Default drop-dead date for anti-dumping duties?

Default drop-dead date for anti-dumping duties?

19 June 2015

Anti-dumping duties may be given a specified termination period under proposals now being consulted on by the Ministry of Business, Innovation and Employment (MBIE).

The change, if implemented, is likely to be fairly complex to administer and may reduce the overall effectiveness of New Zealand’s anti-dumping regime.

Termination periods would be in addition to the new public interest test, recently adopted in principle by Cabinet.

Submissions are due by 26 June 2015.

Current policy

Under existing law, anti-dumping or countervailing duties run for five years but can be renewed, although a review is needed each time. There is no renewal limit, meaning that they can remain for as long as the threat of injury persists. Plasterboard duties have been in place since 1989 to guard local manufacturers against dumped Thai product. Duties on dumped tinned peaches from South Africa have existed since 1996.

The Cabinet has now approved in principle the introduction of a broad new “public interest” test which will require the Minister of Commerce to weigh the effect of duties against the public interest – including the government’s economic priorities and consumer welfare. (For more detail, refer to Chapman Tripp’s commentary last year.)

But the government’s view is that, even with this new test, there is a risk that duties can become “embedded” and prevent New Zealand producers from adapting to future import competition.

So what’s proposed?

MBIE has mooted two possible formats for a termination period – a set time cap with no possibility of extension, or a maximum time period after which renewal can be sought.

Feedback is wanted on:

• whether automatic termination periods should be country or product specific (or both)
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• the maximum imposition period (e.g. five, eight or ten years)
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• whether there should be an ability to reapply or renew, and if so
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• whether there should be a mandatory stand-down period.
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MBIE also wants input on how existing anti-dumping duties should be transitioned to the new rules if a termination period is adopted.

Chapman Tripp comment

There is no reason in principle why anti-dumping duties should not continue for as long as injurious dumping or subsidisation is occurring, or is likely to occur. Nor is change needed to bring New Zealand into compliance with WTO rules.

Australia recently considered and rejected such a termination period and MBIE was lukewarm about the idea in its November 2013 construction market options paper.1

Officials accept that the public interest test will add complexity, is likely to reduce the overall effectiveness of New Zealand’s anti-dumping regime, and will inject uncertainty and more subjectivity into the process. An automatic limitation period will add still more complication and be resource-intensive to administer.

The consultation materials so far available from MBIE do not:

• identify those local industries which MBIE, or Cabinet, thinks may be improperly guarded by “embedded” anti-dumping duties, or
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• seek to distinguish anti-competitive shelter by embedded duties from protection against WTO-prohibited dumping or subsidies.
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In the absence of a clear problem, New Zealand may be best to stick to its current WTO-compliant rules. The argument for an automatic termination period, as well as the new public interest test, remains contestable. A fixed time limit will ultimately make it harder for New Zealand manufacturers to withstand price undercutting by dumped or subsidised goods.

The two MBIE options for termination periods are quite different, and their policy goals and potential consequences will need to be carefully thought through. For example, depriving local producers of any right to seek renewal of anti-dumping duties may expose them to serious harm if dumping or subsidies continue.

ends

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