that other members in the Committee consider voting against it as well. Thank you.

Tēnā koe, Mr Chairperson. Thank you for calling on me. I would like to introduce a tabled amendment. The tabled amendment is proposed for clause 13, new section 10F to replace subsection (2). The new subsection reads: “Imposing the duty is in the public interest unless any of the short and long term costs of imposing the duty to downstream industries, wider supply chains, employment, consumers, and local communities around adversely impacted production sites, are likely to materially outweigh the benefit to domestic industry of imposing the duty.” This amendment widens the scope of what can be looked at in the public interest test. Our problem with the public interest test is that it is far too narrowly drawn. Actually, what we are missing is many of the concerns that we have been hearing about so far in this debate and the issues that have been talked about by different submitters.

Let me look at the additions to the wording, one by one. Firstly, we believe that we need to look at the short term and the long term. The rules do not specifically call for a long-term perspective. The reason that this is important is that, as various submitters have said, once you lose a business—once it goes out of business because of predatory pricing forcing a company out of business—that is a long-term effect. You cannot just replace those fruit trees overnight. You cannot just build up a business overnight. Once it is gone, you are left with a hollowing out of a community. You are left with shareholders who have lost their money. You are left with founders who have lost their houses. You are left with skilled workers who no longer have jobs and often move away to different areas. You cannot suddenly replace these enterprises by a short-term measure.

You have to look, in this public interest test, at the long term, because it is only in the long term that you can understand the dynamics of what generally happens. A colleague previously described the legislation as being naive. What we would be doing in this case is we would be setting up an incentive for a predatory foreign producer to lower its prices until the domestic company was driven out of business, and then raise its prices again. You can understand that effect if you look in the long term, and, therefore, the requirement to look in the long term in a way of calculating the public interest is, we believe, essential.

If I can just draw on one of the submissions—this submission is from Business New Zealand and ManufacturingNZ—it says: “Once value is destroyed … it takes a long time for an economy to replace [a] large employer (we have so few of them [left] in New Zealand …”. So what we are talking about here is a necessity of understanding a dynamic situation rather than a snapshot in time, and the public interest test does not deal with that.

A second issue introduced by this amendment is to look not only at the downstream producers, which is a very narrow definition, and instead to look at the wider supply chain, because it is only in understanding the linkages between firms that can often be very complex and across different industries that you can understand what happens when you lose a manufacturer. If you lose a manufacturer, often the supplier who supplies that manufacturer is also supplying other businesses in other sectors. So if you just look at downstream industries, then you miss the dynamics of the supply base. And, therefore, this amendment proposes adding in consideration of the effect on the wider supply chains into the public interest test.

Again, if I may draw from a quote from the New Zealand Manufacturers and Exporters Association: “… manufacturing in New Zealand is a diverse sector, companies often are closely connected in supply chains, providing demand, inputs and services for each other, as well as building shared skills and capability in our workforce.” Now, if you do not look at the broader supply chain issues, then you miss those connections. So, therefore, our amendment introduces a concept of wider supply chains.

Thirdly, our submission also requires that the public interest test looks at employment, which, at the moment, it does not in section 10F. It requires that we look at local communities that exist around adversely affected production sites. Why is this important? Because local communities often depend on their local employers not only for jobs but also for so many other community benefits. They are the beating heart of communities. If we lose our local businesses, if we lose the manufacturing businesses that tend to have higher skills, higher wages, higher value added, then the future generation will become only a generation of flipping hamburgers in McDonald’s. We need to retain those businesses with the skills. They are vital to the lifeblood of a community. That is why the amendment that we have put down includes the impacts on the local community that have to be considered within the public interest test.

We have outlined in this, essentially, chapeau clause of section 10F(2), additional considerations that must be included in the public interest test. We have a consequential amendment that I shall come back to, which adds to the list of the specific issues that need to be addressed in that test and they are largely heralded by the amendment that is tabled in new section 10F. Thank you.

The question is that the Minister’s amendments to Part 1, in Supplementary Order Paper 289, be agreed to. Those of that opinion will say Aye, to the contrary No. The Ayes have it.

💬 Carmel Sepuloni: Mr Chairman, I did not hear the vote. Can you please read it again?

The CHAIRPERSON (Hon Chester Borrows): I beg your pardon. You did not hear the vote? Were you not listening to the Chairman at the time?

💬 Carmel Sepuloni: Mr Chairman, sorry. I did not hear what you said.

The CHAIRPERSON (Hon Chester Borrows): So you are wondering what clauses we are voting on?

💬 Carmel Sepuloni: We are voting on the bill that we were just debating—

The CHAIRPERSON (Hon Chester Borrows): Yes, that is right. Correct. So we were voting that the Minister’s amendments to Part 1, set out on Supplementary Order Paper 289, be agreed to.

💬 Carmel Sepuloni: Whose amendments are these? The Minister’s?

The CHAIRPERSON (Hon Chester Borrows): These are the Minister’s amendments.

💬 Carmel Sepuloni: No, we are opposed. A party vote is called for.

The question was put that the amendments set out on Supplementary Order Paper 289 in the name of the Hon Paul Goldsmith to Part 1 be agreed to.